Buildings insurance for leasehold properties
Rules about buildings insurance costs
Reasonable charges
You’ll usually need to contribute to the cost of buildings insurance for a leasehold flat through your service charge.
Your landlord can only recover costs through the service charge if the amount is reasonable. You have the right to challenge a service charge if you do not think it is reasonable.
The type of policy and what’s covered should be in line with what your lease says.
Buildings insurance for blocks of leasehold flats can be expensive, particularly if insurers think your building is high risk, for example if there are fire safety concerns or if there have been serious water leaks in the past.
Your landlord does not have to find the cheapest possible insurance, but the cost should be in line with the market. Your landlord should regularly review the insurance and check what options are available to make sure the policy is good value.
Financial Conduct Authority rules
Under the Financial Conduct Authority (FCA) rules, insurance companies must act in leaseholders’ best interests.
Sometimes a landlord gets a payment (commission) from the insurance company in return for taking out insurance. The insurance company must disclose details to leaseholders of any commission they have paid.
The landlord may only take a commission if:
- it's to cover services they provide in arranging the insurance – they can cover their costs but cannot make a profit
- they are not also charging for these services as part of management costs in the service charge
You can challenge insurance charges if you think the landlord’s commission is unfair.
Block or portfolio policies
If your landlord owns the freehold of several different buildings, they might take out one buildings insurance policy that covers all of them, called a block policy or portfolio policy.
This can save money compared to insuring each building separately. But it’s important that the costs are shared between the buildings fairly. For example, leaseholders in a building that is cheaper to insure should not be subsidising a more expensive building.
Your landlord should be able to justify the way they’ve arranged insurance and how they’ve charged leaseholders. You can challenge the cost if you do not think it is reasonable.
- Last updated:
- 1 December 2025
- Next review:
- 1 December 2027
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