Who’s responsible for leasehold buildings insurance?
If you own a leasehold flat, you may find that your freeholder has already taken care of buildings insurance for the property. Many freeholders buy buildings insurance themselves, then charge leaseholders a share of the cost through their service charge.
But there’s no guarantee that your freeholder has arranged buildings insurance, so you’ll need to check the lease or have your solicitor check on your behalf. If the freeholder hasn’t arranged cover, you’ll need to get your own buildings insurance.
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 policy. Plus, it will ensure that the whole building is insured and has the same level of cover.
What if I own a leasehold house?
Leasehold houses are uncommon, but if you own one, you’ll usually be responsible for getting buildings insurance. Check the terms of your lease to be sure.
What does buildings insurance cover?
Buildings insurance covers the cost of repairing or rebuilding your home if it’s damaged by:
- storms, floods, fire and explosion
- vandalism and theft
- fallen trees and lamp posts
- frozen or burst pipes
Most leasehold properties are flats so, as well as your flat, buildings insurance should cover parts of the property that you don’t own – like the other flats, the communal areas and any communal gardens.
Want to know exactly what your policy covers? If you’re a leaseholder, you have a right to ask the freeholder if you can see the buildings insurance policy.
What’s not covered by buildings insurance?
Exclusions – what the insurance won’t cover – will be on the terms of the policy. The freeholder must show you a copy if you ask.
Each policy will have its own exclusions but, typically, you won’t be covered for:
- general wear and tear
- damage caused by pets
Pest infestations, poor workmanship and even frost damage might not be included either.
Frequently asked questions
How do I know who is responsible for buildings insurance?
Your lease should clearly spell out who’s responsible for arranging buildings insurance cover and what that cover should include.
The freeholder is usually responsible for buildings insurance, which is typically included as part of the service charge. Your lease will explain how the service charge is organised and what you’ll have to pay.
What if I’ve bought the freehold of my leasehold property?
If you’ve bought the freehold, whether on your own or clubbing together with other residents, you’ll be responsible for buying buildings insurance.
Do I have to have buildings insurance for my leasehold property?
Buildings insurance isn’t a legal requirement, but your mortgage lender will almost certainly insist on it. They’ll probably ask to see the insurance documents to make sure the property is covered.
What to know if you have to buy leasehold buildings insurance
If you find you’re responsible for arranging buildings insurance for your flat – either because the landlord hasn’t done so or because you’ve bought a share of the freehold – there’s a few things you need to know.
- It makes sense to buy buildings insurance with the other residents – that way, there won’t be problems with some parts of the building being covered and some not.
- If you want cover for a block of flats, you may need a valuation survey carried out before you buy buildings insurance.
- If you’re a joint freeholder of a building with flats, you’ll need to make sure your insurance covers the communal areas. The policy should also include liability cover in case someone is injured when they visit the building. And if you and the other freeholders employ anyone to maintain the building – a cleaner, for example – it should include employers’ liability cover.
- You need to make sure you have cover for the rebuild cost of the building, not its market value. Read our guide on how to calculate the rebuild cost of your home.
I’ve received a demand for my share of leasehold buildings insurance. Do I have to pay it?
If buildings insurance is included as part of your service charge, you’ll be expected to pay it.
I think the freeholder is charging me too much for insurance. What are my rights?
If you think you’re being charged over the odds for your buildings insurance, you’re within your rights to ask your freeholder for a copy of the insurance policy. The copy must show how much the building is insured for, the name of the insurance provider and the risks that are covered by the policy.
The freeholder must reply to your written request for a summary of the policy within 21 days – if not, they’re committing an offence and could be fined up to £2,500.
If you’re not happy with the cover and the freeholder isn’t prepared to negotiate, you could choose to take them to a housing tribunal, where an independent judge will decide the outcome.
It might be worth discussing the matter with other leaseholders in the building, as the freeholder might be more readily persuaded by you all acting together.
Where can I get leasehold buildings insurance?
The best way to get the right policy for your needs is to shop around. To compare with us, you just need to provide a few details about yourself and your home, and we’ll find you a range of quotes from UK insurance providers in a matter of minutes.
What other leasehold charges will I need to pay?
If you’re a leaseholder, there’s likely to be other charges you’ll have to pay.
Usually paid monthly, your service charge is designed to cover repairs to the shared areas of the building, any maintenance and improvements, as well as buildings insurance. Your lease will set out exactly how the service charge is organised and should include a breakdown of what you’ll be charged for.
If your building boasts lots of extra features, like lifts, a gym or a 24-hour concierge, you’re likely to pay a higher service charge.
If you’re worried that your service charge is too expensive, you’re perfectly within your rights to ask to see how it’s worked out and spent. You can also ask for receipts.
The freeholder is legally obliged to give you this information – it’s actually a criminal offence if they don’t.
This is a fee you pay to your freeholder as a condition of the lease for the land your home is on. Typically, ground rent can be up to around £400 a year, but it could be more depending on the terms of your lease.
Once you get the demand for ground rent, you must pay it, otherwise your freeholder could take legal action against you.
Reverse or sinking fund
You may need to pay into a reverse or sinking fund as part of your lease. This allows the freeholder to build up a fund to cover the cost of unexpected or expensive repairs, like replacing the lift.
If you move out, you won’t usually be able to get back the money you’ve put in – but check the terms of your lease to be sure.
What other insurance do I need?
If you need to buy both, you might find it cheaper to combine your buildings and contents insurance under one policy. It might also make things easier if you need to make a claim.
What do I need to get a quote?
To get a leasehold buildings insurance quote, we’ll need to know some basic information about your home, such as:
- when it was built
- how many rooms it has
- the rebuild cost.
To help you work out the rebuild cost of your home, there’s a calculator you can use when you compare with us.
From the Home team
“If you haven’t already, it’s worth checking the details of your lease to see if you’re responsible for contributions towards maintaining the communal areas of the building. You’ll need to set up payments for this if you haven’t done so already.”