Buildings Insurance for UK Flats and Houses: What Buyers and Landlords Should Check

The Short Answer

If you buy a freehold house, you arrange buildings insurance yourself and it must be in place from exchange of contracts, because from that moment the risk usually passes to you. If you buy a leasehold flat, the freeholder or the managing agent normally insures the whole building and recharges the cost to flat owners through the service charge or as a separate insurance charge. You then arrange contents cover for your own belongings.

Ask your conveyancing solicitor to confirm who is responsible for insurance in your specific case, and when cover must start. Do not rely on a general rule.

Freehold Houses

For a freehold house you choose the insurer. Your mortgage lender will usually require the building to be insured for its full rebuild cost, not its market price, and may need to be noted on the policy. The rebuild cost is the cost of rebuilding the property from scratch, and it can be quite different from what you paid.

• Ask your solicitor when the cover must start. It is often the date contracts are exchanged.
• Use a rebuild cost estimate rather than the purchase price.
• Check the excess and any exclusions for flood, subsidence or an unoccupied property.
• If the property is let, make sure the policy is suitable for a rented home.

Leasehold Flats

For a leasehold flat, the lease sets out who insures the building. In most cases the landlord arranges a block policy and charges flat owners their share. Our guide to freehold, leasehold and share of freehold explains how these tenures differ. Ask the seller's solicitor for the insurance details and the latest charge, and check it for sudden increases.

Rules about how landlords must pass on the cost, and what you can ask to see, have been changing. Ask your solicitor to confirm the current position for your flat.

Shared Ownership of Risk: Reserve Funds

Insurance deals with sudden damage. Planned repairs and replacement of items such as lifts and roofs are normally paid for through a separate reserve. We cover this in reserve and sinking funds in UK leasehold blocks. When you read the service charge accounts, look at both the insurance cost and the reserve.

What to Check Before You Buy

• Who insures? The lease and the sellers' pack should say.
• What is the cost? Ask for the last few years of insurance charges for a flat.
• Is the cover adequate? For a block, ask for the policy summary and the sum insured.
• Any claims history? Repeated claims for water or fire can point to maintenance problems.
• Any unusual features? Cladding, flat roofs and older wiring may affect cover and price. Your survey should flag these.
• Is it a listed or older building? Rebuild costs and insurer choice can differ.

If You Are an Overseas Buyer or Landlord

Insurers may ask where you live and whether the property will be let. If a tenant will live there, say so, because a policy written for an owner-occupied home may not respond to a claim on a rented one. A letting agent or your solicitor can help you check this. Also keep your own contact details up to date so notices from the insurer or managing agent reach you.

Common Mistakes

• Insuring for the purchase price instead of the rebuild cost.
• Missing the start date. Cover may need to begin before completion.
• Not telling the insurer the property is let.
• Ignoring a large rise in the flat's insurance charge. Ask what changed.
• Forgetting contents cover. A block policy rarely covers your belongings.

Why Choose Banke International Properties?

Banke Properties helps overseas buyers compare UK developments and investment locations with the full cost in view. We are not insurance, legal or tax advisers, but we can help you prepare the right questions. To discuss a specific property or budget, speak with the Banke UK team.

Conclusion

Buildings insurance is a basic part of buying a UK home. Work out who is responsible, when cover must start and how much it costs, and confirm the details with your solicitor.

This is general information, not legal, tax or insurance advice. Rules and practice change. Confirm current requirements with your solicitor, lender and a regulated insurance adviser before you buy.