Freehold Managers PLC forcing me to buy their insurance?

[NewSAHD]

Not bad going... both in terms of your digging and their commission too!

 

You need to close off any other avenues that they may use to bill you as well. If they have increased the premium following their acquisition of the property from the original developers (which I remember you said was the case) you are likely to find their professional / valuation fees for this have been or will be passed on to you too.

 

This fee is separate from the premium / handling charge, although you may possibly see an argument develop that the 3k includes or was for the insurance revaluation itself.

 

I think from what Andydd has said he has been through this from the point of view of a leaseholder, so it's very interesting to read of his experience too.

 

Finally, the RICS don't do scale fees anymore, but you could call some local Building Surveyors, tell them what your 'policy insured figure' is, and that you are seeking general advice over fees for an insurance revaluation for a block of flats. Ask them if they have experience of this.

 

You will then get an idea of how much local firms who are suitably qualified would charge to carry out an insurance revaluation, without taking up too much time of the Building Surveyors. You then have a better guide to the level of the fee itself too.

 

Just a thought.

Edited November 10, 2009 by NewSAHD

[sir_lancelot1965]

Freehold Managers PLC...lol...where shall I start?

 

This company have tried their damnest to get money for building insurance off my elderly parents for the last 6 years, despite my parents telling them that they had their own buildings insurance....yes, as the landlord (owner of the land), they can ask for a copy of your buildings insurance, but they cannot just issue you with a letter and bill for insuring your property and cetainly not without asking you if you have buildings insurance first and then requsting a copy of said insurance....my mother (father recently deceased) lives in a block of four maisonettes as an owner occupier of one...she has had building insurance since she bought the maisonette over 25 years ago, with the RAC...my parents weren't consulted as to whether or not they had buildings insurance, they were just issued with a bill for a years insurance from Freehold Management PLC, insured with Zurich (ring any bells...lol)...this totalled approximately £126...naturally, my parents responded by letter and kindly told Freehold Managment they wouldnt be paying that, but would continue to pay their £15 chief rent each year to them, as required by law...Freehold managment kept sending threatening letters to my parents asking for the insurance premium to be paid, along with 'administration' costs for late payment....this continued for 6 years, even though my parents got solicitors to point out to Freehold Managment that they didn't have to pay them, as they already had adequate insurance....Freehold Managment told the solicitors they didn't know what they were talking about and even stooped so low as to say my parents didn't own a brick of the property, despite my parents having the deeds to the property saying they did...lol....well the threats went on and the insurance premiums kept adding up for 5 years, until Freehold Managment issued my mother very recently with a court action to try and recoup the money she 'owed' them for 5 years insurance with Zurich, along with administration costs, totalling £7-8 hundred pounds....they even sent her cheque for her annual chief rent of £15 back to her, stating that this was an 'admission' of my mother owing them the insurance money for 5 years that she never asked for and wasn't consulted on....then a slight delay, whilst Newcastle County Court sent a form for my mother to fill in as a prelude to a court appearance in the small claims court....she filled this in and the next day, Freehold Managers sent my mother a letter via their solicitors, instructing her to pay the £15 chief rent owed and the court case would be dropped and the matter ended...lol...we can only conclude that when they knew they weren't going to get a penny off my parents, even after multiple threatening letters and then the threat of court action, they relented, because they knew they wouldn't win in court as they acted outside the law in doing what they did....yes you can get your own buildings insurance, even though you live in a block...I hope this example helps all you good people out there who are trying to be bullied by these low lives in to paying them money for building insurance you never asked for, wasn't consulted on and very likely don't need, as I assume you'll have your own buildings insurance...please please please do not pay them a penny and tell them you'll see them in court...then wait for the spineless backdown...if they were so sure they were right all along and would win in court, why did they back down at the last minute? Yes you got it, because they know they wouldn't win because they are breaking the law by their actions....Hope this gives some comfort and reassurance to you good folks out there who are worrying about what to do when bullied by this cowardly company...farewell and a happy and peaceful life to you all... Sir Lancelot

[andydd]

Sir Lancelot.

 

Interesting, although, ultimately it all comes down to what is in the lease, a lease is likely to say 1 of 3 things...

 

1. That the landlord/freeholder must provide insurance, this will then be billed to you, there is little you can do about this except challange the actual amount via an LVT or take control away from the landlord via buying the freeholder or taking management control via a RTM.

 

2. That you must organise insurance, you are then free to organise your own.

 

3. That you must insure with a landlord-nominated insurer, recent changes in the law have now I believe changed this to make it the same as point 2.

 

There could be a fourth option that there is no mention of insurance, technically you could then not insure, but this could be dangerous and there still may be a condition from your mortgager to insure.

 

Note, even if you do pay for insurance yourself, if your lease has option 1, you will have to pay the landloird for his insurance cost too.

 

Andy

[perubaby]

Unfortunaty most LVT applications related to insurance do fail, this is mainly due to a few precedents being set early on.

 

Important things to note are:-

 

1. You need to prove current quote is unreasonabe and way above other quotes you get.

 

2. There is some sort of commision paid.

 

3. That the landlord didn't shop around.

 

4. Building is over valued and over insured ?

 

Read through other LVT and perhaps apealled Lands Tribunal cases.

 

Andy

 

Hi Andy

 

We have just received a letter from FM demanding our share of the buildings insurance they have taken out, despite already being insured though the managing agents. We have decided to apply to the LVT, but I am interested that many of these fail for he reasons above. How can we prove that they did not shop around? how can we prove there was commisson paid? The quote s much higher than what we previously paid, but because our building is insured along with a number of others I'm not sure how we could prove that FM quote is unreasonable. Any advice you could supply would be gratefully received.

[andydd]

Hi Andy

 

We have just received a letter from FM demanding our share of the buildings insurance they have taken out, despite already being insured though the managing agents. We have decided to apply to the LVT, but I am interested that many of these fail for he reasons above. How can we prove that they did not shop around? how can we prove there was commisson paid? The quote s much higher than what we previously paid, but because our building is insured along with a number of others I'm not sure how we could prove that FM quote is unreasonable. Any advice you could supply would be gratefully received.

 

Well, ask them for info !. They should be able to give you the info you require, they may well refuse to tell you about any commison BUT any LVT may well hold this against them, if they cant prove they did shop arounmd then you can infer that they didnt !

 

Ive attached a spreadsheet list of decisions (local for me) which went in the tenants favour and also deal with 'non-disclosed' commisions, you can search for them on the Lease Advisory and RPTS sites.

Local Insurance Decisions.xls

[Ed999]

My comments apply only if the premises are entirely within England and Wales, and you have a tenancy granted for a term exceeding 21 years, and you were over 18 years of age when you acquired the tenancy.

 

 

Service Charge Law

 

There are numerous laws regarding service charge. Some of the relevent law is contained in sections 18 to 30 of the Landlord and Tenant Act 1985, and in section 166 of the Commonhold and Leasehold Reform Act 2002.

 

Useful websites include the Leasehold Advisory Service and Landlord Zone.

 

 

But much more law is involved than just the 1985 Landlord and Tenant Act. Look at some of the reported decisions on the lease-advice.org website, for example the tables dealing with breaches of the lease - table 6 or table 2 (remember to open the hidden columns with the red link on their page).

 

 

Read this thread: Service Charges dispute - Suggestions

 

Basically, you would have to be refusing to pay the service charge item in dispute on one of the legal grounds mentioned in that thread.

 

 

Costs - Tenant

 

If you win your case in the LVT, it has power, on request, to make an order prohibiting the landlord from adding any of his legal expenses of the LVT case to the service charge. This requires you to make the necessary application for such an order.

 

The problem of legal costs arises mainly in cases where the tenant loses the case.

 

But because the landlord is typically represented by a Solicitor and/or a Barrister, he usually has a better chance of winning than you do, because your inexperience in such claims can lead you into errors.

 

 

Buildings Insurance

 

This type of insurance is a species of legalised theft. You can be sure the landlord is pocketing up to 50% of the premium that you're being asked to pay, as a kick-back for placing the insurance with a particular insurer.

 

The successful challenges to high charges for buildings insurance have been those made on the basis that the landlord is not entitled to profit from the service charge. Where it has been established that the landlord either directly or indirectly receives a payment from either the broker or the insurance company, he has been asked (a) to specify the amount and (b) to justify the payment by detailing what work he does for the money.

 

Attempts to challenge high charges by submitting alternative quotes have proven futile, because it is not possible to get a like-for-like quote when one doesn't have the full details of the broker's original enquiry.

 

Read this thread: Leasehold Buildings Insurance challenge

 

 

 

Leasehold Tribunal

 

To apply to the Leasehold Tribunal (known as the LVT) see http://www.rpts.gov.uk. It's part of the Residential Property Tribunal Service.

 

The list of LVT decisions: Table 2

Edited June 6, 2011 by Ed999

[perubaby]

Thanks for this. I have asked them, but they are giving me the runaround - as they did with the managing agents. The person I spoke to doesn't cover my area, I need to email someone else, the someone else doesn't reply to emails. Presumably this is all evidence that could adversely impact them if it gets to a hearing...

[andydd]

Thanks for this. I have asked them, but they are giving me the runaround - as they did with the managing agents. The person I spoke to doesn't cover my area, I need to email someone else, the someone else doesn't reply to emails. Presumably this is all evidence that could adversely impact them if it gets to a hearing...

 

Well..if you went to an LVT, the tribunal would issue you both with directions, you should then ensure/ask (even perhaps arrange a pre-trial preview) to ask that the directions include some sort of disclosure to include the insurance info you need.Even without the above it would be very foolish of a freeholder/MA to simply turn up with no information.Andyu

[Ed999]

My comments apply only if the premises are entirely within England and Wales, and you have a tenancy granted for a term exceeding 21 years, and you were over 18 years of age when you acquired the tenancy.

 

 

Buildings Insurance

 

Report the overcharging of buildings insurance by the managing agent to The National Fraud Authority, PO Box 64170, London WC1A 9BP.

 

 

This type of insurance is a species of legalised theft. You can be sure the landlord is pocketing up to 50% of the premium that you're being asked to pay, as a kick-back for placing the insurance with a particular insurer.

 

The successful challenges to high charges for buildings insurance have been those made on the basis that the landlord is not entitled to profit from the service charge. Where it has been established that the landlord either directly or indirectly receives a payment from either the broker or the insurance company, he has been asked (a) to specify the amount and (b) to justify the payment by detailing what work he does for the money.

 

Attempts to challenge high charges by submitting alternative quotes have proven futile, because it's not possible to get a like-for-like quote when one doesn't have the full details of the broker's original enquiry.

 

Read this thread: Leasehold Buildings Insurance challenge

 

 

Legal arguments a tenant might use

 

If the landlord argues that the money he receives is for work he does in claims handling, ask him at the hearing:

 

1. Is there any evidence to show that an insurance claim was progressed by the landlord for this property?

 

2. Is there any evidence to show that the landlord or the managing agent have been requested, by the lessees, to progress an insurance claim for this property?

 

If the answer to those questions is no, ask which part of the lease entitles the landlord to a payment for work which he has not done and has not been asked to do?

 

Then draw attention to the provision in the RICS code of management under the insurance section (paragraph 16.2 of the 2007 edition, which you must produce in court). Make the point also that compliance with this code is obligatory.

 

Make the point that the money received by the landlord is far more than the cost of employing someone full time to handle claims; and point out RICS's dislike of percentage-based fees; and point out that the more the landlord charges for insurance the more commision he gets, even if it's for claims handling.

 

 

Like-for-Like cover

 

A very long line of decided cases say that comparative quotations are invalid if they are are not like-for-like.

 

The legal point is: a comparative quotation is not genuinely comparable unless it's for like-for-like cover, i.e. unless it's for identical cover.

 

You might read up on the leading cases. A summary of Berrycroft Management Company Ltd v Sinclair Gardens Investments (Kensington) Ltd [Court of Appeal], and of Forcelux v Sweetman [2001] 2 EGLR 173 [Lands Tribunal] is here (at paragraph 6).

 

 

Berrycroft case

 

IMHO you would be wasting your money in trying to dispute Berrycroft Management Company Ltd v Sinclair Gardens Investments (Kensington) Ltd [1996, CA] in the LVT.

 

That is a Court of Appeal decision, so the Tribunal is absolutely bound by it.

 

 

Forcelux v Sweetman

 

The decision in Forcelux v Sweetman:

 

Forcelux v Sweetman [2001] 2 EGLR 173 (Lands Tribunal)

 

 

Lobby your MP

 

In many cases, challenging the insurance rip-off in the Leasehold tribunal is a waste of time and money, which would be better spent lobbying your MP for a change in the law.

[andydd]

My comments apply only if the premises are entirely within England and Wales, and you have a tenancy granted for a term exceeding 21 years, and you were over 18 years of age when you acquired the tenancy.

 

 

Buildings Insurance

 

Report the overcharging of buildings insurance by the managing agent to The National Fraud Authority, PO Box 64170, London WC1A 9BP.

 

 

This type of insurance is a species of legalised theft. You can be sure the landlord is pocketing up to 50% of the premium that you're being asked to pay, as a kick-back for placing the insurance with a particular insurer.

 

The successful challenges to high charges for buildings insurance have been those made on the basis that the landlord is not entitled to profit from the service charge. Where it has been established that the landlord either directly or indirectly receives a payment from either the broker or the insurance company, he has been asked (a) to specify the amount and (b) to justify the payment by detailing what work he does for the money.

 

Attempts to challenge high charges by submitting alternative quotes have proven futile, because it's not possible to get a like-for-like quote when one doesn't have the full details of the broker's original enquiry.

 

Read this thread: Leasehold Buildings Insurance challenge

 

 

Legal arguments a tenant might use

 

If the landlord argues that the money he receives is for work he does in claims handling, ask him at the hearing:

 

1. Is there any evidence to show that an insurance claim was progressed by the landlord for this property?

 

2. Is there any evidence to show that the landlord or the managing agent have been requested, by the lessees, to progress an insurance claim for this property?

 

If the answer to those questions is no, ask which part of the lease entitles the landlord to a payment for work which he has not done and has not been asked to do?

 

Then draw attention to the provision in the RICS code of management under the insurance section (paragraph 16.2 of the 2007 edition, which you must produce in court). Make the point also that compliance with this code is obligatory.

 

Make the point that the money received by the landlord is far more than the cost of employing someone full time to handle claims; and point out RICS's dislike of percentage-based fees; and point out that the more the landlord charges for insurance the more commision he gets, even if it's for claims handling.

 

 

Like-for-Like cover

 

A very long line of decided cases say that comparative quotations are invalid if they are are not like-for-like.

 

The legal point is: a comparative quotation is not genuinely comparable unless it's for like-for-like cover, i.e. unless it's for identical cover.

 

You might read up on the leading cases. A summary of Berrycroft Management Company Ltd v Sinclair Gardens Investments (Kensington) Ltd [Court of Appeal], and of Forcelux v Sweetman [2001] 2 EGLR 173 [Lands Tribunal] is here (at paragraph 6).

 

 

Berrycroft case

 

IMHO you would be wasting your money in trying to dispute Berrycroft Management Company Ltd v Sinclair Gardens Investments (Kensington) Ltd [1996, CA] in the LVT.

 

That is a Court of Appeal decision, so the Tribunal is absolutely bound by it.

 

 

Forcelux v Sweetman

 

The decision in Forcelux v Sweetman:

 

Forcelux v Sweetman [2001] 2 EGLR 173 (Lands Tribunal)

 

 

Lobby your MP

 

In many cases, challenging the insurance rip-off in the Leasehold tribunal is a waste of time and money, which would be better spent lobbying your MP for a change in the law.

 

LVT's and courts may in theory be bound by cases such as Berrycroft but now increasingly they still do reach different decisions and I have the feeling that many LVT's and courts do find some of the earlier insurance based decisons flawed becuase it would appear that if a LVT did genuinelly follow these early decisions then a landlord is at liberty to charge more or less anything with little anyone can do about it, note that this is what Forcelux are implying in this decision http://www.lease-advice.org/decisions/other/pdf/5894.pdf but the LVT do still reduce the amount deemed payable so challanging your insurance isnt a lost cause and in fact the more challanges there the more LVT's do appear to swing towards the tenant.The Sweetman decision actually links to a different LVT case (but references it), it would appear Sweetman is not avialable online..Ive spent yonks searching, I have a copy though if anyone is interested.

.....................Also note that the above LVT link is from 2004 and would of been bought solely under S19 of the LTA 1985 but since then the scope has widened and S27A LTA 1985 bought into effect which may widen the ability of LVT's to decide 'reasonableness'.Andy

Edited June 8, 2011 by andydd

[Ed999]

I would like to cite here the example of this thread: http://www.consumeractiongroup.co.uk/forum/showthread.php?296513-LVT-Leasehold-Buildings-Insurance-challenge-possibly-one-for-Andydd/page2

 

That deals with the final judgement in a case called Forcelux Ltd v Wilkinson and Scott, decided in the LVT this year.

 

The insurance issues are dealt with in paragraphs 43 to 49 of the judgement.

 

And the judgement is favourable to the tenant, treating the landlord as a trustee and thus as one who may NOT make a secret profit; and attacking the so-called discount paid to the landlord of 18.75% for doing claims handling, as the landlord, not being a firm that is regulated by the Financial Services Authority, is not authorised to do that.

 

The amazing part is that in paragraph 49 the LVT fudges the insurance issue completely, and, giving no reasons whatever, plumps - without any attempt to justify doing so - for the premium amount contained in the comparative quotes obtained by the tenant.

 

Thus, in breach of all the decided cases, it effectively approved the comparative quotes supplied by the tenant - the very thing which the Court of Appeal in Berrycroft had forbidden.

 

So, yes: the LVT is happy to flout the law. In this particular instance, it favoured the tenant. But it nearly ALWAYS flouts the law. And it's a lottery as to whether it sides with the landlord or the tenant in any individual case.

 

This makes a mockery of the leasehold laws. The law is supposed to provide certainty, so that landlords and tenants can know exactly where they stand when they sign a lease. But the LVT has turned the law into a farce, where no one knows where they stand.

 

 

Lobby your MP: http://www.writetothem.com

 

The LVT urgently needs abolishing. We need to return to the former state of affairs, in which the county court decided all cases. The no-costs regime in its small claims division is on a par with the lack of costs awards in the LVT; and the county court judges were far more effective at providing consistency between similar cases. Claims heard in the courts were not a lottery. The system did not used to be a farce.

[bellijayne]

Where I live, we are a converted house in to 4 Flats. 2 have flat roof areas in excess of 30% the problem with any block policy is that unless your actual flat roof is covered and stated on the paperwork of which you have had sight of - you soon won't be. A lot of Co's fail to inform the insurer of this fact which applies to a lot of Flat owners. We took the bull by the horns & insured ourselves as our Leases state the Insurance has to reflect the specific needs of the Property. The biggest one being the flat roof area. We saved over 50% by doing it too. You'll need to identify from when the Insurance runs and then insure 24 Hrs before and be cheeky let the opposition know or your intentions if you can 3 Mths before. Most Insurances are good for 3 Mths, as in the quote. You are a consumer you have the right to source your own Insurance.

[raydetinu]

This is an old thread started in 2009!!!!

[bellijayne]

Yes I know, but people like me who are new are reading these threads all the same. So if someone leaves some new but appropiate and relevant - why not? Has this caused offence?

[andydd]

Nothing wrong with input but many including me will get alerts about new posts added to threads we were watching and it makes it a bit confusing when we visit only to see a new post not really adding anything new tagged onto a old thread (generally it is assumed that threads a few years old will have been resolved, or no longer relevant, etc)..you may like to keep an eye on the Residential and Commercial Lettings/Freehold issues forum and add advice to new threads that appear.

 

It is unlikely that the OP will return top this thread from 4 years ago.

[andydd]

Nothing wrong with input but many including me will get alerts about new posts added to threads we were watching and it makes it a bit confusing when we visit only to see a new post not really adding anything new tagged onto a old thread (generally it is assumed that threads a few years old will have been resolved, or no longer relevant, etc)..you may like to keep an eye on the Residential and Commercial Lettings/Freehold issues forum and add advice to new threads that appear.

 

It is unlikely that the OP will return top this thread from 4 years ago.

[45002]

Nothing wrong with input but many including me will get alerts about new posts added to threads we were watching and it makes it a bit confusing when we visit only to see a new post not really adding anything new tagged onto a old thread (generally it is assumed that threads a few years old will have been resolved, or no longer relevant, etc)..you may like to keep an eye on the Residential and Commercial Lettings/Freehold issues forum and add advice to new threads that appear.

 

It is unlikely that the OP will return top this thread from 4 years ago.

 

 

 

This is an old thread started in 2009!!!!

 

Yes I know, but people like me who are new are reading these threads all the same. So if someone leaves some new but appropriate and relevant - why not? Has this caused offence?

 

 

bellijayne

 

Every time you been "BUMPING" especially old threads up,your pushing the newer threads down and down the page and sometimes off page 1.

 

Some people won't be "subscribe to this thread" checking there Email's for a reply !

 

A lot of newbies to CAG get confused when they can't find there posts...

 

Think of the newbies and people who don't understand forums work

Edited September 26, 2013 by 45002