Leaseholders in the UK are currently engaged in legal action against their landlords over the issue of excessive service charges, particularly with regard to group buildings insurance policies.
Despite having little control over the selection of these policies, leaseholders are required to contribute towards the costs, which have risen significantly since the Grenfell Tower tragedy in 2017, especially for cladded buildings.
According to the FCA, insurance commissions received by brokers for cladded buildings have tripled, while managing agents and freeholders have received more than double.
This, along with the lack of transparency around commissions, has caused great concern among leaseholders.
Through legal challenges, they hope to reform the incentive structure around buildings insurance policies, which they believe are riddled with conflicts of interest.
This has put pressure on property investors, managing agents, insurance companies, and brokers to change their practices.
Leaseholder campaigners estimate that excessive insurance costs for UK blocks of flats total in the hundreds of millions of pounds.
The Financial Conduct Authority has also expressed concern about brokers passing on more than half of the commission to the freeholder or managing agent, which could lead to conflicts of interest.
If you are a leaseholder and concerned about your current arrangements, we are here to provide you with legal advice, guidance, and support. Please don’t hesitate to speak to our team.
