The Lemon Fool

Hi All, not sure if this is the best board, but here goes...

My wife and I are purchasing a leasehold flat as a second property. It will be in our names. The plan is for our son to live there rent-free and pay the bills himself.

I am confused as to what kind of insurance we should be purchasing. Googling suggests it may be landlord insurance, on the basis that we would not be the ones living there.

Can anyone advise?

Thanks

ISTR Landlord insurance sometimes excludes family members.

I would just go for 'contents', and Son would take the policy out, in his name, as they are his contents.

The building Insurance will be covered by the Leaseholder, and as you aren't renting it out commersially you probably won't need to tell them.

If you buy it for you son, in his name, you will avoid the extra 3% stamp duty.

Paul

planteric wrote:
I am confused as to what kind of insurance we should be purchasing.

What risk(s) are you wishing to insure against?

We're expecting to take out buildings insurance ourselves, and for our son to have his own contents insurance. We're risk-averse so would want to cover all possibilities.
We've never had a second property, or ever bought a flat, so this is new to us.
Planteric

1. Son pays for contents insurance...that's straightforward.

2. You need to discuss with the owner of the freehold regarding building insurance. Do they organise buildings insurance and then invoice you for a percentage or do you arrange insurance for your part of the building independently? If the latter, they will want to see evidence that you've arranged for insurance ( I definitely would). The freeholder is responsible for the fabric of the building (but check the lease details) and so they will be keen to check you have indeed insured the part of the building that your flat occupies. Have a check at what the lease document says but confirm insurance arrangements in writing with the freeholder. Coincidentally, what does the lease say about (1) repairs to any part of the property and (2) ground rent.

3. You don't live there so you need to inform the insurance company....they will advise as to the type of policy. If you arrange insurance "online" they will ask if you, the owners, are resident or not.

(4. As a second home owner..you're OK with the extra stamp duty, I presume).


We own a ground floor flat which is rented out. We have landlords insurance. The ground rent is a peppercorn £25 p.a. and repairs to any part of the building are 50:50 cost. So I'd check out the condition of the building as you might be hit with a bill for repairs to an adjacent flat(s).

DrFfybes wrote:ISTR Landlord insurance sometimes excludes family members.

I would just go for 'contents', and Son would take the policy out, in his name, as they are his contents.

The building Insurance will be covered by the Leaseholder, and as you aren't renting it out commersially you probably won't need to tell them.

If you buy it for you son, in his name, you will avoid the extra 3% stamp duty.

Paul

I think you mean freeholder here but what does the lease agreement say?


Oh.....very very important......how much of the lease remains ( how many years).

Check the ground rate and if there are any clauses regarding future increases.

planteric wrote:We're expecting to take out buildings insurance ourselves, and for our son to have his own contents insurance. We're risk-averse so would want to cover all possibilities.
We've never had a second property, or ever bought a flat, so this is new to us.
Planteric

If you are buying a leasehold flat, the building will be insured by the management company or freeholder. The maintenance/service charge will include your (each flat owner's) share of the premium. Your son only needs to have contents insurance.

planteric wrote:We're expecting to take out buildings insurance ourselves, and for our son to have his own contents insurance. We're risk-averse so would want to cover all possibilities.
We've never had a second property, or ever bought a flat, so this is new to us.
Planteric

In which case, as a start point, you need to see the insurance policy arranged by the management company (or freeholder) and see what is covered and more importantly what is excluded, and then find a policy that covers the gaps such that "all" (unrealistic) risk is covered.

planteric wrote:My wife and I are purchasing a leasehold flat as a second property. It will be in our names. The plan is for our son to live there rent-free and pay the bills himself.

I am confused as to what kind of insurance we should be purchasing. Googling suggests it may be landlord insurance, on the basis that we would not be the ones living there.

As has been said, leasehold flats are never insured individually, and are always covered by insurance of the whole building, with each individual leaseholder paying a proportion of the premium, usually as part of the annual service charge.

Landlord insurance generally means insurance taken out by landlords in respect of their relationship with tenants, and has very little application to the property itself. It covers things like liability to the tenant, rent arrears, legal costs of evicting the tenant etc. As it's your son who's living there rent free I can't really see that you'd need such insurance.

But all of these questions should be answered by your solicitor. It's part of their duty to advise you regarding the provisions of the lease generally, and this includes the service charge arrangements, and the insurance arrangements. So I'd suggest that you ask them for advice if you're in any doubt.