Consultation Notice for Buildings Insurance

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    Consultation Notice for Buildings Insurance

    Does buildings insurance (renewal of) count as an item that a freehold owner is obliged to issue consultation notice to the leaseholders (of which I am one of 5)?
    In recent years it has been around £1,300-£1,500, but this year we have been informed that the amount is £3,000. The insurer has been the same for the last 5 years.

    The reason for the large increase in premium appears to be due to the sums insured amount increasing from £1 to £2m. The insurers will not speak to us to explain, as the policy is in the name of the policy-holder. The market value of the 5 individual properties is c£1m, so £2m cover is illogical.

    The freehold owner has already paid the insurance (in April), and is now demanding an annual service charge (5 x £1,000) and from it will reimburse himself the £2,950. The service charge has not been issued with copy of our statutory rights and obligations.

    In previous years, we have always made a point of paying for the insurance separately (c£250-£300) in April, which is the renewal month, and then paying for annual service charges on their due date which is in June.

    Do we only need to pay £250 for the buildings insurance, ie the cap on items that have not been out through consultation notice? Leaving the freeholder with a shortfall of £1,750 (the difference between 5 x 250 and the full £3,000)

    Previously we have paid the insurance despite being slightly more than £250 because the premium was deemed to be reasonably competitive compared to other leasehold properties that some of us own in a different building (of similar size/age etc).

    Or are we required to pay the £600 each (1/5th of £3,000) and then seek recovery of the £350 'overpayment' (600 - 250) ?

    Thanks to anyone who has some knowledge in this area.





    #2
    You can only claim for the amount of extra cost incurred, i.e could you have got a better case. This is a result of case law . If I remember correctly Daejan investments v.

    Comment


      #3
      Originally posted by scot22 View Post
      You can only claim for the amount of extra cost incurred, i.e could you have got a better case. This is a result of case law . If I remember correctly Daejan investments v.
      Does the £250 cap re consultation notices not apply here then?

      So even though we have not been consulted, we have to pay it all, and then claim back the extra cost above what a fair premium / level of cover would have been?

      What is the process for claiming it back?

      Many thanks

      Comment


        #4
        Are you in a large old house converted to 5 flats in London area ? Or modern purpose built block in provincial town ? What floor size are the flats ?

        Buildings insurance should be based on the "re-instatement cost" ( re-build cost ) calculated by total floor area x building cost per sq metre.or sq ft. The re-build cost is not the total market value.

        If the total market value of 5 flats is £1 Mil , I would expect the re-build cost to be £0.5 Mil or less depending on your location.

        Find a local RICS surveyor working near your building and have a chat to get a rough figure and cost to have it valued for insurance purposes..


        Comment


          #5
          Insurance falls under S20 QLTA, but if contract no more than 12 months then S20 not needed.

          Comment


            #6
            Gordon999,

            Large Grade II Listed building in East Anglia, converted into 3 flats and 2 ground floor shops.
            Floor size of the flats are not big enough compared to the commercial units to meet the collective enfranchisement or RTM criteria - if that was the reason for your question.

            Thank you for clarifying my limited understanding that re-build cost is lower than market value.

            Comment


              #7
              Originally posted by Century View Post
              Insurance falls under S20 QLTA, but if contract no more than 12 months then S20 not needed.
              Does an annual buildings insurance policy that has renewed year on year with the same company count as 'more than 12 months'?

              If so, do we just pay the £250 each, and send a covering letter explaining why.

              Comment


                #8
                If works will cost at least one flat more than 250 then the rules still apply.
                However, too many exploited loopholes to get out of paying a fair bill. Hence the court case when it was decided must prove a loss because consultation not properly carried out.

                Comment


                  #9
                  No you can't just pay £250, you will need to apply to the FTT for a ruling that the insurance is too high but it's a lot of time and effort.
                  You will need to get comparable quotes (not household building quotes from the meerkats) with your full claims history and if it's not exactly the same cover then your freeholder will weasel out of it.
                  If you think it's overinsured then ask the freeholder to get a fresh valuation
                  I've been fighting this on one block for 15 years and finally got premium down from £1100 to £300 but only by taking over as RMC !!

                  Comment


                    #10
                    Not on topic, my cynic wonders how many people benefited from your battle but did b all.

                    Comment


                      #11
                      Originally posted by scot22 View Post
                      Not on topic, my cynic wonders how many people benefited from your battle but did b all.
                      Sort of on topic as OP is one of 5 and I was 1 of 55 - the majority just paid the ludicrous demands and thanked me none !
                      But having 4 flats in the building made the effort worthwhile

                      Comment


                        #12
                        Originally posted by Chester14 View Post
                        Gordon999,

                        Large Grade II Listed building in East Anglia, converted into 3 flats and 2 ground floor shops.
                        Floor size of the flats are not big enough compared to the commercial units to meet the collective enfranchisement or RTM criteria - if that was the reason for your question.

                        Thank you for clarifying my limited understanding that re-build cost is lower than market value.
                        I was not thinking about RTM criteria..

                        If you want to pay less than £3000 for buildings insurance, you need to get a surveyor in your town in east Anglia to calculate the re-build cost .

                        Comment

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