Shared freehold - building insurance

Miffster

My question is about freeholders' shared building insurance.

The house is converted into three 1-bedroom flats and the freehold is jointly owned by the  three leaseholders - one of whom is myself. Building insurance cost has always been shared equally between the 3 freeholders.  All are 1-bed flats of about the same size, although the ground-floor flat has exclusive use of the front & rear garden.  

My flat is the top-floor of the building and it has a flat roof.  I have obtained planning permission to extend by building a new bedroom and bathroom on top of the flat roof, making mine into a 2-bedroom flat.  My co-freeholders have agreed in principle to a 'licence to alter' and a 'Deed of Surrender and regrant' for my lease but we're in discussion over a small number of details.

If the building-insurance premium cost rises as a consequence of my extension it seems reasonable that I should bear this cost.  My question is how to say this in the new lease, or other agreement, and how to calculate the fair division of this cost amongst the 3 freeholders, and to ensure this obligation is passed to any new owner should I wish to sell at some time in future.  Mine will now be a 2-bed flat and the others 1-bed flats so should I accept 50% of the cost?  Or is there an 'industry standard' formula based on internal volume or no. of bedrooms etc. and/or should the garden areas also be taken into account.  Thanks for any comments you may have.

Brie

How about prorata based on floor space?  Maybe with an adjustment as 2 of you don't have the gardens?

DullGreyGuy

Miffster said:

My question is about freeholders' shared building insurance.

The house is converted into three 1-bedroom flats and the freehold is jointly owned by the  three leaseholders - one of whom is myself. Building insurance cost has always been shared equally between the 3 freeholders.  All are 1-bed flats of about the same size, although the ground-floor flat has exclusive use of the front & rear garden.  

My flat is the top-floor of the building and it has a flat roof.  I have obtained planning permission to extend by building a new bedroom and bathroom on top of the flat roof, making mine into a 2-bedroom flat.  My co-freeholders have agreed in principle to a 'licence to alter' and a 'Deed of Surrender and regrant' for my lease but we're in discussion over a small number of details.

If the building-insurance premium cost rises as a consequence of my extension it seems reasonable that I should bear this cost.  My question is how to say this in the new lease, or other agreement, and how to calculate the fair division of this cost amongst the 3 freeholders, and to ensure this obligation is passed to any new owner should I wish to sell at some time in future.  Mine will now be a 2-bed flat and the others 1-bed flats so should I accept 50% of the cost?  Or is there an 'industry standard' formula based on internal volume or no. of bedrooms etc. and/or should the garden areas also be taken into account.  Thanks for any comments you may have.

What does the lease state about apportioning freeholder costs? It's very possible that all three leases need changing if they currently all say you pay 1/3 each. If it says its apportioned by share of the total square footage then no change needed and no negotiation, its a matter of fact of what extra footage you've added

It varies significantly, we've had both the above positions before, the building next door is my floor space too but some aspects, eg the lifts, is only on those on a higher floor.

Miffster

Thanks for the responses, I do feel I should negotiate some concession to my co-freeholders as:
1. I need their consent for the licence to alter, and
2. Renewal premiums may rise as a result of my actions, not theirs.
But I wish there was some kind of guidance to help us decide what is fair.

XRS200

The premium is generally calculated on the rebuild cost so assume a fresh rebuild calculation will be needed.  Probably fair that your portion of the premium increases comparing new rebuild cost to old rebuild cost

DullGreyGuy

Miffster said:

Thanks for the responses, I do feel I should negotiate some concession to my co-freeholders as:
1. I need their consent for the licence to alter, and
2. Renewal premiums may rise as a result of my actions, not theirs.
But I wish there was some kind of guidance to help us decide what is fair.

It's a negotiation, fairness is a nice aspiration but ask different people what is "fair" and you'll often get different answers. We have to pay a contribution to the lift that we'll never use, similarly the communal areas that I've been in less than once a year and probably never again after our electric meter went smart. 

That said our layer and the top layer are very large 2 bed duplexes with big balconies or roof terraces whereas the middle layer are small 1-2 beds with no or minimal outside space but they also pay 1/32 of everything same as us.