Why Buildings Insurance Is Often Overcharged
Buildings insurance is the single most common source of service charge overcharging in the UK. Many landlords and managing agents receive undisclosed commissions from insurers — sometimes 30–50% of the premium — inflating what leaseholders pay.
Under the Landlord and Tenant Act 1985 (Section 19), all service charges — including insurance — must be reasonably incurred. An inflated insurance charge is legally challengeable.
The Leasehold and Freehold Reform Act 2024 introduced new requirements for transparency around insurance commissions, giving leaseholders stronger grounds to challenge excessive premiums.
UK Regional Benchmarks (2024)
Average buildings insurance costs per leaseholder per year, by region (source: Hamptons/RICS 2024 data):
London
£470
per leaseholder/yr
Major Cities
£340
per leaseholder/yr
UK Average
£290
per leaseholder/yr
If your buildings insurance charge is more than 1.5× the regional average, you have strong grounds to request a breakdown and comparison quotes.
Red Flags to Look For
- Insurance charge significantly above regional averages
- No breakdown of how the premium is calculated
- Same insurer used year after year without competitive tender
- Managing agent refuses to disclose whether they receive commission
- Premium increased sharply without change in building value or risk
- Insurance arranged through a connected company (related-party transaction)
⚠️ Commission disclosure: Under the Leasehold and Freehold Reform Act 2024, landlords must disclose insurance commissions. You can request this information in writing — failure to respond is a red flag.
Your Legal Rights
Right to Information (LTA 1985, Section 21)
You can request a summary of costs, and inspect supporting documents including insurance policies and invoices. Your landlord must respond within 21 days.
Right to Challenge Reasonableness (LTA 1985, Section 19)
You can apply to the First-tier Tribunal (Property Chamber) to determine whether the insurance charge is reasonable. This is free to apply and no solicitor is required.
Right to Arrange Your Own Insurance
In some circumstances, leaseholders can arrange buildings insurance themselves if the landlord's insurance is unreasonably priced. Check your lease carefully.
Check Your Insurance Charge Now
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What to Do If Your Insurance Looks Overpriced
- Request full disclosure — write to your managing agent asking for the insurance policy, the basis of the premium, and confirmation of any commission received
- Get comparison quotes — obtain at least two independent quotes for comparable cover on your building
- Write a formal dispute letter — citing LTA 1985 Section 19 and requesting an explanation of the cost differential
- Apply to the First-tier Tribunal — if your managing agent doesn't respond satisfactorily
- Contact LEASE — lease-advice.org for free guidance
Note: LeaseAudit provides informational analysis only, not legal advice.