Building insurance and fees - does this seem a lot?

[Wonderbug81]

I live in a converted Victorian flat (2 bed leasehold ownership)

My downstairs neighbour (also 2 bed but with garden, leasehold ownership) and I have just received the building insurance invoice from the management agent on behalf of a third-party freeholder.

Mine is £405 and my neighbour's is £500.

25% of the total is going to an insurance broker and the management agent.

When I asked the criteria and how the imsurance is found, I was told the broker gets three quotes and decides based on that. They didn't share any criteria and said they don't necessarily go with the cheapest.

We have no claims for the time I've been there (past 5 years).

Does 25% commission for two flats seem a lot? There's no straight answers online.

Trying to work out if there's any point pushing back as it does seem a fair bit just for building insurance. Can I at least push back on how they find the insurers?

you shouldn’t be paying ANY commission to the brokers!! Change it to an insurance company YOU want as that’s YOUR right!!! I’d suggest NFU mutual as they don’t overcharge and are fab with an problems and claims

I don't understand who the third party freeholder is and what they have to do with anything. So apologies if my situation is totally different.

I own a (leasehold) one bedroom 1flat. It's one of a block of 6, 1970s build. I sort my own insurance out. I paid £184 for buildings and contents this year.

25% commission is pretty normal for a broker - I can’t comment on if use of a broker is necessary and premium level, things like non-standard construction, poor financial history of the freeholder (ccjs etc), high flood or subsidence risk, type of tenant, vacant portion, post code, high number of bathrooms, poor security, property age can all have an impact.

But if you aren’t happy get a copy of the renewal quote, check the details are right and either ask a local broker for a quote or run it through a couple of online portals and if it’s much cheaper then challenge it.

Insuring leasehold flats is different in Scotland to the rest of the UK.

No the freeholder insures the building the lease holder insures their own contents insurance.
@Nearly50omgyou cannot change this yourself as a leaseholder - only the contents insurance.
@Cantthinkofanewusernameffsthe freeholder is legally responsible for the building insurance as the walls/floors/ceilings are shared and the communal areas. You might be in breach of your lease if you do your own buildings insurance.
OP check out the Leasehold and Freehold Reform Act 2024. It addresses commissions and there are strict rules around it.

Interesting re standard charges. None of those things really apply, fairly standard building, no subsidence etc but perhaps there is some other risk factor I don't know about with the freeholder. House was built in 1880s so maybe that's another element.

Will ask for more info.

@mondaytosunday I'm in Scotland. Didn't realise it was different here to other parts of the UK. Probably why I didn't know what a freeholder is.
My solicitor told me to get buildings insurance, so it must be how it's done up here.

You could join forces with your neighbour and manage the property yourselves under the Right To Manage legislation. This would mean that you can arrange your own insurances and no longer have managing agents fees to cover.

Thanks, I was wondering about something like this!

I might be moving out during the year so perhaps something to consider next year if I end up staying.