Buildings insurance from the Freeholder, 200% increase.
Discussion
The freeholder has decided to get a portfolio wide insurance for his properties, as such the insurance on the building has gone up over 200%.
From £700-800 to over £2400 this year.
The management company have said its due to the benefit of having one policy lumped together, we see it as us subsidising another property somewhere that has subsidence and or high risk renters.
Is this allowed and is there anything we can do about it as naturally the 3 flats are extremely pissed off that on a property that had a re-build cost of £450k, its been insured like its a £1.3 million rebuild cost.
From £700-800 to over £2400 this year.
The management company have said its due to the benefit of having one policy lumped together, we see it as us subsidising another property somewhere that has subsidence and or high risk renters.
Is this allowed and is there anything we can do about it as naturally the 3 flats are extremely pissed off that on a property that had a re-build cost of £450k, its been insured like its a £1.3 million rebuild cost.
This is not going to please you, so sit down and take a deep breath............. but it is possible that your freeholder (or an insurance agency that they own) will be getting a thumping great commission for placing the business with the insurance company. You will almost certainly find the parties wont discuss it. Period. It seems a freeholder can dangle a portfolio of properties in front of an array of potential insurers and see who will give the highest commission for getting the business. There is then no incentive for a freeholder to negotiate the lowest premium...quite the reverse in fact. If you can find out where the other blocks are (they may inadvertently share a schedule with you if you ask for a copy of the policy), do make a note of it - in the future you may be able to bring some pressure to bear if you ALL stridently object. I am not a freeholder but work in a related area and have heard of commissions of 40%!
Otherwise, consider buying your freehold and taking control...however, remember you will need to set up a Company and in my experience everyone generally thinks this is a good idea until a.) you ask for the initial contribution for fees and valuations etc and b.) People realise that a number of you will need to be Directors.....
Incidentally I am trying to track down blocks controlled by a Mrs. Marlen Greenhalgh as executor for her late husband - long shot but if anyone can point me in the right direction that would be great
Otherwise, consider buying your freehold and taking control...however, remember you will need to set up a Company and in my experience everyone generally thinks this is a good idea until a.) you ask for the initial contribution for fees and valuations etc and b.) People realise that a number of you will need to be Directors.....
Incidentally I am trying to track down blocks controlled by a Mrs. Marlen Greenhalgh as executor for her late husband - long shot but if anyone can point me in the right direction that would be great
BMWBen said:
How's that a benefit to you? Tell them you'll take it to the First Tier Tribunal if they don't sort it out pronto...
Also Im looking at it and something similar might have been done last year, I was out of the country at the time so couldnt do anything, can we retrospectively get a refund for this kind of stuff if it has been going on more than just this year?Im all for fair paying of service charges, but this kind of subsidising others is not on.
Du1point8 said:
BMWBen said:
How's that a benefit to you? Tell them you'll take it to the First Tier Tribunal if they don't sort it out pronto...
Also Im looking at it and something similar might have been done last year, I was out of the country at the time so couldn't do anything, can we retrospectively get a refund for this kind of stuff if it has been going on more than just this year?Im all for fair paying of service charges, but this kind of subsidising others is not on.
If there's only 3 flats in this building then my thoughts would be to buy the freehold as soon as possible as well.
Standard Lease hold scam, your hands a tied really unless you go down the "buy the freehold route" sometimes its easy, sometimes the freeholder will fight tooth and nail to hang onto the freehold as you (the lease holders) have become a nice little cash cow.
Their next move will probably be to start increasing maintenance charges or enforcing weird bits of the lease unless you pay them, with ours it was asking for £600 for all the flats that had a Sky dish up. For us the problems all started as soon as a big company brought our freehold, I sold the flat and moved on, someone else's problem now
Their next move will probably be to start increasing maintenance charges or enforcing weird bits of the lease unless you pay them, with ours it was asking for £600 for all the flats that had a Sky dish up. For us the problems all started as soon as a big company brought our freehold, I sold the flat and moved on, someone else's problem now
You need to read your lease, there should be a section that details the responsibility of the "freeholder" and duties of the "leaseholder" in respect of insurance. It almost certainly gives the "freeholder" the right to arrange insurance, I would be astonished if it gave them the right to bundle this property with others for their convenience and then pass the cost on to you.
You can request the schedule of insurance from the management company, they have to supply this within 30 days (I think not responding to this request is a criminal matter!) This allows you to get genuine "like for like" quotes...
https://berniewales.co.uk/ is brilliant if you have long leasehold problems!
You can request the schedule of insurance from the management company, they have to supply this within 30 days (I think not responding to this request is a criminal matter!) This allows you to get genuine "like for like" quotes...
https://berniewales.co.uk/ is brilliant if you have long leasehold problems!
We had a similar issue with our house when we moved in just under 5 years ago - the freeholders were shysters.
Our lease was originally written in 1961, and changed hands a few times. The last freeholders were trying to charge us for all sorts of things that were not in the lease, so we simply refused. They threatened legal action, forfeiture and all sorts of nonsense. We stood our ground for 2 years, then applied to buy under the Commonhold and Leasehold Reform Act 2002.
They offered a hugely inflated sum, we countered with the sum given on the Freehold calculator and offered to take it to tribunal at our cost. We knew that this would set a precedent on the street which the freeholders were keen to avoid, so we reached a figure we were happy with.
If you've been in the house for 2 years or more, I'd recommend buying the freehold just to prevent future problems and make the house more sellable - leasehold houses are getting a bad rep at the moment for shady practices, so we know that we wont have any issues when it comes to selling.
Edit to add - I've just seen that you are in a flat, the process is different, but the principles are similar.
Our lease was originally written in 1961, and changed hands a few times. The last freeholders were trying to charge us for all sorts of things that were not in the lease, so we simply refused. They threatened legal action, forfeiture and all sorts of nonsense. We stood our ground for 2 years, then applied to buy under the Commonhold and Leasehold Reform Act 2002.
They offered a hugely inflated sum, we countered with the sum given on the Freehold calculator and offered to take it to tribunal at our cost. We knew that this would set a precedent on the street which the freeholders were keen to avoid, so we reached a figure we were happy with.
If you've been in the house for 2 years or more, I'd recommend buying the freehold just to prevent future problems and make the house more sellable - leasehold houses are getting a bad rep at the moment for shady practices, so we know that we wont have any issues when it comes to selling.
Edit to add - I've just seen that you are in a flat, the process is different, but the principles are similar.
Edited by S11Steve on Wednesday 27th February 11:58
Losangeles said:
This is not going to please you, so sit down and take a deep breath............. but it is possible that your freeholder (or an insurance agency that they own) will be getting a thumping great commission for placing the business with the insurance company. You will almost certainly find the parties wont discuss it. Period. It seems a freeholder can dangle a portfolio of properties in front of an array of potential insurers and see who will give the highest commission for getting the business. There is then no incentive for a freeholder to negotiate the lowest premium...quite the reverse in fact. If you can find out where the other blocks are (they may inadvertently share a schedule with you if you ask for a copy of the policy), do make a note of it - in the future you may be able to bring some pressure to bear if you ALL stridently object. I am not a freeholder but work in a related area and have heard of commissions of 40%!
Otherwise, consider buying your freehold and taking control...however, remember you will need to set up a Company and in my experience everyone generally thinks this is a good idea until a.) you ask for the initial contribution for fees and valuations etc and b.) People realise that a number of you will need to be Directors.....
Incidentally I am trying to track down blocks controlled by a Mrs. Marlen Greenhalgh as executor for her late husband - long shot but if anyone can point me in the right direction that would be great
The above is the exact reason why as one of four leaseholders we gave our management company the boot, they were on a huge 200% commission. In fact another well known management company own their own insurance brokers, being on a double cut of the cake. Otherwise, consider buying your freehold and taking control...however, remember you will need to set up a Company and in my experience everyone generally thinks this is a good idea until a.) you ask for the initial contribution for fees and valuations etc and b.) People realise that a number of you will need to be Directors.....
Incidentally I am trying to track down blocks controlled by a Mrs. Marlen Greenhalgh as executor for her late husband - long shot but if anyone can point me in the right direction that would be great
Under Section 20 of The Landlord and Tenant Act 1985, a leaseholder can write (must be in writing) to the Management Company and/or requesting a copy of the building insurance documents etc., they then have 21 days to supply a copy of the same. It is a breach under the same Act for that information not to be provided within the stipulated time period.
I use Duedil to search directors/ships of companies, it is surprising what information comes up, with many directors of management companies, also being directors of Insurance Brokers, Window Cleaning, Gardening, Builders, Decorating companies, you get the gist!!!
https://www.duedil.com/
What i should add is once the above building insurance documents are received nothing stops the OP/Leaseholder obtaining their own "like for like" quotes
Edited by Wings on Wednesday 27th February 11:47
Im persuading them to go freehold, in the meantime I have quotes from the same insurance company for £684 for like for like, just different post code (didnt want to flag up it was currently insured) the different post code maybe £100 +- in the cost.
Off to see what the management company say.
Off to see what the management company say.
The Leasehold Advisory Service not only have a very useful web site with lots of info, but also have a free legal telephone helpline.
https://www.lease-advice.org
I am now a Leaseholder and Director of our four flats self Management Company, meaning that since we have controlled our expenditure, monies has now gone into the fabric of the building, communal area etc., rather than some greedy director's pockets.
https://www.lease-advice.org
I am now a Leaseholder and Director of our four flats self Management Company, meaning that since we have controlled our expenditure, monies has now gone into the fabric of the building, communal area etc., rather than some greedy director's pockets.
Wings said:
The Leasehold Advisory Service not only have a very useful web site with lots of info, but also have a free legal telephone helpline.
https://www.lease-advice.org
I am now a Leaseholder and Director of our four flats self Management Company, meaning that since we have controlled our expenditure, monies has now gone into the fabric of the building, communal area etc., rather than some greedy director's pockets.
Can we force at least the RTM?https://www.lease-advice.org
I am now a Leaseholder and Director of our four flats self Management Company, meaning that since we have controlled our expenditure, monies has now gone into the fabric of the building, communal area etc., rather than some greedy director's pockets.
https://www.lease-advice.org/advice-guide/right-ma...
It seems ridiculous the current costs for so little work done on the property?
Yes the leaseholders can, but beware the RTM comes with grave responsibilities, one/you need every leaseholder taking their share of responsibilities. Once you become a director of the management company, you hold the responsibility of the well being of every person entering the communal area.
Apathy is the enemy for leaseholders, and the main reason how management companies are able to get away with ripping off leaseholders.
In my case, I am one director of four of the self management company, and I am the ONLY director that takes any responsibility for arranging building insurance, remedial works, repairs, gardening etc. etc. Whilst i do the gardening, minor repairs, cleaning etc., knowing local roofers, builders etc., i arrange quickly cash competitive repairs.
Since taking on the management company, service charge has remained the same, building insurance premium below what the previous management company were charging, and from being in debt with our bank account, we now have £17k in the bank.
https://arma.org.uk/leaseholders/the-right-to-mana...
Apathy is the enemy for leaseholders, and the main reason how management companies are able to get away with ripping off leaseholders.
In my case, I am one director of four of the self management company, and I am the ONLY director that takes any responsibility for arranging building insurance, remedial works, repairs, gardening etc. etc. Whilst i do the gardening, minor repairs, cleaning etc., knowing local roofers, builders etc., i arrange quickly cash competitive repairs.
Since taking on the management company, service charge has remained the same, building insurance premium below what the previous management company were charging, and from being in debt with our bank account, we now have £17k in the bank.
https://arma.org.uk/leaseholders/the-right-to-mana...
Whilst there is little you can do re the premium as your LL is under no obligation to obtain the lowest premium and can take a commission. In theory the level of any commision needs to be reasonable i.e not 300% but this can be hard to prove.
However you can challenge the reinstatement cost which you have stated has risen greatly. A valuation by a suitably qualified surveyor would establish the correct figure. In addition you can ensure that the insured risks are in accordance with the terms of the lease. Your landlord is obliged to provide details of both of these if requested.
In theory a block policy should see a reduction in the premiums so this could down to an honest mistake on the reinstatement value.
However you can challenge the reinstatement cost which you have stated has risen greatly. A valuation by a suitably qualified surveyor would establish the correct figure. In addition you can ensure that the insured risks are in accordance with the terms of the lease. Your landlord is obliged to provide details of both of these if requested.
In theory a block policy should see a reduction in the premiums so this could down to an honest mistake on the reinstatement value.
The LL and/or the Management Company are required to exercise both openness and transparency, and should always disclose, if requested, either the rate of commission enjoyed, and/or fees the leaseholders are being charged.
Quite easy to prove what commission are being received, since once building insurance documents are received, by using (withholding block no.) those same details and then phoning same insurance company/broker for a like for like quote.
Quite easy to prove what commission are being received, since once building insurance documents are received, by using (withholding block no.) those same details and then phoning same insurance company/broker for a like for like quote.
I have no experience of the resi market but most it is common practice for commercial LL to take a 10% -15 % commission and declare the same. Any more then they are likely to be challenged. However if you are unscrupulous then you could charge a inflated premium and split the profit between the broker or LL and declaring say a 10% premium. It would be almost impossible to prove. There is no obligation for LL to provide details of any broker just a certificate with the name of the insurance company. Even if a quote could be obtained from the same ins company/broker without a full address which is unlikely this would prove nothing as the date of the quote will be different the standing of the freeholder is different for example the premium for an individual property rather a block policy is likely to be higher which are all legitimate reasons for premium to vary. The killer blow is that Ll is under no obligation to make any attempt to obtain the cheapest quote so even if you prove identical cover is available at a lower figure then this has no bearing on the matter.
This is why concentrating on the reinstatement value is likely to be more fruitful.
This is why concentrating on the reinstatement value is likely to be more fruitful.
Edited by nickydee on Wednesday 27th February 23:19
Edited by nickydee on Wednesday 27th February 23:21
Wings said:
The LL and/or the Management Company are required to exercise both openness and transparency, and should always disclose, if requested, either the rate of commission enjoyed, and/or fees the leaseholders are being charged.
Quite easy to prove what commission are being received, since once building insurance documents are received, by using (withholding block no.) those same details and then phoning same insurance company/broker for a like for like quote.
Already did this and its £685 vs £3100 this year.Quite easy to prove what commission are being received, since once building insurance documents are received, by using (withholding block no.) those same details and then phoning same insurance company/broker for a like for like quote.
The insurance company actually said £3100 is ridiculous... thats one of the insurance company staff stating that it should be not that high.
I am not advocating this but it would be interesting to know what would happen if the lessees collectively insured the block for £685 and then refused to pay the insurance fee demanded by the freeholder. He would then have to take you to a tribunal which one cant help feeling he would be reluctant to do.....
Losangeles said:
I am not advocating this but it would be interesting to know what would happen if the lessees collectively insured the block for £685 and then refused to pay the insurance fee demanded by the freeholder. He would then have to take you to a tribunal which one cant help feeling he would be reluctant to do.....
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