Question to the Department for Levelling Up, Housing & Communities:

To ask the Secretary of State for Levelling Up, Housing and Communities, if he will take steps to help leaseholders with premium insurance rates for multi-occupancy residential buildings affected by (a) flammable cladding and (b) other material safety risks.

The Government continues to put extreme pressure into ensuring more fair and proportionate premiums for leaseholders living in multi-occupancy buildings with fire safety issues.

The FCA recommended that the insurance industry develop a risk-sharing facility for buildings with fire-safety issues. The Association of British Insurers’ Fire Safety Reinsurance Facility launched on 1 April 2024 in response to this recommendation. We are closely monitoring the Facility to understand the extent to which it improves outcomes for leaseholders.

On 31 December 2023, FCA changes came into force to give leaseholders rights under Fair Value rules and require the disclosure of key policy information. We welcome these changes and expect that they will help reduce the unfair costs facing leaseholders.

On 27 November 2023, the Leasehold and Freehold Reform Bill was introduced into Parliament. The Bill bans insurance commissions being passed to freeholders and managing agents, replacing these with transparent handling fees. This will stop leaseholders being charged excessive and opaque commissions on top of their premiums.

The Government has also published a commitment by 14 insurance broker companies to cap their commissions to 15%, stop sharing commissions with managing agents, landlords and freeholders, and share policy information with leaseholders when requested. The pledge will benefit leaseholders in buildings over 11 metres (or four storeys) in height with identified fire safety defects, where these details have been made known to the insurance broker.

We will continue to monitor the impact these changes have had on leaseholder premiums, and will remain engaged with industry regarding whether any further steps may be required.