Freehold Managers PLC forcing me to buy their insurance?

[kano]

Hi,

I live in a maisonette of 4 flats. About 5 years ago I got a letter from Freehold Managers PLC saying they were to start insuring all four flats under a block agreement and they required approx £115 from me for this. I already had my adequate insurance so I wrote back saying I did not want their insurance as I had my own and that I had no intention of paying.

 

They subsequently insured me for another 2 years up till 2007 without my authorisation, and have frequently sent demanding letters requesting immediate payment, which I have ignored.

 

Now apparently I owe them over £420 which I have 7 days to pay or they will take me to court. Is this a bluff? My neighbours have taken advice from local solicitors and they tell me to ignore the demands, but I'm concerned.

 

I know Freehold Managers PLC are not a particularly ethical company to deal with, but can they get away with this?

 

Any advice would be gratefully recieved!

[Kentish Lass]

Who is actually your freeholder or managing agent? Why did they decide to go with this particular insurer? (Is it a management company that gets a kick back (oops, I mean a commission)??)

 

By the way, it is quite normal for blocks of apartments to be insured as one building and the cost divided amongst the leaseholders - but if you think any charges are unfair you can object.

[kano]

The company is actually called "Freehold Managers PLC".

 

Have done a bit more searching and apparently I had the right to opt out of their insurance scheme and provide them with details of my own insurer. However they never gave me this option and just automatically enrolled me into their insurance scheme which is out of order.

 

Yeah I guess they will be making a nice little 10% on the side from Zurich! Strange that they only starting enforcing the insurance clause in the lease 5 years ago - I guess they smelled a nice few £££ to be made on the side.

 

Anyway, a strongly worded letter will be winging its way to them on Monday morning telling them to stuff their county court claim where the sun does't shine!

[trickyfoxy]

:sad:Hi,

 

I am having the exact same problem as you with Freehold managers plc

 

Have you managed to resolve the problem?

[kano]

Hi,

 

Don't worry about their threat letters demanding payment within 7 days or face legal action.

 

I didn't respond to their last threat letter which I received over a month ago and surprise surprise, nothing has materialised.

 

After I got the letter I decided to make a file of all of their letters I had received, I'd kept them all but they were scattered in various folders. I subsequently found exactly the same letter threatening legal action (which I also had ignored) from 2007!

 

I wrote to some sort of ombudsman (can't remember the name) and their response was basically that it depends on your lease. Tomorrow I'll post their full reply.

 

HOWEVER.. Today the old lady downstairs rang me and said that she'd received a different letter from some sort of legal firm. I'm not sure of the exact nature of the letter, but she said she'll be going to see her solicitor about it on Monday. Whether its another bull5hit letter or not I don't know.

 

Personally I'm in the clear, because during the insurance dates they specified on their threat letter I wasn't actually the legal owner of the property, it was owned by my late father. I later bought the property from his estate. So if they want their cash they can visit the local cemetery and ask for it there!

 

I wouldn't worry too much about it. Their argument is that your lease says you should be insured in a block. Your lease doesn't say that your ground rent collector should provide the insurance, you CAN get your own. Just like the law says you have to be insured to drive a car, you don't have to get your insurance from the government!

[kano]

It was the leasehold advisory service I contacted. Their reply:

 

Thank you for your enquiry. I urge you to check your lease to determine whether the lease places an obligation on the landlord to insure the building and places an obligation on you to pay the costs incurred by the landlord in insuring your property. If such a clause exists in your lease then the landlord will have a contractual duty to insure your property and in turn you will have a contractual obligation to pay the landlord service charge in respect of the insurance. If you do not have a copy of the lease, you can get a copy from the Land Registry.

 

Please follow the link to our on-line booklet on service charges for a more detailed explanation of your rights on this issue Welcome to the Leasehold Advisory Service;

[NewSAHD]

Hi, until you've checked your lease no-one can really comment further. Please post a copy of the relevant paragraph(s) from your lease, but if you need more help please post a message here too

 

As for the other three neighbours do you know if they are owner occupiers or tenants - and whether or not they have been paying? Curiosity as much as anything, don't worry if you don't know

 

Also, although you may not have owned the property when the charges first fell due you could still be liable for the earlier charges all the same. The debt can often run with the lease, not the owner, so new owners end of paying a previous owners debts Also depends what was said at time of sale. Who acted for you at time of sale and do you still have the paperwork?

 

I'd suggest quickly deal with the lease/liability for insurance first and then liability for earlier charges after

[rocket99]

Hi

I am also being ripped off by Freehold Managers. You may not know this but they get a kick back (I think ) from the Broker BUT!!!! of note is the

up 50% added on admin charge that thet do not tell you about

 

We are going to try new approach by asking OVAL the broker to bill us directly ( with no add on charge ) we have told them that we will not pay unless they send us the bill directly.

 

Any one else tried this

[NewSAHD]

First, check your lease

 

You first need to know who has responsibility for insurance, you, or your Freeholder. This will help decide which steps you should then take. Any problems with this please post a message here

 

Have a look at The Leasehold Advisory Service - Wizard too

 

What is the renewal date of the policy too please, so that we may gauge how much time we have to help you here

 

Also, see if you already have a copy of the existing policy/summary of cover

 

(You should have it, but it is not uncommon to find it has not been sent to you in more recent times. If you purchased your home recently it should be amongst the papers obtained at time of sale though. Alternatively, speak to any new neighbours, if you have any, they might be able to help and it could save some time. Whatever, get a copy of it)

 

You should also consider having OTHER brokers give you a quote on a like for like basis, aside from O***

 

And, yes, commissions are not uncommon and cheaper insurances can be found elsewhere, so, do your homework, you may well find you can get (much) better deals elsewhere

Edited October 31, 2009 by NewSAHD

[raydetinu]

If you are not happy with the Agents/service chargers etc. you can manage the building yourselves as group of tenants; due to the leasehold reform act. just get together, providing most of you agree. then off you go. The LL cannot stop you from doing that.

[andydd]

Hi

I am also being ripped off by Freehold Managers. You may not know this but they get a kick back (I think ) from the Broker BUT!!!! of note is the

up 50% added on admin charge that thet do not tell you about

 

We are going to try new approach by asking OVAL the broker to bill us directly ( with no add on charge ) we have told them that we will not pay unless they send us the bill directly.

 

Any one else tried this

 

If your lease says that the landlord must arrange the insurance then there is little you can do, refusing to pay could land you in trouble, with house repossion a possibilty.

 

You need to read your lease carefully, also you can apply to LVT and say the insurance cost is 'unreasonable'.

 

It is unlikely that the broker can bill you directly as most insurance of this sort is done on a block policy.

 

Heres suggested reading:-

 

Landlord & Tenant Act 1985

Commonhold & Leasehold reform act 2002

 

Also visit the Leasehold Advisory Site, go through past LVT decisions will give you an idea of problems other people have had.

 

Also try Landlord Zone forum for expert help.

 

 

 

Andy

[andydd]

If you are not happy with the Agents/service chargers etc. you can manage the building yourselves as group of tenants; due to the leasehold reform act. just get together, providing most of you agree. then off you go. The LL cannot stop you from doing that.

 

Yep..RTM (Right To Manage) or RTE (Right To Enfranchise), RTE means you buy the land as well.

 

Both mean you take over the management running.

 

Andy

[NewSAHD]

If you are not happy with the Agents/service chargers etc. you can manage the building yourselves as group of tenants; due to the leasehold reform act. just get together, providing most of you agree. then off you go. The LL cannot stop you from doing that.

 

Agreed, to a degree, but be really careful as to what you take on. There really is more to it than just arranging insurance. Well, sometimes

 

Unless the block is really small, it's often best to get a relatively decent Agent working for you for a reasonable fee

 

Lots of Agents out there seeking work, the better ones can provide testimonials/let you see/speak with blocks they already manage

[andydd]

Agreed, to a degree, but be really careful as to what you take on. There really is more to it than just arranging insurance. Well, sometimes

 

Unless the block is really small, it's often best to get a relatively decent Agent working for you for a reasonable fee

 

Lots of Agents out there seeking work, the better ones can provide testimonials/let you see/speak with blocks they already manage

 

I second that, Its something ive looked into but bear in mind that you can end up being the person running the RTM company, chasing other flatowners who don't pay, arranging repairs, etc

 

If you are relatively happen with your current situation it may be worth sticking with that, bearing in mind an LVT can rule on what is reasonable or not.

 

There have been many new laws that have come into effect over the last few years that provide leaseholders with many new powers.

 

Andy

[rocket99]

Hi

Back to Freehold Managers. FM are landlords and not management agents. I have had a look in the lease and they do have the right to purchase our insurance BUT!!!! "we have a legal right to be consulted and for our approval to sought for all major items ie insurance"

( Section 20 Landlord and tenant act 1985 )

 

My aproach was to get quotes from othe brokers and then write and tell FM that we do not approve of their choice and insist on ours. This must be done well in advance and made clear in writing that we will not pay for what we do not approve

 

Will this work ???

[andydd]

Hi

Back to Freehold Managers. FM are landlords and not management agents. I have had a look in the lease and they do have the right to purchase our insurance BUT!!!! "we have a legal right to be consulted and for our approval to sought for all major items ie insurance"

( Section 20 Landlord and tenant act 1985 )

 

My aproach was to get quotes from othe brokers and then write and tell FM that we do not approve of their choice and insist on ours. This must be done well in advance and made clear in writing that we will not pay for what we do not approve

 

Will this work ???

 

HHmm..Section 20 normally refers to one-off items, such as major building works, (i.e. They have to write to you and say what is proposed and put forward contractors, etc). You can then write back and make observations, put forward your choice of contractor, etc.

 

It can cover other things apart from building works, this is termed as a 'long term agreement', but the law quotes “qualifying long term agreement” means (subject to subsection (3)) an agreement

entered into, by or on behalf of the landlord or a superior landlord, for a term of more than twelve months." I dont think insurance would qualify as it wouldnt be more than 12 months at a time, I certainly havn't seen section 20 mentioned in reference to anything else other than building works.

 

Even so the law says the landlord must " have regard to observations made by tenants or the recognised tenants’ association

in relation to proposed works or agreements and estimates". The 'have regard' bit means that they can read your suggestions but ultimately can just ignore them.

 

If its clear that the only option in your lease is to let the landlord insure the property all is not lost, it means an application to the LVT, you can apply yourself or ultimately the landlord will have to if he wants to get money from you.

 

I'm in same situation as you, my insurance has rocketed, heres my ideas:-

 

Firstly write to your landlord and ask for the insurance details, also ask about alternative companies he approached, did he shop around to get a better deal ?. also ask about any commision he gets from brokers (he may not answer, but at least youve asked!).

 

Get alternative quotes, they must be specialist quotes for the whole building, not just your flat, but the whole building, (i.e my single flat is 1 of 2 in a building, so i got insurance quotes for the whole building).

 

In an LVT court the landlord must show that the insurance was 'reasonably incurred', this doesnt mean the cheapest but he should show that he made at least some attempt at shopping around, after all its your money he is spending.

 

You may like to look at this LVT case, It's of interest to me as its same landlord and situation seems almost identical to me, you'll see that ultimately the landlord won, but only just.

 

http://www.rpts.gov.uk/Files/2009/April/10001GEQ.pdf

 

Andy

[rocket99]

This is not what I wanted to hear. Has anyone took on Freehold Managers and won. By the way it is not the choice of insurer that is the main problem

 

It is the 5 K that they add on to our 10 K policy . By shopping around we may get insurance for 8K

[NewSAHD]

Hi, again

 

A few extra comments to add to andydd's helpful post

 

You've checked your lease, if you are certain it's the Freeholder's responsibility - and copy the relevant section of the lease to the forum if you're uncertain - then please advise:

 

a) How many flats in your block?

 

b) Are you in touch with the other flat owners? How many are owner occupied, or sub-let?

 

c) What is the renewal date of the policy?

 

d) What has the claims history been like for your block?

 

e) Do you have a copy of the current policy/summary of cover?

 

f) Do you have copies of earlier policy insurance documents? If not, do you have copies of earlier Year End accounts i.e. you can check what you / the other flat owners have paid for insurance over the years

 

g) It is not unheard of to get the Freeholder's insurer to give a quote direct too, with surprising (?) results , but you need to do a little homework first

 

Section 20 catches out both Freeholder/Agent managed and self-governed blocks alike. Insurance could be a 'Qualifying long term agreement', so it might be that you would need to be consulted, but there are ways of avoiding consulting with flat owners. We can come back to this later if needs be, plus there is much to read at The Leasehold Advisory Service - Publications if you really want

 

What we should be looking at here, instead, is for you is to better negotiate a better deal for your insurance, either with Freehold Managers direct, or, if you feel it is right, through the LVT (Leasehold Valuation Tribunal)

 

As andydd correctly says it doesn't have to be the cheapest quote, but it DOES have to be reasonable. It's your money after all!

 

Hope this helps, post if you need more information

Edited October 29, 2009 by NewSAHD

[andydd]

This is not what I wanted to hear. Has anyone took on Freehold Managers and won. By the way it is not the choice of insurer that is the main problem

 

It is the 5 K that they add on to our 10 K policy . By shopping around we may get insurance for 8K

 

Plenty of people win at LVT (or after standing up to their landlord they find they become more reasonable), try having a browse through for similar cases, its quite interesting.

 

Heres the links...

 

The Leasehold Advisory Service - LVT Decisions

 

Residential Property Tribunal Service: Decisions

 

(Choose LVT and area)

 

Its time consuming to go through them but Ive learnt a lot by having a browse now and again.

 

Unfortunatlely winning against insurance cases is a bit rarer than other causes but it does happen, you have to show that the amount you are paying is totally unreasonable and way above the other quotes also showing that the landlord didnt shop around much is important.

 

In my case I eventually found out that they approached a few companies but only one quoted, my arguement will be that they are in effect a monopoly and can charge what they like, this by its very nature is 'unreasonable' especially on top of the comments made in the other LVT case I linked above where the LVT did make it clear that the landlord is teetering on the edge of 'reasonableness'.

 

A few other points..you mention paying insurance for 2 years, this is more than 12 months clearly so the section 20 about long term agreements may come into effect.

 

As for taking you to court it may be worth letting them proceed with this..the way it works is, the (COUNTY) court will see its a service charge issue and refer it to an LVT court (LVT's are designed to be low cost informal courts so not as scary).

 

BUT one thing worth checking is any wording in your lease regarding wether they can claim back their costs against you (sometimes leases have this clause, sometimes not) although you can apply to an LVt to disallow it anyway.

 

Have you got any letters regarding court action you could scan and post here and also a copy of your lease (or the important parts).

 

Andy

[andydd]

Hi, again

 

A few extra comments to add to andydd's helpful post

 

You've checked your lease, if you are certain it's the Freeholder's responsibility - and copy the relevant section of the lease to the forum if you're uncertain - then please advise:

 

a) How many flats in your block?

 

b) Are you in touch with the other flat owners? How many are owner occupied, or sub-let?

 

c) What is the renewal date of the policy?

 

d) What has the claims history been like for your block?

 

e) Do you have a copy of the current policy/summary of cover?

 

f) Do you have copies of earlier policy insurance documents? If not, do you have copies of earlier Year End accounts i.e. you can check what you / the other flat owners have paid for insurance over the years

 

g) It is not unheard of to get the Freeholder's insurer to give you a quote direct, with surprising results!, but you need to do your homework first

 

Section 20 catches out both Freeholder/Agent managed and self-governed blocks alike. What I'm aiming for here, instead, is for you is to better negotiate a better deal for your insurance, either with Freehold Managers direct, or, if you feel it is right, through the LVT (Leasehold Valuation Tribunal)

 

As andydd correctly says it doesn't have to be the cheapest quote, but it DOES have to be reasonable. It's your money after all!

 

Hope this helps, post if you need more information

 

 

The trouble with d) is that your flat/block./building may have no claims (like mine) BUT it will often be lumped in on a block policy with bad/high risk properties which bump up the cost for everyone. If you read the LVT case I posted, you'll see that this happens with my landlord.

 

Landlords will say that individually insuring properties is a time consuming pain for them, but my arguement will be that they shouls at least sub-divide them into area or at least high/low risk.

 

Andy

[NewSAHD]

I was editing my post to add

 

Section 20 catches out both Freeholder/Agent managed and self-governed blocks alike. Insurance could be a 'Qualifying long term agreement', so it might be that you would need to be consulted, but there are ways of avoiding consulting with flat owners. We can come back to this later if needs be, plus there is much to read at The Leasehold Advisory Service - Publications if you really want

 

and see Andy has posted further information for you too. It must be a subject close to us!

 

Let us know about d) though as Agents are very likely to use this to counter your arguments/alternative quotes, so it best that you/us are prepared

Edited October 29, 2009 by NewSAHD

[andydd]

I was editing my post to add

 

Section 20 catches out both Freeholder/Agent managed and self-governed blocks alike. Insurance could be a 'Qualifying long term agreement', so it might be that you would need to be consulted, but there are ways of avoiding consulting with flat owners. We can come back to this later if needs be, plus there is much to read at The Leasehold Advisory Service - Publications if you really want

 

and see Andy has posted further information for you too. It must be a subject close to us!

 

Let us know about d) though as Agents are very likely to use this to counter your arguments/alternative quotes, so it best that you/us are prepared

 

Ha..yes..very close.

 

Ive been paying ever increasing sums for over 10 years and have been threatened with court action many times but my building society has stepped in and paid (and added it to the mortgage).

 

In recent years I've wised up to the laws and regs and stood upto them, it turns out Ive been paying in adavance when there is no clause in my lease to do so. This has lead to added charges and interest (again not in my lease).

 

They have also been charging me the wrong amount of ground rent.

 

The sums above come to approx £1500 I have overpaid.

 

On top of this it is questionable they have sent valid demands for service charge and grount rent (not complying to new Commonhold 2002 Laws), I also think I have grounds to question insurance and accounts fees.

 

So I'm prepared for a big battle but oddly since questioning them, my landlord has gone very quiet, they have not asked for any money for over a year now

 

Andy

[NewSAHD]

Ha..yes..very close.

 

Ive been paying ever increasing sums for over 10 years and have been threatened with court action many times but my building society has stepped in and paid (and added it to the mortgage).

 

In recent years I've wised up to the laws and regs and stood upto them, it turns out Ive been paying in adavance when there is no clause in my lease to do so. This has lead to added charges and interest (again not in my lease).

 

They have also been charging me the wrong amount of ground rent.

 

The sums above come to approx £1500 I have overpaid.

 

On top of this it is questionable they have sent valid demands for service charge and grount rent (not complying to new Commonhold 2002 Laws), I also think I have grounds to question insurance and accounts fees.

 

So I'm prepared for a big battle but oddly since questioning them, my landlord has gone very quiet, they have not asked for any money for over a year now

 

Andy

 

Sorry to hear of your experience, guess you know it's not uncommon

 

Ground Rent overpayment 'should' be easily resolved, but if they are not replying then no doubt you're putting the correct amount aside for now (adjusted to take account the overpayment!) in anticipation of them finally getting around to sending you the correct demands

 

Demands? There is a prescribed form of words that has to be used for both Service Charges and Ground Rents. Even though these are relatively easy to obtain Agents still get it wrong. Post/email me if you want to check what you've received is correct, I'll be happy to have a look

 

Doesn't mean your Agent won't get around to it, but it does mean you can slow matters down if you want. Plus there are often time limits as to when they can raise charges

 

Insurance, I'm guessing you pretty much know what's needed now, as for accounts there are only the two flats in your block, so any costs incurred cannot (sorry, should not) be very much at all

 

rocket99, sorry, kind of taken over your thread, but let us know how you get on too

Edited October 31, 2009 by NewSAHD

[rocket99]

Thanks for the help

There are 37 flats and I have contacted them all and told them not to pay Freehold Managers ( no matter how threatning a letter they get )

I have told FM to send one invoice for the total bill to our management company. We will pay them in full for the insurance but will "talk about"

any admin charges Last year it was 5K on top of a 10K policy Nice work if you can get it for just one phone call and sending out 37 invoices

 

Out policy is due for renewal in March and I have some details of the policy see below. Our main problem is the very high admin charge that FM do not tell us about and refuse to answer my questions about. I have had to do a lot of detective work figure this out

 

Dear Mr Bradley

Further to correspondence yesterday and as advised I am back in the office and I have now looked into the queries raised.

The difference and changes in premium is down to the change in sum insured following valuation and the record of premiums and changes are as follows:-

Period Sum Insured Buildings premium Terrorism Premium

2007 - 08 £3,314,830 £6,265.03 £1,447.92

2008 - 09 £3,580,016 £6,766.23 £1,563.75

2008 - 09 £2,706,234 + £5,114.78 £1,182.08) additional premium following increase of S/I due to revaluation

2009 - 10 £6,669,711 £12,605.75 £2,913.33

2009 - 10 £6,669,711 - £5,427.48 reduction of premium due to insurer re rating following near doubling of S/I

It is clear following the revaluation that the property was severely underinsured. The freeholders policy has several covers not normally found on standard property policies one of which is the ‘deletion of average clause without condition’. This cover extension would definitely have been of benefit had there been a large loss. Normally in cases where there is underinsurance any claims payments are reduced by the percentage difference.

In the case of Behrens Warehouse, had there been total loss without the deletion of average benefit the insurers, then the insurers could have reduced the payout from and already underinsured £3,580,016 by £1,539,406.

With the property correctly insured the insurers one being asked to re-look at the rating agreed a reduction was suitable as there had been a fundamental change of insured risk hence the premium reduction.

I hope the above makes sense and answers & allays any concerns over premium.

Kind regards

Alasdair

[andydd]

 

Demands? There is a prescribed form of words that has to be used for both Service Charges and Ground Rents. Even though these are relatively easy to obtain Agents still get it wrong. Post/email me if you want to check what you've received is correct, I'll be happy to have a look

 

 

My demand stuff is rather confusing, its more to do with the time when it was received and the 18 month limit as oppossed to the actual documentation.

 

Its posted at:-

 

Notice to accompany demands for service charges - LandlordZONE Forums

 

If you want to get totally confused.Ha

 

Andy