link to ringley website
  • Home
  • About Us
    About us & leadership Awards Savings for Clients Case Studies Green Management Strategies Market Overview Leasehold Reform Campaign Money Back Guarantee
  • Our Services
    • Asset Management
      • UK Asset Management
      • Project Monitoring
      • ESG Consultancy & Implementation
      • PropTech & Living Sectors Platform
      • Marketing Insights
      • Resident Journey
      • Stabilised Assets
      • UK Build to Rent
      • UK Later Living
      • UK Co-Living
      • UK Student Accommodation
      • UK Single Family Housing
    • Block Management
      • Overview - London
      • Overview - Wales & West
      • Overview - Southwest
      • Right to Manage
      • Freehold Management
      • Resident Management
      • Estates of Houses
      • Ground Rent Collection
      • How to change agent?
      • Block Management Services
      • Can't afford an agent?
      • Legal & Tribunals
      • Top 10 Tips
      • Report an incident
    • Commercial Management
    • Law
      • Overview
      • Meet The Team
      • Recommendations
      • Right to Manage
      • Lease Extensions
      • Freehold Purchase
      • Absentee Freeholder
      • Court Appointed Manager
      • Conveyancing - Wales
      • Conveyancing - England
      • Service Charge/Rent Arrears Recovery
      • Company Secretary
    • Property Valuations
      • Overview
      • Loan Security
      • Company Accounts
      • Lease Extensions
      • Freehold Purchase
      • Rent Reviews
      • Ground Rent Investment
      • Development Valuations
      • Expert Witness & Litigation
      • Tax, Trusts & Accounts Valuations
      • Trading Business
      • Compulsory Purchase
      • Residential Valuations
    • Engineering
      • Overview
      • EWS1 Consultancy
      • Asbestos
      • Contract Administration
      • Fire Assesment
      • Homebuyer Survey
      • Building Survey
      • Schedules
      • Party Wall Matters
      • Principle Designer
      • Disability Access Audits
      • Small Building Works
      • Fire Door Inspection
      • Insurance Valuations
    • Property Accounting
      • Finance
      • Quote For Service Charge Accounts?
      • Property Accounting Law
      • Accounting Updates
      • To Audit or Not?
    • Plant & Facilities Management
      • Plant & Facilities Management
      • Fire Door Inspection APP
      • Fire Safety Update
    • Site Staffing Solutions
      • Ringley Integrated Site Staff Solutions
    • Leasehold Guidance
      • Overview
      • Right to Manage
      • Purchasing The Freehold
      • Court Appointed Manager
      • Absentee Freeholder
  • Insights
    Asset Management Articles Block Management Blogs Publications BTR Rental Market Blogs Customer Insights FAQ - Ask Our Experts Insurance Calculator
  • ESG
  • E-books
  • Get In Touch
  •    
  • Work with us
  •  
  • Portal Login
UK Government Promises to Help Reduce Insurance Premiums on Hazardous Buildings for Leaseholders

Written by: MaryAnne Bowring 28/01/2025
  5       0
Responsive image

Collaboration with Brokers to Address Rising Costs

Leaseholders in buildings with fire safety concerns are burdened with ever-higher insurance premiums, which have skyrocketed in recent years and are often added to their service charges.

The UK government has collaborated with 14 major brokers to resolve this issue and hopefully bring changes to make these costs cheaper and more transparent. The pledge was meant to help lessees charge rather inflated insurance premiums, especially for fire-prone buildings. According to recent research by the Financial Conduct Authority, building insurance premiums within the leasehold sector rose to 125 percent between 2016 and 2021. The rise for buildings with fire risks is even more drastic, at 187 percent.

Root Causes of High Premiums

One root cause of such high premiums is that some insurers have refused to cover high-risk buildings. This has resulted in "layered" policies in which multiple insurers cover part of the risk. Such an arrangement often results in significant broker commissions passed on to leaseholders. The FCA also found that brokers remitted parts of the commission to the managing agents or freeholders, which caused them to favour high-cost policies for maximum commission remittance. As a result, the FCA introduced new rules, and the government agreed with the brokers about their obligation to make insurance for leaseholders cheaper.

The Three Key Commitments within the Pledge

1. Stopping Commission Sharing with Managing Agents, Landlords, and Freeholders
In the old days, the broker used to share some of his commission with the property managing agents, landlords, and freeholders who were responsible for arranging insurance on behalf of the leaseholders. Often, in those cases, they would only choose policies based on their potential commission rather than on cost-effectiveness or quality of coverage.

Due to the abolition of commission-sharing, the managing agents and the landlords can now decide which policies to take based on values to leaseholders, not based on who offers the highest commission. All costs associated with arranging insurance are passed transparently through the service charge, ensuring fairer pricing.

2. Capping Broker Commissions at 15 per cent for High-Risk Buildings

The FCA found that broker commissions for high-risk buildings could comprise as much as 60 per cent of a building's insurance premium. As part of their new commitment, the brokers agreed to cap their commissions at 15 per cent of the premium for those buildings. With commission caps, the brokers cannot recover an excessively high fee basis to charge for the insurance premium, which may, therefore, lower the total cost of insurance. The service charge for a leaseholder will also drop as more premium money goes directly to providing cover rather than on commissions. Fees to third parties to compensate for work done on behalf of the broker for this purpose also fall within.

3. Leaseholders to be Provided Information about the Cost of Insurance
One of the long-standing concerns of leaseholders is the lack of transparency regarding insurance costs in the building. Under the new promise, brokers must disclose information about insurance to leaseholders who may request it. Therefore, if a tenant cannot get the breakdown of building insurance costs from their property manager or landlord, they should obtain it from the brokers. This allows leaseholders to understand changes to their service fees, pinpointing defects in managing agents' passing on costs.

Impact of the Reforms on Leaseholders

These changes greatly affect lessees who are impacted by high insurance premiums. The reforms include the elimination of commission sharing, a cap on commissions, and cost transparency. The new regulation updates by the FCA are only intended to discourage excessive charges and bad practices. Therefore, it becomes evident that the government is willing to try hard to make the insurance landscape fairer. These changes should finally begin to reflect on the leaseholders suffering from fire safety issues due to the actual service charges, creating a more straightforward system for managing insurance costs that are much more affordable.

Effective Date and Expected Outcomes

The new regulations went into effect on December 31, 2023. As they begin to take hold, leaseholders can expect to control service charges more effectively and have greater financial security while living in safer homes at greatly reduced prices.



Property Management Block Management Building Safety
POPULAR POSTS

Solar panels on flats - what you need to know

Is noise getting you down?

Ground Rent: Fines for Landlords Who Charge Ground Rent

High Court: Right to Rent does breach human rights

Landlords beware - Don't believe everything you read!

RECENT POSTS

The Unseen Costs of Building Safety: A Financial Burden on Leaseholders in High-Rise Buildings

Judicial Review Granted Against Gwynedd Council’s Planning Restrictions on Second Homes

Angela Rayner Faces Pressure Over Housing Pledge of 1.5 Million Homes as Target Appears Unachievable

Leasehold Reform Moves Forward with New Cross-Party Parliamentary Group

Grenfell Tower Deconstruction to Begin Under £12.25m Government Contract



Blogs related:

ASSET MANAGEMENT
Landmark Supreme Court ruling reshapes UK property law: implications of Aviva investors v Williams Case
There have been significant changes in the UK property law after the recent Supreme Court decision in Aviva Investors Ground Rent GP Ltd and another v Williams and others of 2023. These changes apply to section 27A (6) of the Landlord and Tenant Act 1985.The purpose of Section 27A(6) is to ensure that tenants are not bound by agreements that restrict their right to challenge service charges or impose unfair conditions on the determination of s...

Read


ASSET MANAGEMENT
Understanding the value of RTM as an option to take control of the block
In the UK, providing that buildings and leaseholders meet the criteria, leaseholders have a legitimate right to form a Right to Manage (RTM) company to take over building management from the landlord or the existing property manager. Exercising the Right to Manage is a complex process with long-term implications, and leaseholders must understand that setting up an RTM company involves significant responsibilities. Before moving forward, they s...

Read


ASSET MANAGEMENT
Why flat owners should always read the lease
Always read the lease. This is essential advice for anyone who lives in a leasehold flat, as it sets out what you can and can’t do with your property. Many flat owners don’t realise the importance of understanding their lease terms, especially when planning alterations or improvements to their home.

Read


Meet our Expert Property Commentators

Mary-Anne Bowring FTPI FRICS FARLA FCABE Founder/Head of Asset Management

Strategic partnerships, holistic delivery/ opportunities, growth, value engineering, thought leadership

Ian Barber MD BTR Mobilisation & Leasing

Runs HQ & site lease-up teams. Drives rent pricing, mobilisation, marketing, happy residents!

Jon Curtis MRICS Head of Building Engineering

Chartered Building Surveyor. Lectures on EWS1 & building safety. Runs CapEx programmes.

Kate Robinson MTPI MD Blocks/FM Management (London Region)

Master plan setup, ops and staffing and resident engagement. ISO45001 champion.

Lee Harle Partner Ringley Law

Plot conveyancing. Debt litigation. Group Company Secretary.

Anthony Kingdon MIRPM AssocRICS MD Blocks/FM Management (North Region)

Stakeholder engagement. Mixed tenure specialist. Budget management. Plant audit, PPM compliance.

Chris Georgalis MRICS Head of Commercial Valuation

Chartered Valuer. Rental valuations: retail, leisure. IRR modelling and valuations for secured lending. Compulsory purchase & rent reviews

Nichola Pughe MRICS Head of Residential Valuation

Chartered Valuer. Rental development & mixed use valuations, IRR modelling. Leasehold enfranchisement specialist

Natalie Birmingham Helpdesk Support Manager

Trainer & Helpdesk Manager: people, systems,contractors. ISO45001 supply chain accreditation.

Steve Norman Planning Director

Land due diligence (opportunities & constraints) Has contributed to a number of award winning schemes.


Insights, articles & blogs
INDEX

PROPERTY
BLOGS

LANDLORD
BLOGS

PROPERTY
ARTICLES

E-BOOKS

inshights shared - link to planetrent blogs

Landlord blog
Read landlord blog
inshights shared - link to ringley blogs

Property blogs
Read property blogs
inshights shared - link to ringley articles

Property articles
Read property articles
inshights shared - link to ringley ebooks

E-books
Read E-books

link to ringley social media facebook link to ringley social media instagram link to ringley social media linkedin link to ringley social media x-twitter
link to ringley social media x-twitter for small device
link to ringley social media linkedin for small device
link to ringley social media instagram for small device
link to ringley social media facebook for small device
  • Ringley Group
  • About us
  • CSR / ESG
  • BusyLiving
  • PlanetRent
  • Talk to us
  • Careers
  • Ask a Question
  • Insights
  • Articles
  • Blogs
  • Subscribe
  • BTR & PRS Buildings
  • What we do
  • Asset Management
  • Block Management
  • Facilities Management
  • Property Law
  • Surveying / Valuation
  • Building Engineering
  • Financial Services
  • Managing Agents
  • Block Management Locations
  • Co-working
  • Renting & Letting
  • Right to Manage
  • Contractor Management
  • Space to Work
  • Fees and Client Money Protections
  • Email: solutions@ringley.co.uk

  • Emergency line 1: 0207 428 2056

  • Emergency line 2: 0207 267 2900

  • Report an incident
  • Our Offices
  • London
  • Ringley House
  • 1 Castle Road
  • London
  • NW1 8PR
  • T: 0207 267 2900
  • London
  • Ringley House
  • 47 Rochester Place
  • London
  • NW1 9JL
  • Manchester
  • 11 Swan Street
  • Northern Quarter
  • Manchester
  • M4 5JJ
  • T: 0330 174 7777
  • Cardiff
  • 122 West Bute Street
  • Cardiff Bay
  • Cardiff
  • CF10 5LJ
  • T: 0330 174 7747
Privacy Policy
Ringley Staff Dashboard
link to ifsm website link to tpos website link to rics website link to ukgbc website link to government security industry authority website link to alep website

All content © copyright 2025. Ringley Limited. All Rights reserved. Ringley Limited, incorporated and registered in England and wales. Registered office: Ringley House, 1 Castle Road, London, NW1 8PR. Company No. 03302438
Terms of use | Privacy Policy | Modern slavery act | COVID-19 risk assessment