Leasehold Advice
Buildings Insurance for Leasehold Flats
For a leasehold flat the building is insured as a whole, not by you (the leaseholder). This guide looks at who arranges it, who pays and what a buyer will want to see.
The Essentials
Here is the thing most flat owners get wrong about buildings insurance. For a leasehold flat, you do not insure it yourself. The building is insured as a whole, almost always by the freeholder or by the company that runs the block, and you pay your share of the premium through the service charge. The only insurance you arrange yourself is contents insurance for your belongings.
That arrangement is set by the lease, and it is the sensible way to insure a building made up of many flats: one policy covering the whole structure, rather than dozens of overlapping policies that would argue with each other after a fire or a flood. The catch is that you are paying for a policy you did not choose and may never have seen, which is why knowing your rights around it matters. This guide covers who insures, who pays, what the cover does and does not include, how to challenge the cost and what a buyer will want to see.
A note before we start. Buildings insurance matters, and this is a general guide rather than advice on your own building. To be sure your block has adequate cover in place, check the position with your solicitor or your managing agent, who can look at your specific lease and policy.
Who Insures the Building, and Who Pays
The starting point is always the lease. The lease will name who has the obligation to insure the building, and it will say that the leaseholders contribute to the cost. On the great majority of leasehold flats the obligation sits with the freeholder, who usually arranges the policy through a managing agent. Where the leaseholders run the block themselves, through a resident management company or a right to manage company, that company arranges the insurance instead. Either way, the principle is the same: one policy for the whole building, paid for by the leaseholders between them.
How this differs from a freehold house
If you have only ever owned a freehold house, this is the part that feels unfamiliar. The owner of a freehold house arranges and pays for their own buildings insurance directly, and can shop around for it. A leaseholder cannot do that for their flat, and should not try to. The building is a single structure shared with other flats, so it is insured once, as a whole, and your contribution comes through the service charge rather than a policy in your own name.
What you still arrange yourself
Contents insurance is yours. The building policy covers the structure, not your sofa, your electricals or your clothes, so contents cover for what is inside the flat is down to you to arrange and pay for. It is worth checking whether your contents policy also offers leaseholder's liability cover, which protects you if something you are responsible for causes damage elsewhere in the building. For the wider picture of how the building is run and who you deal with, see our guide on how your block is managed.
What the Policy Covers, and What It Does Not
A block buildings policy covers the structure and fabric of the building: the walls, the roof, the floors, the windows, the common parts and usually the fixtures that form part of the building such as fitted kitchens and bathrooms. It pays out for damage from the standard insured risks: fire, flood, storm, escape of water, subsidence and so on, and it covers the cost of rebuilding or reinstating the building after a serious loss.
Rebuild cost, not market value
One point trips people up. A building is insured for its rebuild cost, which is what it would cost to reconstruct it, not for the market value of the flats. The two are different numbers, and the rebuild cost is the one that matters for the policy. If the building is insured for less than it would actually cost to rebuild, it is underinsured, and a claim could be scaled back. A well-run block has the rebuild cost assessed periodically so the sum insured keeps pace.
Terrorism cover
Most lenders expect the buildings policy to include terrorism cover, and on many blocks it is included as standard or added as an extension. It is worth knowing it is there, because a buyer's lender may ask about it specifically.
Where the cover stops
The building policy is not contents insurance and it is not a catch-all. It does not cover your belongings, and depending on the policy wording it may not cover improvements or alterations you have made inside the flat. Every policy has exclusions, and the policy wording is worth reading rather than assumed. The gap between what people think is covered and what actually is tends to show up at the worst possible moment, after a loss.
The Cost of Buildings Insurance, and Your Right to Challenge It
Buildings insurance is often one of the larger lines on a service charge demand, and for years it was one of the least transparent. The leaseholder pays the premium but does not arrange the policy, which is exactly the kind of gap where costs can drift.
The commission problem
For a long time the main issue was commission. Freeholders and managing agents would arrange the buildings insurance and take a commission on the premium, often a large one and often not disclosed, and the whole cost was passed to leaseholders through the service charge. Leaseholders were paying inflated premiums without being told why. Two changes have addressed this. The Financial Conduct Authority has brought in rules requiring insurers to act in leaseholders' interests, to make sure policies offer fair value and to disclose commission information to leaseholders. Separately, the Leasehold and Freehold Reform Act 2024 includes a measure to ban insurance commissions being charged to leaseholders altogether, replaced by transparent fees. That measure has been passed in law but is not yet in force, as the detailed regulations are still to follow, so it is worth treating as a direction of travel rather than the position today.
Your right to see the policy and challenge the cost
You have two practical levers. Under the Landlord and Tenant Act 1985, you can ask in writing for a written summary of the buildings insurance and to inspect the policy and supporting documents, so you can see what is being paid for. And because the premium is recovered through the service charge, it is a service charge cost and has to be reasonable: if it is not, you can challenge it at the First-tier Tribunal in the same way as any other service charge item. Our guide to service charges explained covers how that challenge process works.
Why premiums spiked on some blocks
Separately from commission, buildings insurance has become genuinely expensive on some blocks, particularly higher-rise buildings with cladding or other fire-safety issues. Since 2020, insurers have priced in that risk, premiums on affected buildings have risen steeply, and a few buildings have struggled to get cover at all. This is a specific problem tied to fire safety rather than a general one, and it is one of the clearest examples of a building-level issue that can affect a flat sale. Cladding and EWS1 are a bigger subject in their own right, beyond buildings insurance alone.
Buildings Insurance When You Sell Your Flat
You do not arrange the buildings insurance, but it still has to be in order for your sale to go through, because both the buyer's solicitor and the buyer's lender will look at it closely.
What the buyer's side checks
The buyer's solicitor wants evidence that the building is properly insured and that the cover is live: the policy schedule or a copy of the policy, confirmation the premium is paid up to date, the sum insured and confirmation that terrorism cover is included. A lender will want the building insured for its full rebuild cost and the policy to be current, with no awkward exclusions. None of this is unusual, and on a well-run block it is a routine part of the paperwork.
Where it comes from
All of it comes through the management pack your conveyancer obtains from the managing agent or freeholder. The buildings insurance details sit alongside the service charge accounts, the ground rent position and the reserve fund balance as standard contents of that pack. The seller's job is not to arrange any of it but to chase the managing agent if the pack is slow, because a delayed pack delays the sale.
When insurance problems arise
Most of the time the insurance is a tick in a box. It becomes a problem when there is a gap in cover, an unpaid premium, a building that is underinsured or a building that cannot get adequate cover at all because of a fire-safety issue. Any of these narrows the buyer pool, because a mainstream lender will not lend against it, and it can stall or collapse a sale that is otherwise ready to go. Where an insurance problem is genuinely holding a sale back and cannot be fixed quickly, a cash buyer is the route least affected by it, since they are not bound by a lender's requirements and can take a view on the building as it stands.
Further Reading
Two related guides cover where buildings insurance fits: the service charge it is paid through, and the lease that says who has to arrange it.
Frequently Asked Questions
Almost certainly not. For a leasehold flat, the building is insured as a whole, and the lease normally puts that job on the freeholder, or on the resident management company or right to manage company where the leaseholders run the block. You pay your share of the premium through the service charge. What you do arrange yourself is contents insurance for your own belongings. Taking out a separate buildings policy on your individual flat would usually duplicate cover that already exists and is not what the lease expects. The one thing to check is your own lease, because it is the lease that says who insures.
Buildings insurance covers the structure of the building: the walls, roof, floors, windows and common parts, and the cost of rebuilding after something like a fire or flood. On a leasehold flat this is arranged for the whole building and paid for through the service charge. Contents insurance covers your belongings inside the flat: furniture, electricals, clothes, valuables. That is yours to arrange and yours to pay for directly. The simple way to hold the two apart is that buildings insurance covers what would stay if you turned the flat upside down, and contents insurance covers what would fall out.
Whoever the lease puts in charge of insuring the building. In most blocks that is the freeholder, often acting through a managing agent. In a block run by a resident management company or a right to manage company, the leaseholders, through that company, choose the insurer. As an individual leaseholder in a freeholder-controlled block you do not get to pick the insurer, but you are not powerless: you can ask to see the policy, and you can challenge the cost if it is unreasonable.
Yes. The buildings insurance premium is recovered through the service charge, which makes it a service charge cost, and service charge costs have to be reasonable under section 19 of the Landlord and Tenant Act 1985. If the premium looks high for the building, or you suspect a large commission is built into it, you can ask for an explanation and, if you are not satisfied, apply to the First-tier Tribunal for a determination on whether the cost is reasonable. Asking to see the policy and the breakdown is the sensible first step.
You are. Under the Landlord and Tenant Act 1985 you can ask the freeholder or managing agent in writing for a written summary of the buildings insurance, and you can ask to inspect the policy itself and the supporting documents. A reasonable managing agent will provide the policy schedule without much fuss. If you are told you cannot see it, that is a warning sign in itself, and it is the sort of thing a buyer's solicitor will also want sorted out.
A building with no buildings insurance is a serious problem, not a minor one. No mainstream lender will lend against a flat in an uninsured building, so it cuts out most buyers immediately. If the freeholder is in breach of the lease by failing to insure, some leases allow the leaseholders to insure instead and recover the cost, and the First-tier Tribunal and the courts can be asked to step in. If you discover the building is uninsured or underinsured while trying to sell, it needs to be fixed before the sale can realistically proceed, or the buyer pool narrows to cash buyers only.
Two things have pushed premiums up. The first is fire safety: since 2020, blocks with cladding or other fire-safety issues have seen premiums rise sharply, and some have struggled to get cover at all, because insurers priced in the risk. The second is commission: for years freeholders and managing agents took large, often hidden, commissions on buildings insurance, which inflated what leaseholders paid through the service charge. The Financial Conduct Authority has since brought in rules on transparency and fair value, and a further measure to ban these commissions being passed to leaseholders has been passed in law but is not yet in force.
Evidence that the building is properly insured and that the cover is current. That means the policy schedule or a copy of the policy, confirmation the premium is paid up to date and a check that the building is insured for its full rebuild cost with terrorism cover included, which most lenders require. All of this comes through the management pack the seller's conveyancer obtains from the managing agent. A current, adequate policy is a routine tick. A gap in cover, an unpaid premium or a building that cannot get proper cover is the kind of thing that stalls a sale.
Generally no, and it is not usually something you would want to do. The lease sets out who insures the building, and on almost every leasehold flat that is the freeholder or the management company insuring the whole building, not each leaseholder insuring their own flat. A few leases allow a leaseholder to insure if the freeholder fails to, but that is a fallback for a freeholder in breach, not a free choice. If you think the building's policy is poor value, the route is to challenge the cost or push for a better policy, not to take out a separate one of your own.
Tell the managing agent, or whoever arranges the block policy, in writing, and do it promptly. You do not hold the buildings policy yourself, so you cannot arrange this directly with an insurer, and you should not take out a separate buildings policy of your own. Block policies almost always have an unoccupancy condition: once a flat has been empty beyond a set period, often around 30 to 60 days, though it varies by policy, the insurer has to be told, and the managing agent makes that notification. The insurer may then set conditions for the flat, such as turning the water off at the mains or keeping the heating on in winter, and may cut back the cover while it is empty. There may also be an extra premium. The reason to act promptly is that an undisclosed empty flat can lead to a claim being reduced or refused. Your own contents insurance is separate, with its own unoccupancy rules, so deal with that with your contents insurer.