Leasehold Properties: Building Insurance

Lord Kennedy of Southwark Excerpts

Thursday 15th June 2023 Lords Chamber

Asked by

[Lord Kennedy of Southwark]

To ask His Majesty’s Government what action they are taking to deliver greater transparency over the commissions paid to freeholders and managing agents by insurance companies when arranging building insurance for leasehold properties; and what action they are taking to deliver greater value for money for leaseholders in this regard.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I declare my interests as set out in the register and the fact that I am a leaseholder.

[Lord Evans of Rainow (Con)]

My Lords, the Government intend to enact reforms to improve the building insurance market for leaseholders by banning commissions on insurance premiums, increasing transparency of information and preventing unjustified legal fees when challenging costs. We are also working with industry to reduce and clarify charges as a matter of priority ahead of reforms coming into force. Our aim is to ensure insurance costs are fairer and more transparent and give more confidence to the leaseholder to challenge costs.

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, leaseholders are often also mortgage payers and are suffering during the cost of living crisis with higher bills for things such as food and energy. What we need in the insurance market is for insurers to treat leaseholders as customers, as they are the ones paying the bills. It is good to hear from the Minister that commissions will be banned, but when will that happen? Will the Minister set out what he and his department can do before any forthcoming legislation? Will either he or the noble Baroness, Lady Scott of Bybrook, agree to meet me and members of the National Leasehold Campaign to discuss the issue and the wider problems leaseholders face? Finally, will he join me in paying tribute to the National Leasehold Campaign for its relentless work in highlighting the problems faced by millions of our fellow citizens?

[Lord Evans of Rainow (Con)]

My Lords, first, I pay tribute to the noble Lord for the work he has done on this subject and for his many years of public service, for his party and his community, as a councillor in Southwark.

We are committed to working with industry to bring down premium increases in the first instance. The Secretary of State has asked the FCA to do whatever it can to press insurance brokers to reduce unreasonable fees ahead of government action to ban managing agents, landlords and freeholders taking commissions when they take out buildings insurance. The Association of British Insurers is planning to launch a scheme for buildings with fire safety issues and very high premiums by summer 2023 at the latest. Ministers will continue to monitor the progress of the scheme and have made it clear that they expect the scheme to be delivered by summer 2023 to provide urgent assistance to affected buildings. I am very happy to meet with the noble Lord and engage with members of the National Leasehold Campaign; I pay tribute to the work it has done.