Consultation on introducing permitted insurance fees for landlords, freeholders and property managing agents
We are seeking views on proposals to prevent freeholders, property managing agents and landlords from imposing on leaseholders opaque and excessive charges related to building insurance, often in the form of commissions. Instead, they would only be able to charge a fair and transparent permitted insurance fee to leaseholders. Secondary legislation will set out what is permitted.
The Leasehold and Freehold Reform Act 2024 brought in a range of measures to give more powers and protections for homeowners and leaseholders. As part of this, the Act created powers to address longstanding concerns that some leaseholders are being charged for the arranging and managing of buildings insurance by their landlords, freeholders or property managing agents through opaque remuneration methods, not justified on the basis of work contributed.
Currently, landlords, freeholders and property managing agents are most commonly paid for arranging and managing building insurance through an insurance broker sharing a proportion of their commission.
The Act instead allows for a new permitted insurance fee that landlords, freeholders and property managing agents would charge leaseholders, separately from the insurance premium. This fee would be fair, transparent and reflective of the work contributed. Responses to this consultation will help us understand what payments should be permitted within this fee and inform the writing of secondary legislation.