Real Estate and Construction

How Common is Tool Theft in the UK?

How Common is Tool Theft in the UK? 500 333 James Hallam

If you work in the construction industry, or if you are any kind of tradesperson, then it is important to understand the risk of tool theft.

In this post we will explore the scale of the tool theft problem in the UK, before sharing some tips for keeping your tools, and your business, safe.

What is the Scale of Tool Theft in the UK?

According to one insurer, tool theft occurs once every 17 minutes in England, Wales, and Northern Ireland. Other reports suggest that at least 110 tools are stolen every day across the UK.

Thieves do not just target construction sites and vans. They also target garages, storage lockups, and even private homes.

Most tool thefts occur at night, and tool thefts tend to increase by 20% throughout the winter months.

However, some tool thieves are so brazen that they will steal tools directly from tradespeople in broad daylight. One carpenter told the BBC that thieves threatened him and his family with violence if he called the police.

What Are The Most Common Areas for Tool Theft in the UK?

Analysis by LBC revealed that nearly half of all reported tool thefts occur in London. Other key hotspots for tool theft include Essex, West Yorkshire, the West Midlands, and Gwent.

Another report suggests that Cambridgeshire is the worst area for tool theft in the UK, followed by South Yorkshire, and Lancashire.

How Much Does Tool Theft Cost the Construction Industry?

One report estimated that tool theft has cost the UK construction industry around £2.8bn.

The Tradespeople Against Tool Theft report revealed that the average cost of an incident of tool theft is £4,470. Nearly 20% of tradespeople who have fallen victim to tool theft lost over £5,000 worth of tools.

How To Deal With and Prevent Tool Theft

  • Brief your staff. If you manage a construction business, or a team of contractors, make sure that everyone understands the risks of tool theft, and the steps they can take to manage the issue.
  • Take extra steps to secure your vehicle. Tool thieves seem most likely to steal tools from parked vans. Invest in extra security for your van, including extra locks, cameras, motion sensors, and location sensors.
  • Take extra care at night. Do not keep tools in your vehicle overnight. Try and park in a well-lit area – ideally on your own driveway, with motion sensors, floodlights, and security cameras.
  • Register your tools. Use a tool inventory app, such as the Tool Register, to keep track of all of your equipment. This way, if you are a victim of tool theft, you will immediately know the value of your loss, which can help with your insurance claim.
  • Mark your tools. Consider applying forensic marking to your most valuable tools, such as with microdots, and labelling your tools as “registered” and “protected”. This might help deter thieves.

Are You and Your Business Covered For Tool Theft?

83% of the tradespeople surveyed for the Tradespeople Against Tool Theft report revealed that, at the time of the theft, they had no insurance in place to cover the loss of their tools. Plus, as tool thieves regularly steal tools from vehicles, 13% of respondents had to pay for vehicle repairs on top of the costs of their lost tools.

Getting the right cover will not prevent tool theft, but it can at least guarantee that, in the event of tool theft, you will be able to replace your tools and get back to work as soon as possible.

James Hallam is an independent Lloyd’s broker with access to a hand-picked selection of A-rated insurance providers. We can help you get the cover you need at a competitive price.

Get in touch to find out how we can help you.

Changes to Insurance Fees and Commission for Managing Agents, Landlords and Freeholders

Changes to Insurance Fees and Commission for Managing Agents, Landlords and Freeholders 500 333 James Hallam

The Leasehold and Freehold Reform Act 2024 received royal assent on 24 May 2024. This post will provide a brief overview of how this new legislation will affect insurance fees and commissions for managing agents, landlords, and freeholders.

Leasehold and Freehold Reform Act 2024 – What Does It Involve?

The Leasehold and Freehold Reform Act 2024 applies to England and Wales, and it is designed to “improve consumer choice and fairness in leasehold”.

The act aims to achieve this through:

  • Making it easier and cheaper for leaseholders to extend their leases or buy their freeholds, whether they live in houses or flats.
  • Increasing the standard lease extension term.
  • Making moves to abolish, or significantly reduce, ground rent.
  • Improving the transparency of service charges, administration charges, and buildings insurance commissions, while giving leaseholders a right to request information about all charges related to the management of their building.

You can read a full guide to the legislation, and its aims.

Open Consultation – Permitted Insurance Fees for Landlords, Freeholders, and Property Managing Agents

The legislation addressed certain longstanding concerns that some landlords, freeholders, and property management agents may be passing on the costs of arranging and managing insurance to their leaseholders, without necessarily justifying or accounting for the work they have undertaken.

In short, some freeholders have been forced to pay significant insurance costs, and have had no power to challenge these costs, or even to properly scrutinise them. There have also been concerns that these costs may include commissions and other financial benefits for landlords, freeholders, and property managing agents that have nothing to do with the services that are allegedly being provided.

The government has launched an open consultation to find solutions to these issues. The aim of the consultation is to ensure total fairness and transparency for any costs associated with the management and arrangement of insurance for leaseholders. Leaseholders should know exactly what they are getting for their money, and they should have the power to challenge any decisions they disagree with.

Insurance Fees for Landlords, Freeholders, and Property Managing Agents – The Current Situation

Landlords, freeholders, and property managing agents are responsible for getting the right insurance in place for the properties they own/manage. Freeholders and property managing agents will usually cover the costs associated with arranging this insurance through charging their leaseholders within their service charges.

It was common for landlords, freeholders, and property managing agents to use insurance brokers to arrange for the necessary property insurance. Brokers work on a commission or fee basis, and they may choose to renumerate landlords, freeholders, and property management agents through giving them a share of their income.

This consultation was launched due to concerns that the current arrangement incentivised landlords, freeholders, and property managing agents to work with insurance brokers that promised the highest commission/income. Such an arrangement would not necessarily provide leaseholders with the best value option.

Meanwhile, leaseholders would be obliged to pay for the entirety of their insurance premiums, which often included any commissions or fees that were shared between brokers and the landlords, freeholders, and property managing agents. Plus, the lack of transparency meant that leaseholders had no power to scrutinise or challenge any decisions made about the insurance they were paying for.

What Could Change Following The Consultation?

  • Landlords, freeholders, and property managing agents will be banned from charging leaseholders any costs beyond a “permitted insurance fee.”
  • Excluded costs are anything related to the arrangement or management of insurance, which includes broker commissions or fees.
  • The consultation proposes secondary legislation to ensure that landlords, freeholders, and property managing agents would only be able to charge leaseholders for insurance services via a separate fee, rather than as part of a variable “service charge”. This would improve transparency, and leaseholders would have the right to scrutinise and challenge any fees they are charged under the provisions of the Landlord and Tenant Act 1985.

How Landlords, Freeholders, and Property Managing Agents Can Prepare For Change?

Are you a landlord, a freeholder, or a property managing agent? Are you wondering how you might prepare for this change?

It might help to get involved in the open consultation. As well as providing an opportunity to share your thoughts, the consultation also includes a number of questions for you to consider. These might help you understand the viability of your current arrangement, along with the steps you may need to take to make your practices more transparent.

If you have any concerns about the future procedure for securing the right insurance for the properties you manage, we are here to help. We are an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. We are committed to getting you the cover you need at a price you can afford, all while delivering the best possible value for your leaseholders.

Get in touch for a free quote today.

How To Find Suitable Land For Development

How To Find Suitable Land For Development 500 375 James Hallam

If you are a real estate developer, you may have struggled to find land that is suitable for building on.

This post is an essential guide to finding suitable land for development in the UK. We will cover a number of techniques you could try to help you find your next development opportunity.

Go for a walk and spot plots with potential

Take a tour of your local area, or of the target area you want to develop. Pay attention, and you just might find the perfect future development site.

It could be a derelict building, or an empty plot of land, or even an established building with a big “For Sale” sign on the front. Make a note of the address, take lots of pictures, and try to find out who you need to contact to inquire about purchasing and developing the land or property.

Ways to find undeveloped land online

There are many online resources to help you find land development opportunities:

  • HM Land RegistryThis will tell you who, if anyone, already owns any given piece of land. If you find an empty plot of land that seems perfect for development, for example, this service will let you find out whether anyone owns it, so you will know who to contact for more information.
  • Brownfield Land RegistryAnother government resource, on which local councils can list any sites in their area which may be suitable for future development.
  • PlotBrowserOne of a number of sites that will allow you to find UK building plots, for free. If you create an account, you may be able to get regular updates on any new development opportunities in your target areas.
  • Government Property FinderThe government is legally required to publicly advertise any land or property they have for sale. As well as using the government’s dedicated property finder resource, also check the official local council websites for any development opportunities in your target areas.

Finding Land to Develop at Property Auctions

Plots of land are often sold at auctions. You may be able to find upcoming auctions through visiting dedicated auctioneer websites:

You may end up paying less for the land at auction than you would if you used a different avenue. The turnaround is often a lot faster, too. However, it is important to do your research. Make sure you thoroughly understand the opportunities and limitations of any land up for sale before you commit to a purchase.

Get tailored support for property developers from James Hallam

Buying land is risky. So too is developing land. The right insurance can act as an essential safety net, enabling you to search for, purchase, and develop land with total peace of mind at every step of the way.

Our bespoke insurance services can help you ensure you have full cover for every stage of the land acquisition process. Talk to us, and we will help you secure the cover you need at the best possible price.

Get in touch to find out how we can help you. 

Construction Skills Shortage in the UK: Where Are The Biggest Gaps?

Construction Skills Shortage in the UK: Where Are The Biggest Gaps? 500 334 James Hallam

The UK has been struggling with a construction skills shortage for some years now. In 2021, it was estimated that 75% of all UK contractors were having problems recruiting skilled workers.

The latest CITB figures suggest that the UK needs an extra 251,500 construction workers by 2028 to meet expected levels of work. This means the industry will need to recruit an extra 50,300 new workers per year.

Where are the biggest gaps in the construction workforce?

The 2024-2028 Construction Skills Network report reveals that the major sectors for demand are:

  • Private Housing – In 2023, output on the construction of new private homes saw a decline of over 13%. The housing market slowly improved throughout 2024, but due to the skills shortage, the CSN report forecasts a comparatively sluggish growth in the coming years.
  • Infrastructure – New infrastructure output “flatlined” in 2022, and output rose by around 4% in 2023. The annual growth rate for the sector between now and 2028 is projected at 1.5%, one of the lowest of all sectors. Due to skill shortages, as of November 2023 the government’s Environment Agency delivered less than 20% of its initial output target, despite using up 33% of the time allocated and 25% of the funding.
  • Repair and Maintenance – 2023 was the fourth consecutive year in which R&M output outperformed new work. Between now and 2028, the CSN report forecasts an average growth in R&M work of 2.8% per year. Many private homeowners are choosing to improve their current properties instead of moving. Meanwhile, damp issues and cladding remediation projects are encouraging many public housing associations to invest more in R&M. Due to this projected demand, the construction skills shortage will likely be particularly noticeable in the R&M sector.

How to address the construction skills gap in your organisation

  • Aim to attract younger workers. Polls suggest that only 5% of students are considering pursuing roles in construction. Consider ways you might attract younger workers. This might be through offering generous renumeration and employee benefits packages, or through highlighting the possibilities of long-term job security and career development.
  • Invest in apprenticeships. The 2024 Open University Business Barometer highlights how many employers are turning to apprenticeships to bridge their skill gap. However, the report found that 63% of organisations do not have specific recruitment, retention, or training initiatives for apprentices or other target groups. The government has plenty of resources available on their site for any business that wants to offer attractive and sustainable apprenticeships.
  • Invest in training and development. As well as expanding your workforce, look for opportunities to improve your existing workforce. With training and development, you can broaden your existing workers’ skillsets, which could help reduce the skills shortage you are currently facing. Plus, if you publicise the extensive training and development opportunities at your business, it could help you recruit the next generation of construction workers. Development opportunities tend to be a strong incentive for potential employees.

Get tailored support from James Hallam

The coming years are going to be tough for the UK construction industry. But at James Hallam, we are committed to helping you in any way we can.

We can support you with thorough risk assessments and through ensuring you have adequate insurance cover in place to protect your business, your workers, and your assets. Our support can provide essential peace of mind at the best possible price.

Get in touch to find out how we can help you.

Who is Responsible for Building Insurance on Commercial Property?

Who is Responsible for Building Insurance on Commercial Property? 800 533 James Hallam

Buildings insurance is vital for all businesses. If your business premises are not insured, then you may struggle to operate following fires, floods, and other incidents.

Yet who is responsible for arranging and paying for building insurance on commercial properties?

Whether you are a business owner, a leaseholder, or a freeholder, it can be confusing to determine your exact responsibilities when it comes to building insurance. So, in this post, we will answer some of the key questions that you might have regarding building insurance on commercial properties.

Who is responsible for arranging building insurance on commercial properties?

Apart from a few exceptions, the responsibility for arranging building insurance falls upon whomever legally owns the commercial property. If you are an owner-occupier, meaning your business owns your premises outright, then you will be responsible for arranging your building insurance, and paying for it, alongside the rest of your business insurance.

Who is responsible for building insurance if you rent your business premises?

What if your business is just one of a number of businesses to rent space in the same building? In this case, more often than not, the building’s owner, freeholder, or landlord will be responsible for ensuring there is adequate building insurance in place to cover their occupants against all possible risks.

In some instances, the terms of the lease may stipulate that the head lessee is responsible for arranging building insurance, rather than the freeholder, subject to the freeholder’s interest being noted on the policy.

Who is responsible for paying for building insurance on commercial properties?

The property owner, freeholder, or landlord will not necessarily pay for the insurance they arrange. They may instead choose to pass on the cost of cover to their tenants as part of their commercial lease agreement.

So, if you are a business owner renting your premises, you may still have to pay for buildings insurance, even if you are not responsible for arranging it yourself.

If you are the sole business occupying the premises, then you will pay for all of the cover. But if you are one of several businesses occupying the premises, then you will likely only pay for a proportion of the cover.

What does commercial building insurance cover?

In a commercial property, building insurance will cover the property’s internal and external structure, including all windows, doors, plumbing, electricals, stairwells, and so on. Typically, the insurance will provide cover for property damage – for any necessary repairs following fire, flood, subsistence, break-ins, and so on.

The commercial property insurance will typically not cover the building’s contents. So, if you are leasing office or warehouse space in a commercial property, you will almost certainly have to arrange for your own separate contents insurance policy, to cover your stock and equipment.

You will also have to arrange for certain additional forms of business insurance. This might include business interruption insurance, employer’s liability insurance, cyber insurance, and whatever else is necessary to cover your business for the various risks you face while conducting business.

How does commercial property insurance work when making a claim?

Consider the following example: There is a fire at the commercial property where your business is based. It causes significant damage, so it becomes necessary to make an insurance claim.

Whomever legally owns the building, whether this is an owner-occupier, or a third party landlord or freeholder, will be responsible for making a claim on the building insurance policy. This will cover the necessary repairs for any damage to the building’s structure, or its permanent fixtures and fittings.

Yet any businesses based in the building will have to make separate claims on their own policies to get the cover they need for destroyed or damaged stock or equipment, for business interruption, for loss of income, for temporary relocation, and so on.

This is why it is important that everyone involved in a commercial property leasing agreement fully understands their responsibilities in regard to insurance, and the steps they will need to take in the event of a claim.

Insurance claims in commercial properties can get complicated. But with good communication between tenants, freeholders, leaseholders, insurers, loss adjusters, and whomever else is involved in the claim, the process can proceed as smoothly as possible.

Have you got the right cover for your business or commercial property?

Whether you are a landlord, a leaseholder, a freeholder, or an owner-operator, we can help you make sure you have the right cover in place for your commercial property. As well as advising on your buildings insurance, we can also advise on the additional cover you might need to ensure you meet you are fully compliant and fully protected.

Find out more about our Real Estate Insurance and get in touch for a free quote today.

What Property Developers Need to Know About ESG in Real Estate

What Property Developers Need to Know About ESG in Real Estate 800 519 James Hallam

Growing numbers of property developers are starting to understand the importance of ESG in real estate.

In this post, we will explore what ESG means for real estate, while outlining some steps property developers can take to improve their practices.

What is ESG?

ESG stands for “environmental, social, and governance”. Think of ESG as a framework for conducting business as ethically and sustainably as possible. If a business commits to ESG, it means they are committing to adopting best practice in each of these three pillars:

  • Environmental – Taking stock of your businesses carbon footprint, and taking steps to increase energy efficiency and reduce waste.
  • Social – A focus on the human impact of your operations. This means looking after your people, and for anyone who interacts with your business, whether they are customers or other members of the public.
  • Governance – Assessing how your business is run internally, with a focus on factors such as regulatory compliance, executive pay, tax, financing, and more.

Why ESG matters for real estate

The environmental pillar should be of particular concern for property developers. According to UKGBC, the real estate industry contributes to 42% of the UK’s total carbon emissions. Plus, a recent report found that 70% of UK commercial real estate stock falls below EPC rating B, and over 50% of UK homes fall below EPC rating C.

The government’s energy efficiency bill has set certain targets regarding EPC ratings. By as early as 2030, properties will need to meet certain minimum energy efficiency standards before they can be legally listed or sold on the real estate market.

This creates a pressing business case for property developers to commit to ESG. With such stringent regulations in place, the future of the UK real estate industry depends on it.

How to improve your ESG as a property developer

ESG is not a box-ticking exercise, and it is not the sort of thing you can do once and then forget about. It will require an ongoing commitment to achieving best practice in each of the three pillars.

In this post, we have focused on the environmental pillar of ESG. This is because the looming deadlines for minimum energy efficiency standards likely mean that most property developers will be particularly concerned about working towards economic sustainability.

It will not be easy. One study estimated that upgrading the UK rental housing stock to meet the minimum efficiency standards could cost around £18 billion. The cost of upgrading commercial stock could be even higher.

How to begin your ESG journey to best practice

There are a number of ways property developers could work to achieve best practice in ESG:

  • Do not underestimate the importance of “quick wins”. Investing in advanced heat pumps for your entire property portfolio may be prohibitively expensive. But choosing energy-efficient lighting is not.
  • Conduct an audit of your own internal operations. Identify any key areas of improvement, and make them the foundation of a new set of policies and procedures focused on ESG.
  • Learn how to measure your performance on each of the ESG pillars. Invest in training wherever necessary to ensure that individuals across your business understand the part they need to play in reaching your goals.

Work with other organisations that share your commitment to ESG

James Hallam is an independent Lloyd’s broker with access to a hand-picked selection of A-rated insurance providers. We share your commitment to ESG, and we will support you in any way we can to help you achieve best practices across your property development business.

For example, running thorough risk assessments, and ensuring you have adequate insurance cover in place to protect your assets, is a core component of the governance pillar of ESG. We specialise in helping real estate businesses meet all of their insurance needs at the best possible price.

Get in touch to find out how we can help you.

OCIP vs CCIP: What is The Difference and Which Should I Choose?

OCIP vs CCIP: What is The Difference and Which Should I Choose? 800 534 James Hallam

If you are a property developer, or you are managing a large construction project, you have a choice about the sort of insurance you get to cover your project.

Broadly speaking, it is a choice between an owner-controlled insurance programme (OCIP) and a contractor-controlled insurance programme (CCIP).

In this post we will explain the difference between the two arrangements, to help you decide which is best for you.

What is OCIP?

OCIP stands for owner-controlled insurance programme. It is designed to provide comprehensive cover for key parties involved for the duration of a construction project. As the name of the programme suggests, an OCIP is usually purchased by the owner of the construction project, such as a property developer.

What is CCIP?

CCIP stands for contractor-controlled insurance programme (CCIP). This is designed to provide cover for all contractors and subcontractors involved in construction projects. A CCIP is typically purchased by a contractor, which means that the owner may not pay the premiums themselves.

What is the Difference Between OCIP and CCIP?

The biggest difference between an OCIP and a CCIP is the level of cover provided by each arrangement. OCIPs provide comprehensive cover while CCIPs are not as comprehensive.

Usually, OCIPs provide comprehensive cover for all aspects of a construction project, including property damage, personal injury, and certain liabilities. OCIP coverage can extend to contractors and subcontractors, along with their employees, and it can even cover third-party claims.

CCIPs, on the other hand, are not as comprehensive. They are usually purchased directly by contractors, and as such will only cover that contractor, along with any subcontractors they appoint.

Plus, CCIPs are often a lot more limited in scope. While an OCIP can cover an entire construction project, from start to finish, CCIPs are usually purchased on a project-by-project basis. This means that the coverage may stop as soon as the contractor’s involvement in the project comes to an end.

OCIP vs CCIP: Which Should I Choose?

There are certainly some benefits to choosing a CCIP. This arrangement can be a lot more affordable than purchasing an OCIP. Plus, letting contractors arrange their own insurance can help streamline construction projects.

Yet if you are overseeing a construction project, only an OCIP will guarantee you the cover you need, for as long as you need it.

With an OCIP, the property developer will have full control over the entire policy, and all of the associated costs. This means:

  • You get to choose the extent of your cover, so you can ensure that everyone involved in the project is covered for every risk. With a CCIP, the contractor may overlook certain risks, which may lead to a costly underinsurance situation.
  • The entire project, from start to finish, can be covered under a single policy. This is often the most cost-effective approach. If there are multiple contractors involved in the project, there may be multiple CCIPs. This could result in overlaps across the various premiums, meaning you may pay extra for cover you do not need.
  • An OCIP can also streamline the claims process. Rather than potentially making multiple claims on multiple policies, you will only have to make a single claim on a single policy. Plus, all settlements will be made directly to your business.

Be sure to read our full guide to your insurance requirements as a property developer.

Specialist Insurance Services for Property Developers

If you are worried about your insurance requirements as a property developer, we are here to help.

We are an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. At James Hallam, we know that no two property development projects are ever quite the same. This is why we will take the time to understand your risks so we can tailor a flexible and cost-effective property developer insurance package that offers all the cover you need.

We can help you ensure you have enough cover to protect your project, at a competitive price. Get in touch for a free quote today.

New Rules For Multi-Occupancy Buildings Insurance – One Year On

New Rules For Multi-Occupancy Buildings Insurance – One Year On 800 800 James Hallam

In December 2023, the Financial Conduct Authority (FCA) set out new rules for multi-occupancy building insurance. These rules only apply to residential leaseholders. They do not affect commercial properties.

In this post we will review the new rules that came into play and assess the effect these new rules have had on the market over the past year.

Why Were New Rules For Multi-Occupancy Buildings Insurance Introduced in 2023?

The FCA’s new rules were devised in response to certain concerns that surrounded insurance for high-rise buildings following the 2017 Grenfell Tower fire. It was found that the insurance market was not working in the interests of leaseholders.

On buildings insurance policies for multi-occupancy properties, the freeholders are the insured party, rather than the leaseholders. As a result, insurers and brokers rarely considered leaseholders’ needs. On top of this, leaseholders did not have a say in how their cover was arranged, and they had no means of challenging any decisions made about their cover.

The FCA established new rules to apply to all leasing contracts completed from 31 December 2023, including renewals. The new rules apply to the building insurance policies for any leasehold dwelling in the UK, of any size and of any type. Specifically, the changes are intended to benefit leaseholders who pay a “service charge” as part of their lease, which contributes to building insurance cover.

The only instances where these rules do not apply are in commercial properties leased by businesses, and in rented accommodation where there is no itemised cost for insurance.

The FCA’s NEW Rules For Multi-Occupancy Building Insurance

The new FCA rules are as follows:

New Disclosure Documents

There must be more transparency over any decisions made about a building insurance policy by freeholders. Plus, new disclosure documents are now necessary to make it clear to leaseholders exactly what they are getting for their insurance premiums.

The FCA stipulate that these documents must be designed with a consumer audience in mind, meaning that they must be more accessible and not contain overly technical language.

Insurers and brokers have a responsibility to share these documents with policyholders, who then have an obligation to share them with leaseholders. For more information, you can read a full guide to the content that the FCA outlines for these disclosures.

Leaseholders are Now Considered Customers

As leaseholders are now considered customers in insurance arrangements, insurers and brokers must provide the same level of service and transparency as they would to any other customers.

This has numerous implications on how insurers and brokers operate. For example, under this new rule, insurers and brokers must ensure that any renumeration decisions are not just in the freeholder’s best interests as a policyholder, but also in the leaseholders’ best interests.

Insurers and Brokers Must Provide Fair Value to Leaseholders

As leaseholders typically pay their own insurance premiums, then insurers and policyholders have an obligation to deliver a valuable product at a fair price, with total transparency on any pricing decisions.

The Effect of the New Rules For Multi-Occupancy Buildings Insurance One Year On

These new rules have been in place for almost a year now. How has it affected the insurance market for multi-occupancy buildings?

The new rules appear to have kickstarted a national conversation about leaseholders’ rights. It has emerged that, in recent years, leaseholders have paid hidden insurance commissions as part of their “service charge”.

Until these new rules came in, leaseholders had no say in the decisions that freeholders made regarding buildings insurance. It has emerged that certain freeholders may have agreed to pay higher premiums for cover, allowing brokers to receive larger service fees. In exchange, freeholders benefited from commissions in exchange for choosing this insurer.

The higher premium payments were passed on to leaseholders, who did not receive any added value. Worse, they often had no idea that such arrangements had taken place, and even if they were made aware, they would have no ability to influence any decisions.

2024 Class Action Lawsuit against Hidden Insurance Commissions

In July 2024, a class action lawsuit was launched against these “hidden insurance commissions”, which one solicitor described as a “national scandal”.

Such secret arrangements and underhand commissions would be in breach of the new FCA rules. The British Insurance Brokers’ Association has welcomed these reforms. They have also announced their plans to produce guidance for brokers to help them ensure that they value leaseholder interests alongside freeholder interests.

Paul Stenning, Divisional Director, Real Estate & Construction, James Hallam, said:

“These new rules should help to level the playing field in an area of insurance that has traditionally been exploited by certain parties. As a prudent specialist broker, we welcome these new rules and have embraced the rationale to ensure that our clients’ insurances are placed with an emphasis on a combination of breadth of cover, security of insurers, and fair and appropriate insurance premiums.

“Our advice to freeholders who may be concerned about their premiums is don’t be afraid to ask your broker or managing agent for disclosure of costs and fees as you are entitled to know exactly what your leaseholders’ premium payments go towards. And of course, don’t forget that you are within your rights to seek alternative quotes.”

Waiting For The Autumn Budget

Since the FCA introduced the new rules, the UK has elected a new Labour government. At the time of writing, the details of Chancellor Rachel Reeves’ Autumn Budget, and the implications it might have on the insurance industry, are unclear. However, there are concerns that the new government may look to raise insurance premium tax (IPT).

Biba has called on the new government to cut the headline rate of IPT from 12% to 10%. On top of this they have called for an IPT exemption for all multi-occupancy residential buildings that are either currently undergoing, or in need of, cladding remediation.

In a statement, Biba said: “We believe that IPT is a tax on the poor and vulnerable, and a tax on businesses at a time when we want them to invest more in risk management.”

Are You Struggling to Get Multi-Occupancy Building Insurance?

There have been concerns that, following these new FCA rules, insurers and brokers may leave the market, or else limit their cover options.

If you are a freeholder, and you have struggled to get multi-occupancy building insurance as a result, we can help you.

We are an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. We are committed to getting you the cover you need at a price you can afford.

Talk to us, and we can help you ensure you have enough cover to protect your multi-occupancy property at a truly competitive price. We will also help you ensure you meet the new FCA regulations, and that your insurance meets your leaseholders needs, as well as your own.

Get in touch for a free quote today.

What Insurance Do Property Developers Need?

What Insurance Do Property Developers Need? 800 500 James Hallam

Property developers need a diverse range of insurance products to cover the various different aspects of their projects.

In this post we will explore the insurance cover you need as a property developer to ensure you are adequately covered for all risks. We will also discuss the benefits of choosing owner controlled insurance programme (OCIP) for your property development business.

Essential Insurance For Property Developers

Property development insurance policies should include cover for:

  • Construction All Risks – Cover for physical loss or damage to the contract works, whether caused by fire, flood, or other incidents.
  • Delay In Start-Up – If your project takes longer than expected, your clients could lose revenue, and could make a claim against you. Delay in start-up insurance provides cover for any financial loss following such delays.
  • Third-Party Liability – Cover for any third-party property damage, or any third-party accidents or injuries, sustained as a result of your project.
  • Public Liability – Cover for any damage to public property, or any accidents or injuries sustained by members of the public, as a result of your project.
  • Existing Property – If the property development project is a renovation of an existing property, you will need cover for any damages caused to the existing structure stemming from your project.
  • Employer’s Liability – If you employ any staff, you have a legal requirement to get employer’s liability insurance, to cover your workers for any accidents or injuries they sustain on the job.

Additional Insurance Property Developers May Need

Depending on the nature of your project, you may need some additional cover. Specialist property developer insurance products include latent defects cover and rights of light cover. For example, if your project involves repairing a church in England or Wales, you may have a legal obligation to get chancel repair liability cover.

Why You Should An Choose Owner Controlled Insurance Programme (OCIP)

Some property developers allow contractors and other third parties to arrange the insurance cover for development projects. This is a risky approach, as there is no guarantee that you will get all the cover you need. The best way to ensure your project has adequate cover for all risks is with an owner controlled insurance programme (OCIP).

This essentially means that the property developer has full control over the policy and the associated costs. This way, you can guarantee that you will have full cover for every aspect of your project. On top of this, the added control means you can get exactly the cover you need at the best possible price. As well as avoiding the risk of underinsurance, you will also avoid paying extra for any unnecessary overlaps in premiums.

Finally, getting your insurance on an OCIP basis can result in more straightforward claims processes. Often, it means you will only have to make a single claim on a single policy, and any payments will be made directly to your business.

Talk To James Hallam About Your Property Developer Insurance Needs

James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. We know that no two property development projects are ever quite the same, and we are committed to getting you the cover you need at a price you can afford.

Talk to us, and we can help you ensure you have enough cover to protect your project, at a truly competitive price. We will take the time to understand your risks so we can tailor a flexible property developer insurance package that offers full cover at outstanding value.

Get in touch for a free quote today.

Freeholder Insurance Responsibilities and Duties

Freeholder Insurance Responsibilities and Duties 800 534 James Hallam

If you are the freeholder for a property, you may have certain duties and responsibilities when it comes to insurance.

In this post we will outline the key freeholder insurance responsibilities and duties. We will also explore a recent change in the law, and outline how this might affect you as a freeholder.

Key Duties and Legal Responsibilities For Freeholders

The Landlord and Tenant Act 1985 and the Landlord and Tenant Act 1987 outline some key legal obligations that apply to all freeholders – that is, the party who owns the land on which a property is built.

These legal obligations include:

  • Repairing and maintaining the building structure.
  • Cleaning and maintaining any communal areas in the property, such as hallways, stairs, lifts, and doors.
  • Setting and collecting ground rent and service charges.
  • Delivering management reports to leaseholders to outline how ground rent and service charges are spent.

Do I Need Freeholder Building Insurance?

Your leasing arrangement may stipulate that, as a freeholder, you need to get suitable building insurance for your property. Additionally, your local council regulations might specify that you need some form of protection in place for your tenants. Getting adequate cover might also be a key requirement of your mortgage arrangement.

Yet even if you do not have a legal responsibility to get insurance, it remains essential that you get suitable cover for any potential loss, damages, or legal issues.

The Risk of Inadequate Cover

Without adequate cover in place, you might be personally liable for any losses or damages arising from incidents at your property. Even a small claim can come with a huge financial cost.

Specialist insurance provides freeholders, leaseholders, and tenants with essential peace of mind that everything will be taken care of should anything ever go wrong.

What Type of Insurance Do Freeholders Need?

You might see freeholders building insurance referred to as “block of flats insurance”, or “multi-unit dwelling insurance”. In any case, it is a specialist form of cover for property owners who provide accommodation for multiple residents.

You should be able to get a bespoke policy that is tailored to meet your specific needs as a freeholder. Yet most policies will include cover for the following:

  • Structural damage, including subsidence.
  • Flooding, whether caused by burst pipes, escape of water, or otherwise.
  • Loss of rent.
  • Alternative accommodation for tenants, should your property become uninhabitable.
  • Break-ins, vandalism, and theft.
  • Public liability and third party liability – for claims involving accidents or injuries sustained while on or near your property.

New Multi Occupancy Rules on Residential Properties

The FCA recently introduced new multi occupancy rules on residential properties, which came into effect on 31 December 2023. These changes affect both leaseholders and freeholders.

Essentially, the new rules require insurance firms to be more transparent when providing key information to leaseholders and freeholders.

These changes apply to multi-occupancy residential buildings including multi-tenanted leasehold properties, buildings converted into individual flats, and mixed commercial and residential occupancy buildings. They may bot apply to Houses in Multiple Occupancy (HMOs).

For more information, contact your insurer.

Talk To James Hallam About Your Freeholder Insurance Needs

James Hallam is an independent Lloyd’s broker with a dedicated team of experienced insurance professionals. We are committed to getting you the cover you need at a price you can afford.

Talk to us, and we can help you ensure you have enough cover to protect your freehold property at a truly competitive price. We will take the time to understand your risks so we can tailor a flexible freeholder building insurance policy that offers full cover at outstanding value.

Get in touch for a free quote today.