London landlord to face tribunal challenge after 21-fold hike in insurance due to building safety issues

NHG said it does not have any control over the insurance premium levied by the building’s owner, Seven Capital. When it investigated the rise it found it was in keeping with market rates.

There was initially some dispute about whether the building is over 18 metres or not (buildings over 18 metres are deemed higher risk). A survey by NHG found the block to be between between 17.95m and 17.99m – below the limit that requires registration.

However, this did not result in a reduced premium due to the remediation work needed on the outside of the building.

As part of their tribunal submission, residents claim they have identified the manufacturer of the external wall system and that it is a low fire risk. But NHG has said the block has not yet had this assessment, so it is not able to determine what level of risk the cladding poses.

NHG initially claimed that the block could not be accessed by the London Fire Brigade (LFB), but LFB told Inside Housing that its local crews have no issue in accessing the building.

In response NHG said: “This was a line mistakenly included in a presentation to residents in June 2024. It was subsequently flagged to us by residents, and we were happy to correct it.”

Leaseholders were also billed for £60,000, which was wrongly added to the service charge as VAT on the insurance.

NHG told Inside Housing that this was incorrectly sent by Seven Capital, and the landlord challenged and sent a revised invoice after the budget estimate for 2024-25 had already been sent to residents.

An NHG spokesperson said: “There are 30 individual flat owners and 45 further flats owned by NHG. Neither NHG nor individual leaseholders have any control over the insurance premium levied by the building’s owner, Seven Capital.

“We were surprised to see a 21-fold increase in the insurance premium leaseholders (including NHG) had to pay, so investigated whether the premium was excessive or in line with market rates. Unexpectedly, we found that the quote provided by Seven Capital was typical of market rates.

“All flat owners must pay a portion of the building insurance, so NHG (as the owner of 45 of the homes at Shaftesbury Place) and the other individual homeowners are equally invested in keeping the insurance bill as low as possible.”

However, one of the residents who spoke to Inside Housing said they felt communication in resolving these issues has been poor and that they have “lost all trust” in how the building is being managed.

He added: “They seem to be able to make multiple mistakes and just say it was a human error. They are playing with people’s lives with no interest or care in how we are financially and mentally affected.”

Shaftesbury Place is a Section 106 scheme where NHG provide the affordable housing – a mix of social rent and leasehold homes.

Seven Capital’s role is to arrange building insurance and then invoice NHG for a percentage of the premium based on the number of homes the landlord owns in the building.

There are 75 shared ownership and social rent homes in total. Owners of the 30 leasehold flats each pay one-75th of the insurance premium cost. For the 45 social rent homes, NHG pays the collective insurance bill.

Inside Housing understands that remediation work to the external wall system has now started and will be completed by the end of the year. The landlord said it hopes that the removal and replacement of the cladding and insulation will see insurance costs reduced.

Seven Capital said: “Health and safety issues were discovered back in 2023 after an investigation by an independent surveyor for the insurance company.

"This resulted in the then building insurer reviewing the insurance policy which led to a significant increase in insurance costs, in line with then market conditions, which were directly recharged to NHG and thereby service charges for leaseholders.

"SevenCapital has a policy of being a good landlord and has taken a vested interest in working closely with both NHG and leaseholders to help reduce insurance costs and thereby service charge.

"Direct actions have resulted in the insurance company being changed and further information being presented to help reduce policy costs by over 50% in the past three years.

"SevenCapital has also been supporting NHG in their tender for improving the health and safety of the building, which once completed should further reduce the insurance costs and therefore leaseholder service charges.

"SevenCapital is a long-term investor and committed to building health and safety and product quality."