Leasehold buildings insurance law can seem a little confusing. However, the answer is quite simple and you can normally find the answers in your lease or through your lender or lawyer.
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Generally, if you own a flat in a block then the buildings insurance is the responsibility of the freeholder and you will contribute towards this as part of your service charge.
Alternatively, residents in your block might split the buildings insurance between them. This is common with residents associations or if you own a share of the freehold. Many flats will also now come with a share of the freehold, which means that you collectively will need to make sure that insurance is in place, and that you comply with both sets of obligations – as freeholder and leaseholder.
If the freeholder hasn’t arranged cover, in spite of his or her obligation under leasehold buildings insurance law, you will need to remind them that this is an obligation of the freeholder. If they are slow to respond, it may be a good idea to get your own buildings insurance, even on a temporary basis. Once the freeholder does take insurance, then you can always cancel that policy and get a partial refund. Emerald does not charge any admin fee for cancellations, which we have done to help customers out should circumstances change.
So if you are in that situation, and if there are multiple flats in the building, you may find it’s easier (and possibly cheaper) to club together with the other leaseholders and buy a buildings policy to cover the freehold exposure.
If in doubt you should always check your lease. Generally your solicitor will make you aware of these requirements when you first buy the property. This is important for things like mortages. While buildings insurance is not a legal requirement most lenders require it in order to lend to you because they need to protect their own financial interest in the property.
It can be frustrating for flat owners who have to rely on their freeholders for buildings insurance – which may be uncompetitive and difficult to manage. For that reason, many flat owners will club together to make an offer to buy the freehold, which means that you have total control then of your situation.
However, even if you aren’t the freeholder, you can get details of the insurance by requesting them, and the freeholder must respond under leasehold buildings insurance law. A freeholder must respond to a written request for a summary of the policy within 21 days. The summary must show the sum for which the building is insured, the name of the insurer and the risks covered by the policy. If the freeholder refuses then they are committing an offence and could potentially be liable for a fine of up to £2,500. However, they may charge an admin fee for that work.
As for your obligations as the lease holder, again ask your solicitor for a summary of the lease, as leasehold buildings insurance law can seem quite technical. In general there are several that appear in all leases – do not damage the structure of the building, no partial subletting, payment of annual rent (usually a token sum), payment of service charge, and yes, reimbursement of insurance costs. Other covenants by the leaseholder may include specific easement rights (to a car parking space or bike rack) or something else that is specific to the property.
There are also several good websites that give a summary of lease obligations. Just bear in mind that some of then are for specific properties, so there may be some specifics there that do not apply to your case.The Government has a good site that at least gives you an outline of leasehold buildings insurance law and how a leasehold property is structured, and you can find that page here.
Who is responsible for buildings insurance on a leasehold property?
Most of the time it is the freeholder of the property who is responsible for buildings insurance on a leasehold property. Some exceptions may apply such as if the deed or lease specifically requires leaseholders to arrange their own cover.