Joint building insurance increase due to flat being let

Noodles_33

I live in a house conversion of 2 flats and own one of the flats. 

The building has to be insured as a whole and currently does not allow letting as both flats have been owner occupied. 

I am due to rent out my flat soon and the insurance is coming up for renewal. I am having to change the policy to allow letting, which increases the insurance in total around £80, so only £40 more each. 

Should I be responsible for paying the additional £80 as I wanted this change, or should it be split 50/50. I don’t want it to create any legal issues when finally selling my property. 

user1977

What "currently does not allow letting"? Your current insurance policy? Or your leases? What (if anything) does your lease say about insurance if it's one leaseholder causing an increase in premium?

Devongardener

If the increase in insurance is solely due to your flat being rented out then you should cover the extra cost yourself, why should the other owner contribute?
£80 is a relatively small amount to find in the whole scheme of things in your responsibilities as a landlord.

Noodles_33

user1977 said:

What "currently does not allow letting"? Your current insurance policy? Or your leases? What (if anything) does your lease say about insurance if it's one leaseholder causing an increase in premium?

The lease allows letting, it’s the current building insurance policy that doesn’t allow it, which we took out jointly 2 years ago. I don’t think the lease states anything in regards to the occurrence of an increase, just that it should be mutually agreed between both freeholders.

I am happy to pay the increase, it’s more about it causing difficulties in the future when I come to sell the property. As it would just be a mutual agreement. 

Noodles_33

Devongardener said:

If the increase in insurance is solely due to your flat being rented out then you should cover the extra cost yourself, why should the other owner contribute?
£80 is a relatively small amount to find in the whole scheme of things in your responsibilities as a landlord.

I am happy to pay the increase, I was asking more in terms of it causing difficulties when I come to sell the property, as it would be a mutual agreement that is in place. 

gwynlas

Why should it cause problems in the future?

Insurance requires annual payment and you are paying additional remium in order to let out your property.

If you sell to another owner occupier then the two of them revert to 50/50 split.

eddddy

It sounds like you are joint freeholders (shared freehold).

Noodles_33 said:

I don’t think the lease states anything in regards to the occurrence of an increase, just that it should be mutually agreed between both freeholders.

Are you sure you're looking at the lease? A lease is generally a 'contract/agreement' between the freeholder(s) and a leaseholder.

It isn't generally a contract/agreement between one joint freeholder and another joint freeholder (e.g. about mutually agreeing on insurance etc.)

Are you maybe talking about some other 'contract / agreement / deed' - and not the lease?

Noodles_33 said:

The building has to be insured as a whole and currently does not allow letting as both flats have been owner occupied. 

As far as I'm aware, it's unusual for a building insurance policy for a building containing flats not to allow letting.

(Just to make sure - presumably you have a policy specifically for a building containing flats, probably arranged by a broker. As opposed to an insurance policy for a house - perhaps arranged online through a comparison site.)


Assuming you have the correct policy, to answer your question - if the lease allows letting, then it's reasonable for you (as a leaseholder) to insist that the buildings insurance policy allows letting. And it's reasonable that the premium is divided according to what the lease says - probably 50/50.


But it sounds like you might have some kind of additional contract / agreement / deed between you and your joint freeholder, which might have other terms.

saajan_12

gwynlas said:

Why should it cause problems in the future?

Insurance requires annual payment and you are paying additional remium in order to let out your property.

If you sell to another owner occupier then the two of them revert to 50/50 split.

Right, but if they sell to another LL? Or if the other flat owner lets their property too? Etc etc. 

To be perfectly clean and fair, there could be a formula to divide the difference in premium to a policy that does not allow letting etc. But this seems overkill for a £40 issue and the cost to draft would be more than the amount in question. Personally I'd leave the agreements as is, just cover the difference for now and hope for the  best. 

Noodles_33

eddddy said:

It sounds like you are joint freeholders (shared freehold).

Noodles_33 said:

I don’t think the lease states anything in regards to the occurrence of an increase, just that it should be mutually agreed between both freeholders.

Are you sure you're looking at the lease? A lease is generally a 'contract/agreement' between the freeholder(s) and a leaseholder.

It isn't generally a contract/agreement between one joint freeholder and another joint freeholder (e.g. about mutually agreeing on insurance etc.)

Are you maybe talking about some other 'contract / agreement / deed' - and not the lease?

Noodles_33 said:

The building has to be insured as a whole and currently does not allow letting as both flats have been owner occupied. 

As far as I'm aware, it's unusual for a building insurance policy for a building containing flats not to allow letting.

(Just to make sure - presumably you have a policy specifically for a building containing flats, probably arranged by a broker. As opposed to an insurance policy for a house - perhaps arranged online through a comparison site.)


Assuming you have the correct policy, to answer your question - if the lease allows letting, then it's reasonable for you (as a leaseholder) to insist that the buildings insurance policy allows letting. And it's reasonable that the premium is divided according to what the lease says - probably 50/50.


But it sounds like you might have some kind of additional contract / agreement / deed between you and your joint freeholder, which might have other terms.

It’s a house conversion split into just the two flats. It does seem odd but it’s all been done through a broker, so I can only assume it’s all correct. 

It’s times like this that I wish there was a management company that dealt with the insurance, I actually find it more difficult being a joint freeholder. 

I think it better to split 50/50 but the other freeholder can be very difficult to deal with. I might just pay the additional cost this year and then try and split it evenly next year. 

anselld

Noodles_33 said:

eddddy said:

It sounds like you are joint freeholders (shared freehold).

Noodles_33 said:

I don’t think the lease states anything in regards to the occurrence of an increase, just that it should be mutually agreed between both freeholders.

Are you sure you're looking at the lease? A lease is generally a 'contract/agreement' between the freeholder(s) and a leaseholder.

It isn't generally a contract/agreement between one joint freeholder and another joint freeholder (e.g. about mutually agreeing on insurance etc.)

Are you maybe talking about some other 'contract / agreement / deed' - and not the lease?

Noodles_33 said:

The building has to be insured as a whole and currently does not allow letting as both flats have been owner occupied. 

As far as I'm aware, it's unusual for a building insurance policy for a building containing flats not to allow letting.

(Just to make sure - presumably you have a policy specifically for a building containing flats, probably arranged by a broker. As opposed to an insurance policy for a house - perhaps arranged online through a comparison site.)


Assuming you have the correct policy, to answer your question - if the lease allows letting, then it's reasonable for you (as a leaseholder) to insist that the buildings insurance policy allows letting. And it's reasonable that the premium is divided according to what the lease says - probably 50/50.


But it sounds like you might have some kind of additional contract / agreement / deed between you and your joint freeholder, which might have other terms.

It’s a house conversion split into just the two flats. It does seem odd but it’s all been done through a broker, so I can only assume it’s all correct. 

It’s times like this that I wish there was a management company that dealt with the insurance, I actually find it more difficult being a joint freeholder. 

I think it better to split 50/50 but the other freeholder can be very difficult to deal with. I might just pay the additional cost this year and then try and split it evenly next year. 

That sets a dangerous precedent.  You are not in breach of the lease conditions so there is no reason to pay the extra.  

DullGreyGuy

Noodles_33 said:

I live in a house conversion of 2 flats and own one of the flats. 

The building has to be insured as a whole and currently does not allow letting as both flats have been owner occupied. 

I am due to rent out my flat soon and the insurance is coming up for renewal. I am having to change the policy to allow letting, which increases the insurance in total around £80, so only £40 more each. 

Should I be responsible for paying the additional £80 as I wanted this change, or should it be split 50/50. I don’t want it to create any legal issues when finally selling my property. 

Ordinarily you would be buying Block insurance on a property containing more than one flat which would normally be agnostic to if the properties are let or owner occupied. Many policies cover hundreds of flats in a development and there is little chance the freeholder will know if units are let or not. 

Assuming you arent in Scotland then you as freeholders should pay the bill inline with the agreement as freeholders, assuming you haven't got a LTD thats actually the freeholder. The freeholder then needs to charge the leaseholder inline with the terms of the lease and how building costs are to split. 

You could have a "gentlemen's agreement" that you pay more given its uniquely for your benefit. Assuming the thing is 50/50 what is the dispute resolution process? How are disagreements resolved if you want to pay the 50% more but your co-freeholder won't agree to the higher policy cost unless you take all the cost?