Question 1

Extortionate Amount of Money

Accepted Answer

Q: The new LPE1 form has the following question: Please confirm the date of the last buildings reinstatement cost assessment? I have spoken with the insurance broker that the previous managing agents and the freeholder use and neither has any record of this. We took over the management in 2005 and the insurance has always been based on the previous year with an up-lift for inflation. We are being advised to have a valuation carried out. The freeholder has said that it is the responsibility of the management company. On contacting one company we were told the cost of the valuation would be £9,900 + VAT. Should this be the responsibility of the freeholder or should the residents have to pay this through their service charges? FPRA Hon Consultant Belinda Thorpe replies: Insurers recommend that valuations are completed every three years. Once you have the valuation it is sensible to check with your Insurer to whether they require VAT adding on or not, as some do and others do not. I would expect that whoever has the responsibility to make the arrangements to insure the block, should also be responsible for ensuring it is insured adequately and correctly and therefore responsible for the cost of the survey. If you are not sure who is responsible to make the arrangements to insure, then I expect it should be shown in your lease. I am happy to review the lease, if this helps at all. Lastly, £9,900 seems an extortionate amount of money for a rebuilding cost survey. One company I know has rates for a block this size at £21 per flat. [Submitted December 2016]

Question 2

Extortionate Amount of Money

Accepted Answer

Q: The new LPE1 form has the following question: Please confirm the date of the last buildings reinstatement cost assessment? I have spoken with the insurance broker that the previous managing agents and the freeholder use and neither has any record of this. We took over the management in 2005 and the insurance has always been based on the previous year with an up-lift for inflation. We are being advised to have a valuation carried out. The freeholder has said that it is the responsibility of the management company. On contacting one company we were told the cost of the valuation would be £9,900 + VAT. Should this be the responsibility of the freeholder or should the residents have to pay this through their service charges? FPRA Hon Consultant Belinda Thorpe replies: Insurers recommend that valuations are completed every three years. Once you have the valuation it is sensible to check with your Insurer to whether they require VAT adding on or not, as some do and others do not. I would expect that whoever has the responsibility to make the arrangements to insure the block, should also be responsible for ensuring it is insured adequately and correctly and therefore responsible for the cost of the survey. If you are not sure who is responsible to make the arrangements to insure, then I expect it should be shown in your lease. I am happy to review the lease, if this helps at all. Lastly, £9,900 seems an extortionate amount of money for a rebuilding cost survey. One company I know has rates for a block this size at £21 per flat. [Submitted December 2016]

Extortionate Amount of Money

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