Buildings insurance for blocks of flats: what leaseholders need to know.
What buildings insurance actually covers
Buildings insurance covers the structure and communal parts of a block - the roof, external walls, shared plumbing and communal areas - against risks like fire, flood, and structural damage. It's distinct from any contents insurance a leaseholder arranges individually to cover their own belongings and interior fixtures.
Who arranges it, and who pays?
Responsibility for arranging buildings insurance normally sits with the freeholder or, following an RTM claim, the RTM company - usually delivered in practice through a managing agent. The cost is then recovered from leaseholders through the service charge, split according to the terms of individual leases.
Why premiums have risen
Buildings insurance costs across the sector have increased significantly in recent years, driven in part by wider claims trends and, for buildings affected by fire safety defects such as cladding, materially higher risk ratings from insurers. This isn't unique to any one building or managing agent, but it makes transparent, competitively placed cover more important than ever.
Commission transparency, and what's changing
Leaseholders already have a legal right to request a breakdown of any commission earned by a freeholder or managing agent on their building's insurance. Further reform under the Leasehold and Freehold Reform Act 2024 is expected to go further, replacing commissions altogether with clearly defined 'permitted insurance fees' covering only specific, chargeable activities. The exact commencement date for this change has not yet been confirmed by government, so it's a case of watching this space rather than treating it as already in force.
How to query an insurance charge
Start by requesting a breakdown of the premium and any commission or fees included, which a managing agent is obliged to provide on request. If the cost still seems disproportionate, leaseholders can challenge the reasonableness of a service charge, including insurance costs, at the First-tier Tribunal.
Frequently asked questions
Who is responsible for arranging buildings insurance in a block of flats?
Usually the freeholder, or the RTM company where Right to Manage has been exercised, typically delivered in practice by a managing agent. Check your lease for the specific arrangement on your building.
Can I see how much commission is being paid on my building's insurance?
Yes - leaseholders already have the legal right to request this information from their freeholder or managing agent.
Will insurance commissions be banned?
It's the government's stated direction of travel, under the Leasehold and Freehold Reform Act 2024, replacing commissions with defined 'permitted insurance fees'. The commencement date has not yet been formally confirmed.
Questions about your building's insurance arrangement, or want a second opinion on your current cover? Get in touch at hello@fortemproperty.co.uk or 020 3725 6755.