Building Insurance

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    Building Insurance

    The dispute has happened since the change of freehold.

    I was told by my conveyancing solicitor that building insurance is arranged by the Landlord for the common parts only and I must insure the flat myself. My lender also informed building insurance I must take out to hold as a condition of my mortgage. Things went on well for seven years.

    After the change of freehold, an ex-council house ended up as a buy-to-let property, the current freeholder is a developer. Instead of contrition to the common parts (the Reserved Property), the freeholder enforce me to pay a share for the whole building (Reserved Property + Demised Premises=my flat).

    I stress that my liability to pay for insurance is limited to the Reserved Property and asked him to correct his invoices. He doesn't listen and carries on billing. I continued to insure my flat.

    Facing the increase in the bills and the freeholder's harassment, I am thinking to sell the flat. However, I am worrying I may lose out buyers if I sell it with this dispute.

    I understand one insurance policy is better than two, but because of the Lease and my lender's instruction, I don't think I am in a position to do anything. Also, the freeholder's insurance is expensive, it's commercial insurance, eg. policy covers loss of rent.

    I will be very appreciated if anyone in the forum would be able to give advice? Many thanks in advance.

    #2
    One of the drawbacks of leasehold property I'm afraid, check what your lease says and sell up and move on before starting dispute that you will have to declare to any buyer

    Comment


      #3
      I dont agree with section 20z's remarks. Get a local solicitor to write to the freeholder and point out that the lease specifies an arrangement at variance with what they are promoting.

      Comment


        #4
        Originally posted by hexu
        I was told by my conveyancing solicitor that building insurance is arranged by the Landlord for the common parts only and I must insure the flat myself.
        This seems unusual. Does the lease confirm this?

        Leasehold properties that I have owned have been insured by the freeholder. I presumed - rightly or wrongly - that it pretty much had to work this way (e.g. because the property ultimately belongs to the freeholder).
        There is a fine line between irony and stupidity. If I say something absurd please assume that I am being facetious.

        Comment


          #5
          It is not that uncommon, especially in leases originally granted from before about 1967, or granted by reference to a lease from the 50s or early 60s. Typically the lessee would be obligated to have the lessor as joint insured, and the covenant is to insure the demised flat for the full reinstatement value. In many cases but not universally the leases will specify a particular insurer, or the lessor entitled to nominate one, so that the cover is as if there is one master policy, which keeps things simpler if there is a major loss such as a fire affecting a whole bunch of flats. Back in the early 60s conveyancing standards were a lot more lax. Now every tuppeny ha'penny mortgage lender would prefer a landlord's covenant to insure and ask a buyer of a flat held under such a lease to pay a once only premium to cover what it regards as a defective lease. In my experience, with older flats, when there is a fire, damage very often spreads to the one above, as the fire stopping is often inadequate between floors. The fashion for lights cut out of the ceiling exacerbated this as generally people didn't bother fireproofing where they had cut through the ceiling. This is now included, incidentally in the `18th Edition to which resi landlords are supposed to upgrade their electrical installations under the new regs

          Comment


            #6
            Originally posted by Section20z View Post
            One of the drawbacks of leasehold property I'm afraid, check what your lease says and sell up and move on before starting dispute that you will have to declare to any buyer
            Thank you for your suggestion. I want to sell it indeed, but any potential buyers would have to pay building insurance themselves in order to get a mortgage. I am not sure if I am in a position to sell my flat even if I give the money to the freeholder?

            Comment


              #7
              Originally posted by ATC View Post
              I dont agree with section 20z's remarks. Get a local solicitor to write to the freeholder and point out that the lease specifies an arrangement at variance with what they are promoting.
              Thank you for your advice. I would thought the freeholder would suggest a Deed of Variation before sending any of his bills to me, but he didn't.

              I do worry if I agree to make a variation and pay insurance to the developer, the cost of building insurance (commercial) will increase more than double compare to my own insurance (residential). It increases every year.

              Recently he found out that I plan to sell, so guess he won't pay for the variation, but ask me to pay (not to mention he made the mistake and breach the lease). If this is the case, I wonder should I request a deed of variation before I sell the flat or after I receive a offer from a buyer? Many thanks

              Comment


                #8
                Originally posted by doobrey View Post

                This seems unusual. Does the lease confirm this?

                Leasehold properties that I have owned have been insured by the freeholder. I presumed - rightly or wrongly - that it pretty much had to work this way (e.g. because the property ultimately belongs to the freeholder).
                As ATC said, it exists.

                Comment


                  #9
                  ATC,

                  Indeed, it's a Victorian converted flat, more than hundred years old. I would understand the inconvenience of holding more than one policy, but I find it hard to accept the current freeholder's behavior. Instead of a proper discussion, he enforces me to pay items that I am not entitled.

                  I have paid building insurance of my flat for the previous years. Now in order to sell the flat, it seems I get no choice but have to pay off his charges. After all, I didn't do anything wrong, but suffering all this unreasonable costs. It's painful.

                  Comment


                    #10
                    Originally posted by ATC View Post
                    I dont agree with section 20z's remarks. Get a local solicitor to write to the freeholder and point out that the lease specifies an arrangement at variance with what they are promoting.
                    Hi ATC, I seem to misunderstand your point previously. My solicitor has written to the freeholder, but he does not accept our position. His reply is shown as below:

                    "Insurance companies are unable to cover the structure of the building and common parts of the building without taking into account the structure of the flats themselves irrespective of the wording of the Lease."

                    If this is true, then how the former freeholders insured the building? Should I inform my lender?

                    My solicitor suggests me stop corresponding with the current freeholder, he can apply FTT. Problem is the freeholder doesn't apply FTT, but keep sending bills with interests.

                    Any suggestion on this will be very grateful.

                    Comment

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