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Buildings insurance - our approach as landlords (direct tel: 01792 315467)
Insurance is often a contentious issue when we buy a new portfolio of ground rents or rent charges. When we request compliance with an insurance covenant, many take umbrage. Some of our thoughts on the issue are:-
- When we acquire a portfolio, we are buying a bundle of rights. Those rights are not limited to just collecting rent. Provided we operate within the confines of the law, as a legitimate business we are entitled to exercise those rights.
- When we buy a ground rent or rent charge, we are acquiring an agreement (i.e. a lease or a rent charge deed) which is already in existence. When that agreement was first entered into (on the one side by our predecessor in title and on the other by the original property owner), both parties were presumably happy with the terms: similarly, subsequent purchasers were happy with the terms when they bought; if they weren't happy with the terms, then why did they buy the house?
- We find in some instances that no buildings insurance at all is in place. If it were not for our involvement, the owner would be at risk of losing his or her home entirely.
- Every home owner has to have buildings insurance. Why not try our in-house insurance broker for a competitive quote? You never know - you may even save yourself some money
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Buildings insurance - extenuating circumstances (direct tel: 01792 315464)
We recognise that for some groups of people (e.g. senior citizens, individuals suffering from serious illnesses) a change could be distressing. Accordingly, if you consider yourself to be in that category, please write to us with details. If we agree with you, we'll write back confirming that we will waive your personal breach of any insurance covenant contained in the lease or rent charge deed; there will be no fee for this service.
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Buildings insurance - the law (direct tel: 01792 315467)
The following is our understanding of the law. If in doubt, you should consult your own professional adviser (e.g. solicitor or Citizens Advice Bureau).
The first place to start is the lease or rent charge deed. You need to check the wording. We cannot unilaterally change any covenants. We have to keep to the covenants: equally we expect you to keep to the covenants.
Where there is a covenant to insure in an insurance office to be approved by the landlord, then the landlord has an absolute right to withhold approval of an alternative office without entering upon reasons. The authority for this is a 1928 House of Lords decision i.e. Tredegar -v- Harwood. The judgment goes on to say that, if, contrary to the main decision, there were to be implied a term that the lessor's approval was not to be unreasonably withheld, then in that particular case the grounds given by the lessor (i.e. that for estate management purposes he required all houses to be insured in the same office) were reasonable.
The effect of Tredegar -v- Harwood is that we are entitled to withhold approval or consent for any other insurance company until Zurich Insurance Company is put forward. Unless the lease or rent charge deed provides otherwise, we are not obliged to give reasons for turning down another insurance company.
Over the years Parliament has brought in various statutes with a view to limiting the power of landlords. You will need to seek legal or other professional advice if you wish to avail yourself of the different provisions. As far as we are aware, there is no such protection for house owners who are bound by an insurance covenant contained in a rent charge deed.
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