Exorbitant Insurance charged by freeholder who may gain commission?
Hi, I own (leasehold) a flat in a block of 30 flats. Each year the freeholder charges each owner for the insurance on the block, each flat being charged one thirtieth.
Over the years the insurance has increased which is reasonable, however it now stands at approx £800pa for each flat. The insurance includes things which we consider not relevant to us: riot and flooding.
While owners have asked the freeholder to gain competitive quotes it seems to us that he has no inclination to do so, as we presume he acts as an agent for this and his other properties, and thus gains commission which he would not wish to reduce.
Is there any way we can seek to encourage/force him to seek better quotes?
Many thanks
Frank
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Member Since August 2016 - Comments: 1190
7:53 AM, 15th May 2020, About 6 years ago
Reply to the comment left by Gary Nock at 14/05/2020 – 18:07An RTM cannot enforce forfeiture only the freeholder can do this. It’s the threat of forfeiture that encourages the leaseholder to pay up, so agreed it very rarely gets as far as forfeiture because the lessee doesn’t want to lose their property. That threat of forfeiture is lost when an RTM is in place making it more difficult to recover unpaid service charges.
Member Since April 2020 - Comments: 159 - Articles: 1
1:28 PM, 15th May 2020, About 6 years ago
Reply to the comment left by Clint at 14/05/2020 – 14:01
“Kick-backs” aren’t allowed, but legitimate commission is. And if the landlord/agent is a member of ARMA, then that commission must be fully disclosed in the annual service charge audit.
And when going to the Tribunal, you need to ensure you’re comparing like with like. It’s always possible to get cheaper quotes – but what does that cheaper quote cover – and how do the excesses compare. Cheap is not always the best. Equally, I agree, £800 per flat may not be the best. It depends on the fine print.
Member Since April 2020 - Comments: 159 - Articles: 1
1:34 PM, 15th May 2020, About 6 years ago
Reply to the comment left by moneymanager at 14/05/2020 – 12:50
If you already have an RTM in place – and your RTMCo has instructed a managing agent – then I think you need to do two things:
1. Get the RTMCo to deal with the insurance – as that forms part of the “management” of the building and that management no longer rests with the freeholder/landlord.
2. Get the managing agent to do their work properly – in particular standing up to the landlord and enforcing the RTM.
Again, go to the Tribunal if the landlord has not relinguished management completely and has not handed over ALL management to the RTMCo.
Member Since July 2013 - Comments: 1266 - Articles: 1
7:51 PM, 15th May 2020, About 6 years ago
You are entitled to a copy of the invoice and to know how much the commission is and to whom it is paid. Start by asking for that.
Member Since October 2016 - Comments: 155
8:30 PM, 15th May 2020, About 6 years ago
Reply to the comment left by BernieW at 15/05/2020 – 13:28
Is there a formal way to request information about commission received?
Member Since April 2020 - Comments: 159 - Articles: 1
2:28 PM, 18th May 2020, About 6 years ago
Reply to the comment left by michaelwgroves at 15/05/2020 – 20:30
It should be shown as part of the Service Charge Accounts, if they comply with TECH 03/11 >https://www.icaew.com/technical/financial-reporting/accounting-for-specific-sectors/service-charges-and-service-charge-accounts