EX KCTMO LEASEHOLDERS BEAR THE BRUNT

Dear Dame

Could you kindly publish the following excerpts and scan of page six of a six page letter dated 15th March 2018, received from Ex KCTMO operative, Assistant Director of Homeownership Daniel Wood, now operative of RBKC.  (please forgive any copy typo's).

Please kindly invite your readers to help us challenge this outrageous increase in Leaseholders Building Insurance which RBKC inform us they will send to the First Tier Tribunal (Property Chamber) under Section 27A Landlord and Tenant Act 1985, to determine whether these leasehold building insurance premiums have been reasonably incurred by the Council and accordingly, whether the individual premiums are properly payable by individual leaseholders.

Thank you for your continued support of all things good in RBKC and your tireless work to highlight the injustice and erosion of our environment and community.  

We are indebted to you.

With kind regards,

Your avid followers and admirers

Letter from Daniel Wood

15th March 2018

Dear Leaseholder

Your buildings insurance renewal for 2018/2019

I am writing to let you know, as early as possible, that your leasehold building insurance premium will be going up from 1 April 2018.  You pay for this in your service charge.

I understand this is frustrating news and I'd like to reassure you we're working harder than ever both internally and with our insurers to try to minimise the costs you pay but there are a number of unavoidable factors what have resulted in the increase.

Why is my Insurance cost rising?

The building insurance premium is going up by 85.56% (before Insurance Premium Tax - "IPT"), for the following three key reasons:

1.  The insurers, Ocaso, will see a significant and unprecedented loss in the 2017/18 policy year due to the Grenfell Tower fire and the leasehold units that were part of the tower.  This has therefore caused a major deterioration in the claims history 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 your premium increase.

2.  The property sums insured: - on advice from the insurers, given the experience of the Grenfell Tower fire and the unanticipated potential costs that would apply to a future major fire in terms of a sustained need for alternative accommodation, complex demolition and site clearance costs, the current level of sums insured have been reviewed.  The sum insured is now going up to a maximum of £400,000 per property, other than for the very small number (24) whose sums insured is already above this. Your loss of rent or costs of alternative accommodation cover is also going up, to a maximum of £80,000 per property (currently £40,000 per property), or 33% of the property sum insured, whichever is greater.  This is to ensure you have adequate cover.  These charges are responsible for approximately 31.99% of the premium increase.

3.  The general cost of leaseholder building insurance is going up, particularly in central London, due to a number of factors.  For example, adverse weather conditions, a higher volume of "escape of water" claims, the cost of home repairs and like-for-like alternative accommodation continues to increase.  These factors have contributed to approximately 13.60% of the premium increase.  On page 6 of this letter is a summary of claims experience to date.  For comparison, the premium received by the insurers last year was £796,517.80 including IPT.  This demonstrates their losses.

Finally, IPT (which is tax set by the government) has doubled from 6 per dent to 12 per cent since 1 April 2016.

Can't you get a better price?

We last tendered the insurance contract in 2015, producing significant savings over the last two years.  Before IPT, the 2016/17 premium was a 34% saving on the 2015/16 premium and the 2017/18 was a 28% saving in comparison to 2015/16.

We've taken advice from our insurance brokers about getting a better price than Ocaso are offering.  Their advice is that re-tendering now is likely to result in even higher costs to leaseholders because of the Grenfell Tower fire a general increase in the overall value of claims made by the Council's leaseholders in recent years and current market conditions.

That said, and subject to advice from our insurance brokers, we would like to be in a position to re-tender the contract later this year, to ensure we are getting the best price reasonably obtainable.  We will write to your in the next few months with an update about the brokers' view of the current and, if appropriate, the approach we are considering for any tender exercise.

Is it reasonable to pass on increased leasehold building insurance costs arising from  theGrenfell Tower Tragedy?

In addition to the terrible loss of life and the ongoing suffering of all those affected by this tragedy, a number of leasehold flats were damaged by fire and the anticipated costs of this unprecedented event are reflected in the claims experience the appendix below (No included here).

Anticipating that variations of the question above will rightly be asked and reflecting the Council's commitment to openness and transparency, the council has decided to make a formal application to the First Tier Tribunal (Property Chamber) under section 27a Landlord and Tenant Act 1985.  We will be asking the Tribunal to determine whether these leasehold building insurance premiums have been reasonably incurred by the Council and - accordingly - whether the individual premiums (as set out in the table on the next page) are properly payable by individual leaseholders. (Table not added here)

To ensure that you have your say, we are proposing to make all leaseholders parties to this application.  This will enable you to take part in the Application if you so choose, with the result binding everyone (including the Council).  We will write to you again when the Application has been issued, with further information, and what you will need to do, to get involved.  We also confirm that the legal costs that the council will incur in making this Application will not be passed on to leaseholders.

How much will I be billed for?

Paragraph not included 

When will I receive my bill?

Paragraph not included 

How is the insurance purchased?

Paragraph not included 

How are the premiums calculated?

Paragraph not included 

Who can I speak to about this?

Paragraph not included 

Yours sincerely 

Daniel Wood 

Assistant Director of Homeownership

T:  020 7605 6464

E:  HM-Homeownership@rbkc.gov.uk 

E:  Daniel.Wood@rbkc.gov.uk