Building Insurance for Leaseholders - misleading advice ?

rufford155

The Home Insurance article in last weeks tips email stated “…..buildings insurance is usually only for freehold homeowners (otherwise it's generally the management company's or landlord's responsibility…..”

Surely this is dangerously misleading ?

I’m not sure what is meant by “Management company” – we pay £15 per annum to someone who purchased all the leases on our estate.

That person is not  a landlord, does not "manage" anything except her own company collecting the annual rent, certainly does not own our house and, as far as I understand it, has no responsibility for insuring it.

I understood that the lease is for the land, not the building.

Therefore we always insure our own building as well as the contents.

I would guess something similar applies to millions of folk who might be misled by the article.

Please convince me if I am incorrect.

MyRealNameToo

rufford155 said:

The Home Insurance article in last weeks tips email stated “…..buildings insurance is usually only for freehold homeowners (otherwise it's generally the management company's or landlord's responsibility…..”

Surely this is dangerously misleading ?

I’m not sure what is meant by “Management company” – we pay £15 per annum to someone who purchased all the leases on our estate.

That person is not  a landlord, does not "manage" anything except her own company collecting the annual rent, certainly does not own our house and, as far as I understand it, has no responsibility for insuring it.

I understood that the lease is for the land, not the building.

Therefore we always insure our own building as well as the contents.

I would guess something similar applies to millions of folk who might be misled by the article.

Please convince me if I am incorrect

With a leasehold generally the freeholder owns the land and the house, the leaseholder has bought the right to occupy the land and building for a fixed period of time. There inevitably will be some exceptions 

The majority of leasehold properties are flats, in the case of flats the lease will normally make the freeholder or the management company responsible for insuring the building as a whole... there are obvious challenges if each flat owner has to insure their unit. 

In the minority being houses then there is more variation on who's responsible for arranging the insurance as there is less problems if your neighbours are uninsured or debate on who should cover the communal lift if its damaged in a storm given everyone has only insured their flat and no one the communal areas. 

user1977

rufford155 said:

Please convince me if I am incorrect.

Please show us the section of your lease which deals with insurance.

rufford155

"The majority of leasehold properties are flats."  -  Really ?
I understand the situation with flats as the building is multi-occupancy.
But it's quite different for leasehold houses where a solicitor will advise you to insure the building even before exchanging contracts.
How can my leaseholder be expected to insure my house when I only pay her £15 a year ?
And the thought that she actually owns my house would be quite scary if I believed it.
I thinks the MSE tip should have made a distinction between flats and houses.

MyRealNameToo

rufford155 said:

"The majority of leasehold properties are flats."  -  Really ?
I understand the situation with flats as the building is multi-occupancy.
But it's quite different for leasehold houses where a solicitor will advise you to insure the building even before exchanging contracts.
How can my leaseholder be expected to insure my house when I only pay her £15 a year ?
And the thought that she actually owns my house would be quite scary if I believed it.
I thinks the MSE tip should have made a distinction between flats and houses.

Yes, according to google 72% of residential leasehold properties are flats. Personally that feels low given almost all flats are leasehold in England & Wales ("share of freehold" are legally still leasehold just you also own a share in the company that owns the building or are joint freeholder). Leasehold houses are rare other than some geographic anomalies 

The solicitor should only advise you after reading the lease which will identify who is responsible for insuring the property. It would be a poor solicitor that recommends someone insures a property that someone else is obliged to insure. 

Ultimately read your lease, it will tell you what the obligations of the leasee and leassor are. Given what you are paying it would seem likely in your case that the lease makes you responsible for it but only way to confirm is to read your contract and it's difficult to see from here. Wouldnt be the first time freeholders have changed and people havent read documents properly etc. 

rufford155

OK, I stand corrected - but surprised.
All the houses in our area (in Lancashire) are leasehold.
In our previous house we actually purchased the lease but not many folk do that and we haven't bothered in our current one.
I still stand by my comment that the wording of the MSE tip was misleading for anyone in my circumstances.
I do have a copy of the lease but I'm not going to dig it out as I'm confident with my assumptions - I know there are reams and reams of of it with a plethora of restrictions that are out of date or irrelevant today - e.g. cannot put up a TV aerial - but which were never amended.

MyRealNameToo

There historically were some places where it was more common for leasehold houses, there is history to it. They are the exception rather than the rule. Search the whole of London and there are 423 properties for sale listed as leasehold compared to 30,247 flats. Look at Bristol, which has a lower proportion of flats overall and its 955 leasehold flats and 48 houses. Not the strongest methodology but indicative enough. 

Restrictions generally dont become "out of date" or "irrelevant" - some have found to their detriment many years later when a freeholder charges for breaches when they become aware of the breaches. Its one of the reasons people buy these properties with negligible ground rent

kingstreet

rufford155 said:

"The majority of leasehold properties are flats."  -  Really ?
I understand the situation with flats as the building is multi-occupancy.
But it's quite different for leasehold houses where a solicitor will advise you to insure the building even before exchanging contracts.
How can my leaseholder be expected to insure my house when I only pay her £15 a year ?
And the thought that she actually owns my house would be quite scary if I believed it.
I thinks the MSE tip should have made a distinction between flats and houses.

For clarity for future readers;-

You mean your freeholder, you are the leaseholder. "In our previous house we actually purchased the lease." 
You purchased the freehold.

rufford155

kingstreet said:

rufford155 said:

"The majority of leasehold properties are flats."  -  Really ?
I understand the situation with flats as the building is multi-occupancy.
But it's quite different for leasehold houses where a solicitor will advise you to insure the building even before exchanging contracts.
How can my leaseholder be expected to insure my house when I only pay her £15 a year ?
And the thought that she actually owns my house would be quite scary if I believed it.
I thinks the MSE tip should have made a distinction between flats and houses.

For clarity for future readers;-

You mean your freeholder, you are the leaseholder. "In our previous house we actually purchased the lease." 
You purchased the freehold.

Sorry - my mistake !

rufford155

This in today's news from Lancashire

Gill Burnside's house in Burscough caught fire early on Monday morning. Her daughter Jess Burnside was alerted by a neighbour, and said her and her mum had to stand there and watch "the house just burn". Two of her four cats died in the fire.

Gill only had contents insurance and no buildings insurance - and the family said the loss adjustors estimated the damage to the property to be in excess of £80,000.

MyRealNameToo

rufford155 said:

This in today's news from Lancashire

Gill Burnside's house in Burscough caught fire early on Monday morning. Her daughter Jess Burnside was alerted by a neighbour, and said her and her mum had to stand there and watch "the house just burn". Two of her four cats died in the fire.

Gill only had contents insurance and no buildings insurance - and the family said the loss adjustors estimated the damage to the property to be in excess of £80,000.

The BBC article on the story said they did previously have Buildings insurance but they hadn't dealt with it after the death of Mr Burnside which is why they were without. 

Obviously it doesnt say if the house was leasehold or freehold, only that they hadn't bought buildings insurance. 

There are always stories of people sustaining big losses that they arent insured for