Leasehold buildings insurance: Can you challenge an excessive premium or commission?

There is something particularly frustrating about contributing to a large insurance premium for a policy you did not choose, from an insurer you may never have heard of, arranged through a broker you have had no dealings with.

For many flat owners, buildings insurance appears as just another line on the annual service-charge statement. But if the premium suddenly jumps from £500 to £1,200, or you discover that part of what you are paying is commission shared with the freeholder or managing agent, it is entirely reasonable to start asking questions.

The reassuring point is that leaseholders are not expected simply to accept whatever figure appears on the bill. The lease matters, the cost must normally satisfy statutory reasonableness requirements, and insurance firms are now subject to much stronger rules about explaining the policy, its price, any remuneration and how the insurance was placed.

My starting point would be to resist focusing on the premium alone. An expensive policy can sometimes be justified by the building’s risk profile. A cheaper-looking policy can also be poor value if it carries a huge excess or inadequate cover. The real questions are what has been bought, why it was chosen, what everybody in the chain is being paid and whether the resulting cost to leaseholders is reasonable.

This guide explains the position for residential leaseholders in England and Wales.

Quick answer: Can you challenge leasehold buildings insurance costs?

Yes. If buildings insurance is recovered through a variable service charge, the lease must allow the landlord to recover it and the amount is generally subject to the statutory requirement that costs are reasonably incurred.

The freeholder does not have to obtain the cheapest policy available. However, the insurance should be appropriate for the building and its cost should be capable of justification. A leaseholder can obtain information about the policy and premium, scrutinise commission and other remuneration, gather comparable evidence and, if necessary, ask the appropriate tribunal to decide whether the charge is payable and reasonable.

There are also separate Financial Conduct Authority rules for multi-occupancy buildings insurance. These require regulated insurers and insurance intermediaries to produce considerably more information about matters including the cover, pricing, remuneration, shopping around and certain conflicts of interest.

Contents

• What is leasehold buildings insurance?
• Who arranges buildings insurance for a leasehold flat?
• What should the lease say about insurance?
• Why is my leasehold buildings insurance so expensive?
• Can the freeholder charge whatever they like?
• Does the freeholder have to shop around?
• Does the freeholder have to choose the cheapest policy?
• What insurance information are leaseholders entitled to see?
• What information should you receive under FCA rules?
• Can a freeholder or managing agent receive insurance commission?
• What if the freeholder uses a connected broker?
• What if several buildings are insured under one policy?
• Should I obtain alternative insurance quotations?
• How can I challenge an excessive insurance charge?
• Can I complain to the Financial Ombudsman?
• Can right to manage give leaseholders control of the insurance?
• What about buildings insurance for leasehold houses?
• What should I check when buying a leasehold flat?
• Are the rules on insurance commission changing?
• What I would check if the insurance premium suddenly increased

What is leasehold buildings insurance?

Buildings insurance covers the structure of the property against specified risks. Depending on the policy, these commonly include fire, flood, storm damage, escape of water, subsidence and vandalism.

For a block of flats, one policy will usually cover the building as a whole rather than every leaseholder arranging separate insurance for their own part of the structure.

This should not be confused with contents insurance. The block policy will not normally insure your furniture and personal possessions, so individual flat owners usually need their own contents cover.

Buildings insurance is not required simply because a property is leasehold. The obligation normally arises from the lease, and mortgage lenders will also usually require satisfactory cover.

Who arranges buildings insurance for a leasehold flat?

For most blocks of leasehold flats, the freeholder, landlord, residents’ management company or Right to Manage company arranges a single policy for the building. A managing agent may deal with the practical arrangements on its behalf.

The cost is then commonly divided between leaseholders through the service charge in the proportions specified by their leases.

That makes practical sense. A block cannot sensibly have Flat 1 insuring the roof, Flat 2 insuring part of the foundations and Flat 3 choosing not to insure the external walls at all.

But the fact that somebody else chooses the policy does not remove the leaseholder’s rights over the resulting cost. My broader guide to leasehold service charges and what can be challenged explains the general rules.

What should the lease say about insurance?

The lease is the first document I would reach for.

It will commonly require the landlord to insure the building and allow the cost to be recovered from the leaseholders. It may specify particular risks that must be covered, the basis on which the building is insured and how each flat’s contribution is calculated.

The wording matters. A landlord cannot simply add an insurance charge to the service charge because insuring the building seems sensible. There must be a contractual basis for recovering the expenditure.

Occasionally, the insurance provisions in an older lease are defective or no longer workable. Depending on the circumstances, variation may be possible. My guide to deeds of variation and defective lease terms explains the wider position.

Why is my leasehold buildings insurance so expensive?

There is no single answer, and a high premium does not necessarily mean somebody is profiteering.

Insurers price risk. A building with serious fire-safety concerns, a history of major escape-of-water claims, subsidence, flood exposure or difficult construction may genuinely be much more expensive to insure than an apparently similar block nearby.

Older or unusual buildings can be costly to reinstate. Claims history, rebuilding costs and the amount of cover required can also affect premiums.

The excess matters too. Two quotations that appear similar may not really be comparable if one has a £500 escape-of-water excess and the other requires the building to meet the first £10,000 of every such claim.

There may then be costs within the insurance distribution chain, including broker remuneration and payments connected with arranging or managing the policy.

That is why I would be wary of drawing conclusions from the premium alone. First establish exactly what has been bought and what payments sit behind the headline figure.

Can the freeholder charge whatever they like?

No.

Where the insurance contribution forms part of a variable service charge, section 19 of the Landlord and Tenant Act 1985 generally limits recovery to costs that were reasonably incurred. The lease must also entitle the landlord to recover the expenditure in the first place.

Reasonableness does not mean the landlord has to find the cheapest insurance available. Nor does a sharp increase automatically make a premium unreasonable.

The question is broader. Was the insurance appropriately procured? Was the policy suitable for the building? Was the market properly considered? And was the resulting expenditure within a reasonable range for the cover and risk involved?

Does the freeholder have to shop around?

There is no simple rule requiring a freeholder to obtain a particular number of quotations every year.

But repeatedly renewing an expensive policy without properly considering the market may make it harder to justify the resulting cost as reasonably incurred.

Where an insurance intermediary is involved, current FCA rules require disclosure of how many alternative policy quotations were obtained and why the policy selected was considered consistent with the interests of both the insurance customer and the leaseholders.

If only one insurer was approached, I would want to know why. There may be a perfectly good explanation, particularly for a difficult-to-insure building, but it is a fair question.

Does the freeholder have to choose the cheapest policy?

No.

A cheaper policy may provide less cover, carry higher excesses, contain significant exclusions or simply be less suitable for the building.

Good value is not always the same as lowest price.

But paying substantially more for broadly comparable cover requires a credible explanation. Insurance procurement involves judgement, but that does not put the decision beyond scrutiny.

What insurance information are leaseholders entitled to see?

Leaseholders have longstanding statutory rights to obtain information about buildings insurance.

You can make a written request to your landlord for a summary of the insurance cover. Broadly, this should identify matters including the insurer, the sum insured and the risks covered.

You can also request an opportunity to inspect the policy and relevant documents showing evidence of the premium paid, and to take copies.

The landlord normally has 21 days to comply with the relevant request. The government-funded Leasehold Advisory Service provides a useful explanation of the right to see buildings insurance information.

This is a simple but powerful starting point. If you are being asked to contribute £1,500 towards insurance, you should not have to guess who the insurer is or what the building is actually insured for.

What information should you receive under FCA rules?

Separate FCA rules have applied to multi-occupancy buildings insurance since the end of 2023. They substantially increase the information that regulated insurers and insurance intermediaries must produce for leaseholders.

Leaseholders are entitled to receive information covering the policy’s main cover and exclusions, insured sum, excesses and pricing. The disclosures also extend to remuneration, including commission received by the relevant regulated firm and financial incentives paid to third parties such as a freeholder or somebody acting on its behalf.

Where an insurance intermediary is involved, leaseholders should also receive information about shopping around, including the number of alternative quotations obtained and why the chosen policy was considered consistent with their interests. Further details about those quotations can be requested.

There is an important practical wrinkle. The regulated firm will often provide the information first to its customer — for example, the person arranging the block policy — and tell that customer to pass it promptly and in full to the leaseholders. Where the regulated firm has direct contact with a leaseholder, it may provide the information directly. If it becomes aware that a leaseholder has not received the required information, it must provide it.

The full disclosure requirements are contained in ICOBS 6A.7 of the FCA Handbook.

These FCA rights sit alongside the older statutory rights to obtain insurance information from the landlord. They are not the same regime, and in many cases the FCA disclosures provide considerably more detail.

Can a freeholder or managing agent receive insurance commission?

This is one of the most controversial parts of leasehold buildings insurance.

Historically, a broker might receive commission from the insurer and share part of it with the freeholder or managing agent involved in arranging or administering the policy. Ultimately, the leaseholders bear the cost through the insurance expenditure passed on to them.

The mere appearance of the word “commission” does not automatically make an insurance charge unlawful. But remuneration should relate to genuine services provided in arranging or administering the insurance. Current Leasehold Advisory Service guidance states that a landlord may recover its costs for providing those services but should not use the commission to make a profit, and should not charge again for the same work through separate management costs.

You can read the official guidance on buildings insurance costs and commission.

The amount also has to withstand the wider test of reasonableness. A modest payment for genuine insurance administration is very different from a substantial percentage of the premium being retained without a convincing explanation of what was done to earn it.

Current FCA rules require relevant remuneration to be disclosed in cash terms. This includes commission received by regulated firms and financial incentives paid to third parties such as the freeholder.

So if £12,000 of a £60,000 block insurance cost is ultimately going to somebody involved in placing or administering the policy, I would not stop at the percentage. I would ask what service that payment represents, whether the same work is charged for elsewhere and whether the resulting overall cost is reasonable.

What if the freeholder uses a connected broker?

A connection between the landlord, managing agent, broker or insurer is not automatically unlawful. But it makes transparency particularly important.

The obvious concern is conflict of interest. Is the policy being chosen because it represents good value for the building, or because the commercial arrangements are attractive to somebody in the chain?

FCA rules require disclosure of specified conflicts, including certain ownership relationships between an intermediary and an insurer and whether the intermediary represents the customer or acts for the insurer.

If a connected arrangement produces a substantially higher cost than credible alternatives, that may become relevant to any challenge over reasonableness.

What if several buildings are insured under one policy?

If several buildings are covered by one portfolio policy, ask how the premium has been allocated between them.

Portfolio insurance can produce economies of scale, but the allocation between buildings should still be capable of justification. Leaseholders in a relatively low-risk block should not simply subsidise a much harder-to-insure building elsewhere in the portfolio without a proper contractual and reasonable basis.

FCA pricing disclosures should generally include building-level premium information or, where the precise figure cannot be identified, a reasonably prepared estimate.

Should I obtain alternative insurance quotations?

They can be useful, but only if the comparison is genuine.

A screenshot from an ordinary home-insurance comparison site is unlikely to prove that specialist block insurance is unreasonable. An insurer needs accurate information about matters such as the building, reinstatement value, claims history, construction, fire-safety position, cover and excesses.

Try to compare like with like.

If credible evidence shows equivalent cover was realistically available for £35,000 when the landlord paid £58,000, that may be significant. If the cheaper quotation excludes a major risk or carries dramatically higher excesses, the comparison is much weaker.

I would also ask for details of the quotations already obtained before paying somebody to recreate work that may already exist.

How can I challenge an excessive insurance charge?

I would approach this in stages rather than beginning with a tribunal application.

1. Check the lease

Establish who is responsible for arranging insurance, what cover is required, how the cost can be recovered and what proportion you are required to pay.

2. Obtain the insurance information

Ask for the statutory insurance information and the relevant FCA disclosures. Look for the premium, cover, excesses, insurer, remuneration, number of quotations and explanation for the policy selected.

3. Ask focused questions

If the premium has doubled, ask why. If only one quotation was obtained, ask why. If a substantial payment went to the freeholder or managing agent, ask what service was provided for it.

A handful of precise questions usually produces more useful information than a general complaint that the bill is outrageous.

4. Gather comparable evidence

If the explanation remains unsatisfactory, consider obtaining evidence of what genuinely comparable insurance would cost. Make sure any quotations reflect the same building risks and broadly equivalent cover.

5. Consider the tribunal

If the dispute cannot be resolved, a leaseholder can ask the appropriate tribunal to determine whether the insurance contribution is payable and reasonable.

In England, service-charge disputes are generally dealt with by the First-tier Tribunal (Property Chamber). In Wales, they are dealt with by the Leasehold Valuation Tribunal.

The official Leasehold 3 form is used for relevant service-charge applications in England.

As with other service-charge disputes, simply refusing to pay can create additional problems. My guide to challenging leasehold service charges explains the wider position.

Can I complain to the Financial Ombudsman?

Potentially, but it is important to use the right route for the right complaint.

If the complaint concerns the conduct of an FCA-regulated insurer, broker or another regulated firm, you would ordinarily complain to that firm first. Depending on the circumstances, you may then be able to refer the matter to the Financial Ombudsman Service.

The FCA’s guidance for leaseholders on buildings insurance explains the regulatory complaint route.

That is different from asking whether your landlord is legally entitled to recover a particular insurance contribution through the service charge, or whether that charge is reasonable. Those are generally matters for the leasehold tribunal.

The two routes can therefore arise from the same insurance arrangement without being interchangeable.

Can right to manage give leaseholders control of the insurance?

Potentially, yes.

Where qualifying leaseholders acquire the Right to Manage, the RTM company will commonly take responsibility for arranging the building’s insurance along with other management functions. That gives leaseholders collective control over matters such as the managing agent or broker used and how the insurance is procured.

It does not guarantee a lower premium. If the building is genuinely an expensive insurance risk, changing who arranges the policy does not make that risk disappear.

But where dissatisfaction with insurance forms part of a wider pattern of poor or opaque management, the Right to Manage may be worth considering. For more serious management failings, my separate guide explains appointment of a manager by the tribunal.

What about buildings insurance for leasehold houses?

The position is often different for a leasehold house, where the leaseholder may be responsible for arranging the insurance themselves.

There is a statutory protection where a long lease of a house requires the leaseholder to insure with an insurer nominated or approved by the landlord. Section 164 of the Commonhold and Leasehold Reform Act 2002 can allow a qualifying leaseholder to use their own authorised insurer instead, provided the statutory conditions are met and the required notice is served.

The Leasehold Advisory Service explains the insurance rules for leasehold houses.

What should I check when buying a leasehold flat?

Insurance can be overlooked during a purchase because attention tends to fall on lease length, service charges and planned major works.

I would still want to know who insures the building, the current premium, significant excesses, recent claims and whether there are known difficulties obtaining cover. If you intend to use a leasehold flat for Airbnb or other short-term letting, check the position before assuming that either the lease or the building’s insurance arrangements permit it.

A very high premium may also be a clue to problems elsewhere in the building, particularly where fire safety, cladding, flooding or repeated water damage is involved.

Your conveyancer should check that appropriate block insurance is in place and consider the relevant lease and lender requirements. My guide to buildings insurance when buying a home explains why flats are treated differently from ordinary freehold houses.

Are the rules on insurance commission changing?

Yes, but the new regime is not yet in force.

Section 59 of the Leasehold and Freehold Reform Act 2024 provides for the existing system to be replaced so that specified insurance costs cannot simply be passed through the service charge. Instead, landlords, freeholders and managing agents will be able to recover only a transparent “permitted insurance payment” of a type defined in secondary legislation.

The UK and Welsh governments consulted jointly on how this should work. In July 2026, the UK government confirmed that it intends to proceed with a transparent and fair permitted building-insurance payment alongside wider leasehold transparency reforms.

The detail still requires secondary legislation. The English government has said that leaseholders will begin seeing wider service-charge and transparency changes during 2027; implementation in Wales is dealt with separately.

For now, therefore, leaseholders should assess insurance costs under the existing lease, service-charge law and FCA rules rather than assume that the new permitted-payment regime already applies.

The government’s current position is explained in its response on strengthening leaseholder protections.

What I would check if the insurance premium suddenly increased

If an insurance contribution jumped sharply from one year to the next, I would start by comparing the two policies rather than just the two prices. Has the insured sum changed? Has the building’s risk profile altered? Are the excesses different? Has there been a significant claim? Has fire-safety or structural information affected the insurer’s view of the risk?

Next, I would look at procurement. How many insurers were approached? Were genuine alternatives available? Why was this policy selected?

Then I would follow the money. What remuneration did the broker receive? Was anything paid to the freeholder, managing agent or another party involved in arranging the insurance? What work was carried out for that payment, and has the same work been charged for elsewhere?

Finally, I would return to the lease and the basic statutory question: Is the cost properly recoverable and was it reasonably incurred?

That sequence matters. A dramatic increase is a reason to investigate, not proof that the charge is unlawful. Equally, “insurance has gone up everywhere” is not a complete answer to a leaseholder who is entitled to understand why their own building costs what it does.

For me, that is the real value of the modern disclosure rules. Leaseholders may not control every decision about their building’s insurance, but they should increasingly be able to see enough of the decision to test whether it makes sense.

Last legally reviewed: 12 August 2026

This article is based on general principles of English and Welsh law, is intended for informational purposes only, and does not constitute legal advice or establish a professional relationship.

About the author, Clare Lowes