Can the freeholder control the insurance cover if we can find a cheaper quote

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    Can the freeholder control the insurance cover if we can find a cheaper quote

    We are 4 leaseholders of a block of flats. We have found a much cheaper insurance than the one the freeholder supplies (£900 a year cheaper). However the freeholder refuses to consider any insurance quote that we submit as they say that 2 of the flats are sublet. They mean by this that 2 of the properties are let out by their owners. They consider this sub-letting and therefore it is almost impossible for us to find an insurance company that will cover this. Can they really call this sub-letting and will this still be a problem if we go for RTM.

    #2
    That IS sub-letting! What did you think it meant.

    If you get a very big difference in quotes it probably means you didn't tell the broker all the relevant facts.

    Comment


      #3
      One possibility, although it may not be popular with the buy to let landlords here, is that there is a clause in the lease about doing anything that increases the insurance. The freeholder may just be able to get the sub-;letters to cough up £450 each, assuming that is the only detail you missed out, but I think they will object, strongly.

      Comment


        #4
        Thanks for the info. I think we may need to take legal advice

        Comment


          #5
          Yes. A leaseholder that rents out their flat is 'subletting' their flat. That is exactly what the term 'sublet' means.

          It would seem that your freeholder's insurance premium is more costly because it more accurately reflects the claims history and occupancy of the building.

          It is crucial that an insurer is given an accurate picture of both these things. Failure to specify these things could result in the insurance policy being voided and/or leaseholders having to finance the shortfall of any insurance policy payout.

          You state that you yourself have found it almost impossible to obtain quotes for a block of flats that contains sublets. This does not surprise me at all because the occupancy of a building can have the following impact on the insurance policy premium:
          1. Owner occupied flats = least expensive and standard costs
          2. Sublet flats = more expensive. Most insurers will charge more when there are sublets in the mix. This is because insurers suppose that tenants are less mindful than owner occupiers
          3. Flats used as holiday/second homes = very expensive and some insurers will not offer cover at all when there are holiday/second homes in the mix. This is because insurers suppose that these properties can go unoccupied for long periods of time. The leaseholder might be in occupation every weekend or only one week a year!
          A freeholder is not obliged to elect the cheapest buildings insurance premium. A freeholder is only obliged to elect the buildings insurance policy which best covers the building, in accordance with the lease provisions.

          If and when you obtain RTM status, your RTM Company will be obliged to obtain a buildings insurance policy which accurately reflects the claims history and occupancy of the building. In doing so, you would be expected to secure a policy which best covers the building, in accordance with the lease provisions. Obtaining RTM status does not mean that you can ignore the leases ....

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