Compton Group - Insurance - s164 Notice

User232002

[Deleted.]

ciderboy2009

Why doesn't your friend just send them a copy of the notice they originally submitted when they started the new policy {wink, wink}?

eddddy

How much more expensive is Compton's insurance than the one the leaseholder found?

If the leaseholder has found insurance that's much cheaper, I guess you could try the angle of going to tribunal to argue that that their insurance charge is not 'reasonable' - because insurance can be arranged much more cheaply elsewhere.

They don't have to get the cheapest insurance available - but they need to be able to justify their decision.

(But I guess the tribunal might simply say "so you should have used your rights under s164". I don't know.)




What is the tribunal decision you're looking for about?

eddddy

User232002 said:

My understanding is that reasonableness is not a defence. There is a very clear term in the lease that specifies that insurance 'must be in an office of the landlords choosing.' I gave up on any courts interpretation of reasonableness when the Supreme Court decided (around 2015 I think) that a car park fine of £100 was 'reasonable.' 

Are you referring to Parking Eye vs Beavis? If so, I can't see anything similar between that case and this one.

• In that case, the legislation under consideration was the Unfair Terms in Consumer Contracts Regulations 1999 - and a key factor the judge mentioned people were able to clearly see signs stating a £85 charge before they parked.

• In this case, the legislation is The Landlord and Tenant Act 1985 - and presumably no price for the insurance premium was stated in advance.

Section 19 of the Landlord and Tenant Act 1985 explicitly says Service Charges must be reasonable...

19. Limitation of service charges: reasonableness.

(1) Relevant costs shall be taken into account in determining the amount of a service charge payable for a period—

(a) only to the extent that they are reasonably incurred...

Link: https://www.legislation.gov.uk/ukpga/1985/70/section/19

 
And here are some extracts from a tribunal decision:

The Applicant’s case

7. The Applicant says that the premiums he has been required to pay for buildings insurance and included in his service charges since 2014/15 have been far too high. He asked an insurance broker to obtain quotations for insurance cover on a like for like basis. The result was that the Applicant’s brokers obtained a quotation from Ageas that was considerably cheaper than the premium being charged by the landlord’s insurers.

...
...

Summary

43. The Tribunal finds that the charges made by the Respondent for the Applicant to pay in respect of buildings’ insurance were not reasonably incurred.

Link: https://assets.publishing.service.gov.uk/media/5ffda62ae90e0763a7b4ab41/Erica_Drive_Decision.pdf

But every case will be decided on the specific facts. I'm sure the facts of your case will be very different from the above case.

(There are some interesting comments in that case that are worth noting, if you decide to make a tribunal claim.)

eddddy

User232002 said:

I don't think that LTA 1985 is aimed at long leases / ground rent situations.

Of course the Landlord and Tenant Act applies to long leases. Why do you think it doesn't?

User232002 said:

This isn't a service charge. 

Why isn't it a service charge?

If it's a bill issued by Compton, and the leaseholder pays Compton - it's a service charge.

Or are you saying that the the leaseholder makes arrangements directly with the insurer and makes payments directly to the insurer, and not to Compton? 

eddddy

User232002 said:

Because the act makes several references to short leases, leases 'of a flat,' and tenants 'of a dwelling.' Because it talks about repair obligations. Its clearly designed to apply to the situation of leaseholders in a block of flats dealing with a landlord and not a lease for a bare patch of land which has hundreds of years remaining where ground rent is payable.

You seem very confused about all of this.

Are you now saying that your friend is leasing a bare patch of land? So what type of insurance has your friend's landlord arranged for a bare patch of land? ('Landlord' is the legal term for 'Freeholder')

Or was this another 'off-hand comment'?

In reality, I suspect that your friend is actually leasing a house and land. Hence the requirement for buildings insurance.

(I've heard some people say that if you have a leasehold house - you lease the land, but own the building. But that's almost always incorrect.)



It might be better if you encourage your friend to get a free advice call with the Leasehold Advisory Service:   https://clients.lease-advice.org/#/

eddddy

There's so much incorrect, illogical and self-contradictory info in your posts. Too much to address.

TBH, I'm not convinced that you're as ill-informed as you're pretending to be. I suspect that you might be just trolling.

So I'll leave you to it.

BarelySentientAI

There's a bit missing out of the bold that I think changes the interpretation:

"The tribunal expressed the preliminary view that, because the lessee is required to insure the property himself and contracts directly with the insurance brokers, the costs in connection with insurance are not 'relevant costs' and so are not subject to the limitation provided for at section 19 of the 1985 Act "

That seems to suggest that if Compton were the ones that contracted with the insurance broker, then the remainder of the statement does not apply and the S19 limitation might still be pertinent?

Or do Compton not offer to contract/charge the insurance, just tell you where you have to go and find it, perhaps to avoid exactly that conclusion?

All very confusing.

BarelySentientAI

User232002 said:

BarelySentientAI said:

That seems to suggest that if Compton were the ones that contracted with the insurance broker, then the remainder of the statement does not apply and the S19 limitation might still be pertinent?

Yes. There are two situations;

(1) A freeholder buys an insurance policy for an entire block (of flats for example) and then distributes this cost via a service charge to the leaseholders. This is subject to s19.

(2) A landlord charges a ground rent on the land which usually, but not always, contains a single dwelling. The lease contains a clause that instructs the leaseholder to insure with an insurer nominated by the landlord. The contract between leaseholder and insurer is concluded directly. This is not subject to s19.

I gave more than enough information in my initial posts to show that my friend was in scenario (2). "Ground rent," "Peppercorn rent," the lease being for 999 years and, of course, the fact that s164 only applies in scenario (2). 

I didn't know s19 was irrelevant when I created this thread. Its fine for people to make mistakes. Its not fine, in a land law case especially, to suggest people go to court and rely on certain arguments unless you are absolutely sure you are correct. 

So the important part is that the clause is an instruction to use a certain insurer and that the leaseholder is the one who needs to actually do the contract.  That makes sense.

You are right, there are often posts on here saying "just take them to court" or similar, and that's not great advice to be giving on (or taking from) an anonymous internet forum without complete certainty.

I don't know a huge amount about leasehold - is there some penalty for not complying with lease conditions, even if the situation is then rectified?  I always thought that getting back into compliance was enough to satisfy things, so then your reading of 164.4 would seem to make sense to me.

KatieJayne27

Hello everyone. Jumped on this thread because I thought it better posting on a open chat on this discussion rather than starting a new one. Like many people, I also have recieved a letter from compton asking that we change our insurance over to Zurich. I was also unaware when buying the property 12 months ago that we had a clause in our lease that stated we must insure with an approved company from our leaseholder. We are first time buyers and unfortunately have made the cardinal sin of not already being insured. Very strange as our mortgage was approved ect and the only documents I can find relating to building insurance was something we had to sign from the solicitors to say that building insurance was our responsibility and they can't advise ect ect. I think because I have 2 policies with legal and general that are life and income protection I've assumed that we had it. Silly I know, but both of these come out direct debit and I haven't thought much about them since our mortgage advisor set them up. An oversight and if anything good was to come out of this ridiculous situation with compton it is that we are now aware about insuring the building. My question on this is- compton want us to send reciept of our insurance within the next 21 days and they will only require us to move over to their recommended insurer from when the policy is to be updated...I assume next year when it runs out? So if I took insurance out today for example, sent them this, would that mean they could only make us move over in 12 months? When that comes about, 2 weeks before could I send this common hold and leasehold act letter through that a lot of people have mentioned and thus stop them in their tracks? Or because I have no insurance to begin with and I take a policy out now, they'll see the date and I'll have got myself in a sticky situation where they'll charge me or still continue to force me to change over?