As a leaseholder & landlord in a building which contains 4 flats and a restaurant below, we are being asked by the managing agents to pay building insurance of nearly £11,000. We have contested this exorbitant premium for years - with no success. The problem is apparently the restaurant.
Has anyone any thoughts on this or any comparable premiums?
Many thanks for any input
Is the building’s insurance alone £11000 per flat or for 4 flats + commercial premises? Sounds excessive even if it’s for the flats and commercial premises combined.
No - luckily not per flat! But it’s bad enough for all combined. Any other comparisons?
Book a call with the Leasehold Advisory Service. They are the experts in what managing agents can charge you.
why do you not get a quote for all yourself and see what it is as a comparison. Do not tell the managing agents you are doing this
Thanks for both suggestions.
Yes I’ve used the Leasehold Advisory before - they’re really helpful but not sure if they’d have any idea about this as it’s a commercial issue, not a legal one.
But suggestion of getting quotes ourselves is a good one - presumably via a broker. Shall pursue
Many thanks
I think that the Leasehold Advisory Service would give you an idea of whether it was legal to impose a share of the restaurant insurance on the residential leaseholders.
Thanks David - shall give Lease Advisory a go but when we have asked the insurers previously we get answers such as terrorism (!) - no mention of restaurant, though that obviously raises therisk of fire
The sum you’re paying is out of all proportion for a flat, even a flat above a restaurant. I can only assume that you’re paying a large share of the commercial insurance. I pay around £300 a year for landlords insurance on a 2 bed upper floors maisonette.
I agree - as do the 3 other leaseholders & we’ve disputed it for years with no result. After one of the leaseholders queried the brokers he reported the following:-
“I had a long telephone conversation with the broker in 2020 about the premium. He took me through the risks covered and why it is so expensive. Much of the cost was due to the risk of loss of rent for the commercial and residential properties, should the building be severely damaged. There was also cover for the risk of terrorist damage”
My £964 premium is for a 2-bed room flat, central London. Sadly the managing agents seem untouchable.
Thanks for your input David
I own a flat above commerical premises, there are two blocks, with a total of 20 flats and 7 commerical premises. The managing agent has advised us for the past 5 years or so that its around 10k for buildings and terrorism insurance per year, so although there are a smaller number of flats in your situation, I’m not surprised. Having said that it doesn’t hurt like Colin said to get a quote yourself. I did this to make sure what we pay is fair. You’ll need to know the cost of the rebuild though, your managing agent should know this.
Thanks Carley - interesting to have that comparison. I actually quizzed the broker yesterday & his answers seemed valid - also have a call booked with Lease Advisory so we’ll see…
Loss of rent is only pertinent to the freeholder interest. Leaseholders surely simply cover buildings damage due to insured peril. Please check with property lawyers. Unless sharing such costs were specified in the lease the residential leaseholders should not bear those costs pertaining to one leaseholder being commercial.
But the ‘Commercial Premises’ is in fact a restaurant where there is a very high fire risk.
Thanks for all your thoughts - here is the actual cover pasted in below, no mention of loss of rent. The terrorism premium is itemised separately bringing the total to nearly £11k for the entire building.
Fire, Aircraft, Explosion, Lightning, Riot and Civil Commotion, Malicious Damage, Earthquake, Storm and Tempest, Flood, Burst Pipes, Escape of Oil, Impact, Breakage of Glass, Accidental Damage, Any Other Damage, Property Owners Liability, Theft (GBP400 each and every loss). Escape of Water (GBP2500 each and every loss). Subsidence Heave and Landslip (GBP1500 each and every loss).