Maisonette insurance

Rekusu26

What ho one and all,

I have a maisonette that I rent out.  There are four maisonettes in the block and for whatever historical reason, each owner is responsible for their own building insurance, rather than a block / group insurance.

I have just found that as a landlord, my building insurance has more than doubled for the next year. Obviously, it is sensible to have building insurance but of  course, it is not a legal requirement.

I do not know what kind of insurance the other residents have, but in the event of a fire in one maisonette, I assume that all would be damaged and / or require some major redecoration. 

 I register the estimated rebuild cost on my maisonette, but that does not reflect the cost of rebuilding the entire block.

So what would happen?

Thanks and toodle pip

DullGreyGuy

Your scenario isn't clear... what would happen if your neighbours had insurance but you didnt or?

eddddy

Rekusu26 said:

Obviously, it is sensible to have building insurance but of  course, it is not a legal requirement.

I do not know what kind of insurance the other residents have, but in the event of a fire in one maisonette, I assume that all would be damaged and / or require some major redecoration. 

The situation is very likely to be as follows:

Your maisonette is almost certainly leasehold, and your lease will almost certainly say that you are required to have buildings insurance.

So if you fail to get buildings insurance you'd be breaching your lease, and if your freeholder finds out, they could take enforcement action against you.

(Ultimately, your maisonette could be repossessed by your freeholder - if you continue to breach the lease. But you'd have to be mad to let things escalate that far.)


Your lease will specify exactly what parts of the building you are responsible for, and therefore what parts you must insure....

• if you have a downstairs maisonette, it's likely to be the foundations, the ground level floor, the bottom half of the building's walls, etc

• if you have an upstairs maisonette, it's likely to be the roof, the ceiling, the top half of the building's walls, etc

loubel

Did you not get contingent buildings insurance when you purchased? This would cover the situation where you have insured but other leaseholders have not, or not sufficiently, to cover the cost of repairs. Your solicitor should have arranged this.

EssexHebridean

ETA - apologies to @loubel - I missed the key point in their reference, the below is the situation with a standard leasehold but NOT in the situation being referred to here. Thanks to DGG for the comprehensive explanation! 

A solicitor doesn’t arrange buildings insurance. Where there is a mortgage lender, they will require to see proof that the purchaser has put buildings insurance in place - or in the case of a flat where the freeholder arranges the buildings insurance, that there is a policy in place before releasing funds - the solicitor will ask their client (the purchaser) for proof of that prior to requesting funds (or prior to completion where the exchange and completion dates are close together so funds have been requested prior to exchange).

In this case it’s irrelevant anyway as the OP has clearly had insurance as they refer to a large price increase on renewal. Flat insurances have gone up massively in the past few years - I know that the leaseholders in our old block have been hit with two successive large increases in annual service charge to account for that. 

loubel

Solicitors do arrange contingent buildings insurance, which is a type of title insurance designed to cover this situation 

DullGreyGuy

EssexHebridean said:

A solicitor doesn’t arrange buildings insurance. Where there is a mortgage lender, they will require to see proof that the purchaser has put buildings insurance in place - or in the case of a flat where the freeholder arranges the buildings insurance, that there is a policy in place before releasing funds - the solicitor will ask their client (the purchaser) for proof of that prior to requesting funds (or prior to completion where the exchange and completion dates are close together so funds have been requested prior to exchange).

In this case it’s irrelevant anyway as the OP has clearly had insurance as they refer to a large price increase on renewal. Flat insurances have gone up massively in the past few years - I know that the leaseholders in our old block have been hit with two successive large increases in annual service charge to account for that. 

@EssexHebridean I think you are missing the point... the OP hasn't said exactly who is uninsured in their question but they are thinking of this sort of thing...

Flat below the OP's has a major fire damaging their own and the OP's unit and making the building structurally unsound. The OP's insurer cannot commence with works until the flat below has been made sound again. So what happens if it turns out the other owner didnt renew their policy? Or they failed to declare a previous bankruptcy so the policy is voided. 

The OP's insurer isn't liable to fix up the structure below them and the other person may not be able to afford to without having insurance. Hence there is the concept of contingent insurance which is arranged by the solicitor which will respond in the case where one of the other parties doesn't have appropriate insurance

EssexHebridean

Thanks @DullGreyGuy and apologies to @loubel - I have edited my post accordingly. 

DullGreyGuy

eddddy said:

Rekusu26 said:

Obviously, it is sensible to have building insurance but of  course, it is not a legal requirement.

I do not know what kind of insurance the other residents have, but in the event of a fire in one maisonette, I assume that all would be damaged and / or require some major redecoration. 

The situation is very likely to be as follows:

Your maisonette is almost certainly leasehold, and your lease will almost certainly say that you are required to have buildings insurance.

So if you fail to get buildings insurance you'd be breaching your lease, and if your freeholder finds out, they could take enforcement action against you.

(Ultimately, your maisonette could be repossessed by your freeholder - if you continue to breach the lease. But you'd have to be mad to let things escalate that far.)

It somewhat depends @edddy depending on exactly when the issue of no insurance is found, if its post a major loss walking away may be what some think is the best option, especially if you live in an area where rebuild costs significantly outweigh the value of a property. 

You've bought a flat for £80,000, you have £50,000 left on your mortgage and a major fire with no insurance and £150,000 of repairs required. You're not going to get insurance retrospectively and is someone going to be willing (or even able to) get into £200,000 of debt to save a £80k flat

eddddy

DullGreyGuy said:

It somewhat depends @edddy depending on exactly when the issue of no insurance is found, if its post a major loss walking away may be what some think is the best option, especially if you live in an area where rebuild costs significantly outweigh the value of a property. 

You've bought a flat for £80,000, you have £50,000 left on your mortgage and a major fire with no insurance and £150,000 of repairs required. You're not going to get insurance retrospectively and is someone going to be willing (or even able to) get into £200,000 of debt to save a £80k flat

Yes.

However, I was addressing the specific comment mentioned by the OP that buildings insurance "is not a legal requirement".

It sounded like the OP believed building insurance was optional - and therefore maisonette owners could choose whether or not to have it.

I was explaining that it is not optional - it is a requirement of the lease. 

Many leases require leaseholders to provide evidence of Buildings Insurance to the freeholder. So refusing to insure (or refusing to provide evidence of insurance) could ultimately result in forfeiture of the lease.


As you say, in spite of this, there is the issue that some leaseholders might not insure adequately, or at all.

Rekusu26

Apologies if my post was a little unclear. Thanks to all responses, particularly DullGreyGuy .

I own outright and did life in the f/f maisonette, now it provides a rental income.  I do have landlord insurance and have had building insurance for the entire time I have owned the property.  I assume that the other three maisonette owners also have building insurance.

Each owner is responsible for their own insurance; in the event of storm damage to the roof for example that would be my responsibility.

But what happens in a fire?  If I have a fire, hopefully, my insurance would provide cover, but most likely, all maisonettes in the block would suffer one way or another (smoke, water, may be fire itself.)  So how would  insurance work with four policies?

As for the land owners, they have never to the best of my knowledge, visited or asked for anything.  it is s 999 year lease and the original landowners are most likely dead.  I pay a 6 monthly peppercorn rent.

As for my responsibility as written in the lease; it is not exactly clear because it is a hand typed, multi-page document in legalese speak that I do not comprehend.  However,  assuming the g/f has a similarly worded lease (most likely) then it seems we are jointly financially responsible for drains and roofing.  To  quote:

At all times during the said term of pay and contribute a rateable or due proportion of the expenses of making repairing maintaining supporting rebuilding and cleansing all way passageways pathway sewers drains pipes water courses water pipes cisterns gutters party walls  party structures fences and appurtenances belonging or used or capable of being used by the lessee in common with the lessor or the tenants or occupiers of the premises near to or adjoining the demised premises or of which the demised premises form part  ..... and on and on and on.  Clear as mud!

Don't you just love legal speak?