Do I need to insure my leasehold flat?
02/06/2023
(Last Updated: 29/05/2024)
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2 min read
The Leasehold and Freehold Reform Act 2024 was passed on the 24th May 2024, but is not yet in effect and the date for this is not yet clear. We will update our content as and when the finalised legislation is published.
Some of the expected changes include:
- 990 year standard lease extension for houses and flats
- Standardised format for service charge bills, for greater transparency
- Leaseholders will no longer have to pay their freeholder’s costs when making a claim
- Freeholders who manage their building directly must belong to a redress scheme, so leaseholders can challenge them if needed (already applies to managing agents)
- Ban on sale of leasehold houses, except in specific circumstances and schemes
- Fair and transparent buildings insurance handling fees
- Removal of two year requirement before statutory extension
While the existing act abolishes ground rent on lease extension and new leases, the new act does not cap ground rent on pre-existing leases.
The obligation to insure your leasehold flat for building insurance sits with the freeholder, however, you are liable to pay for your share of the cost for this. The cost is split between all of the leaseholds in the flat and is normally paid annually.
So...do I need to insure my leasehold flat?
Whilst the freeholder organises the buildings insurance, depending on their policy, there are parts of your leasehold which you still need to insure such as your personal possessions or internal damage.
Some building insurance policies don't cover all of your leasehold flat, as the policy covers damage to the building not to what is fixed to it. For example:
Does the insurance cover a bathe overflowing?
Covered by building insurance
|
Not covered by building insurance
|
|
|
The above table is just an indication and you should read the inclusions and exclusions contained within the Building Insurance policy for your own leasehold flat.
Get a copy of your building insurance
You need to know what your building insurance covers and what is excluded. During the conveyancing, you need to get a copy of the policy and read through it. You solicitor should request a copy from the seller's solicitor.
If you already live in the property, then you can ask your freeholder/managing agent to provide you with the current policy and then you can decide what insurance you need for a leasehold flat.
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