Leaseholders pay the price
Propertymark members reported increasing numbers of managing agents being forced to accept higher insurance premiums or raise significant additional funds for further building works. In both situations, the rising costs are ultimately paid by the residents.
We are deeply concerned that if this trend continues, owning a home in a high-rise building will become prohibitively expensive and remediation works will be delayed as management companies seek financially realistic options. This direction risks undermining the UK Government’s commitment to protect leaseholders from unsafe buildings and from paying the price for safety failures that are not their fault.
Agents placed in impossible position
We are aware of one instance where an insurance company initially raised annual premiums for a portfolio of five blocks from £80,000 to £600,000 and then refused to reduce them even after additional work was done to remediate to a higher standard.
The managing agent had to source funds to cover this 750% increase in insurance costs on top of funding the additional work with no UK Government assistance. There was no choice but to pass these costs to the property owners, many of whom could not afford the increase.
Homes left unsold
Despite positive news in December 2023, when lenders committed to offer mortgages on high-risk properties, many homes have languished on the market since the Building Safety Act 2022 came into force.
In some cases, it was impossible to meet the standards demanded by insurers, in others, leaseholders did not have the resources to go ahead with extra remediation without financial support.
DLUHC has had no impact
Propertymark has briefed officials from the Department for Levelling Up, Housing and Communities (DLUHC) on this issue and they have stated that insurers should not be raising premiums, however, this has so far been ignored by the insurance industry.
We urge the UK Government to explore ways of ensuring that providers are prevented from issuing significantly increased premiums so that leaseholders can be properly protected.
