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Leaseholders in Kensington and Chelsea face 89% hike in insurance premium
Leaseholders in homes where Kensington and Chelsea Council owns the freehold face an 89% increase in their insurance premium following the Grenfell Tower fire.
A report to the council’s housing and property scrutiny committee said leaseholders’ insurance premium will rise from £796,518 in 2017/18 to £1.5m in 2018/19.
The council is now going to a tribunal to determine whether it is “reasonable” to pass the increased costs on to leaseholders.
The amount for each leaseholder will depend on how many rooms the property has.
A leaseholder in a two-bed property will face a £576.75 bill, while a four-bed property leaseholder will pay £697.69.
The council’s insurer, Ocaso S.A., will see a “significant and unprecedented loss” in the 2017/18 financial year due to the Grenfell Tower fire and the leasehold flats that were part of the tower, the report said.
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The report said: “This has therefore caused a major deterioration in the claims costs for the policy and inevitably results in an increase to the 2018/19 premium being charged by the insurers. The Grenfell Tower fire accounts for approximately 40.41% of the premium increase.”
As a result of the premium increase the council has referred itself to a tribunal to determine whether it is reasonable to pass on the increased building insurance costs to leaseholders.
The report stated: “It is anticipated the question as to whether it is reasonable to pass on increased leasehold building insurance costs arising from the Grenfell Tower tragedy to leaseholders will rightly be asked.
“Reflecting the council’s commitment to openness and transparency we are therefore working towards making a voluntary self-referral to the First Tier Tribunal (Property) and seeking their ruling on exactly that question. In this scenario, leaseholders will be provided with information about how they can become involved and ensure their views are represented.”
A spokesperson confirmed the council is going to tribunal and has written to leaseholders this week.
The report added that given the potential costs of a future major fire the insurance cover for rebuilding a property is going up to a maximum of £400,000 per property, and the loss of rent or cost of alternative accommodation cover is doubling, from £40,000 per property to £80,000 per property, or 33% of the rebuilding cover cost (whichever is greater).
The council also said leaseholder building insurance is going up generally, particularly in central London, because of weather conditions, an increased number of escape of water claims and insurance premium tax doubling from 6% to 12% since April 2016.
