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HomeProperty InsuranceBlock of Flats InsuranceThe simplest way to manage a small block of two flats

The simplest way to manage a small block of two flats

Sometimes, the simplest way is the best way when it comes to managing small blocks of flats, and there is usually very little point in setting up a management company to handle the affairs of the building. I have often found that the larger the block, the more complex the affairs, and the bigger the need for a ridged structure to be in place to make sure that everything runs smoothly. However, in the case of a house converted into, two self-contained flats most things can be handled perfectly well and amicably between the two owners.

In a two flat building, It is typical for the leasehold of the flat to be accompanied by a share of the freehold of the building. Usually the owners get to know each other quite quickly, and both are equally responsible for the building. One other advantage of this set up is the lack of an external landlord means there are no ground rents to pay and no other service charges to consider. The joint owners are free to manage their own affairs and of course benefit from shopping round to obtain cheaper blocks of flats insurance.

In some cases a “criss cross” lease is written under this arrangement a flat owner holds the lease to his or her own flat and the freehold of the other. Some parts of the country refer to these leases by special names, for example, under a Tyneside flat lease, each flat leaseholder is deemed to be the landlord of the other. For example, in our case of a building divided in to, two self-contained flats, the grant of a lease of the ground floor flat to the ground floor flat owner is accompanied by the freehold for the upper floor flat and of course vice versa. This type of arrangement is especially common with maisonettes.

Occasionally though, even in the case of two flats, this simple arrangement is not sufficient for some lenders and it may be necessary to put in place a more formal structure if the mortgage provider asks for it.

Insurance for the converted flats can be a tricky problem as many insurance companies are not keen to issue policies in joint names. However, shop around, you will definitely find a company willing to help you.

Many owners, desperate to obtain cover will sometimes end up insuring the whole building, and some buildings are covered with multiple policies. I believe there are scores of policies that have been written where the insurers do not know the full extent of the risk or have been provided with the names of all the interested parties. The good news is most solicitors are very clued up when it comes to the requirements of mortgage lenders and insurance in respect of flats, and it is becoming harder to exchange contracts on a purchase without the correct form of insurance being in force. There are always exceptions to the rule, and of course, not everybody has a mortgage and some cash buyer still manage to end up buying a policy without worrying too much about its suitability.

If you need insurance on a building divided in to flats, speak to a company that specialises in handling this type of business, this will give you confidence that your needs are being correctly addressed.

In my opinion, obtaining insurance should never be attempted by just one of the flat owners; it really needs to be a joint decision so that there is no chance incorrect information is provided. Answering questions on a proposal form to obtain insurance on behalf of another flat owner is dangerous if you do not know all of their history or circumstances. Sometimes flats are used for different purposes ; some are rented to tenants, and some are holiday or second homes, all this “underwriting” information needs to be communicated to the insurance company to ensure that cover is issued correctly.

If you‘ve just bought a new flat or apartment, get to know the other owner as soon as possible once you’ve opened up a channel of communication you should find running a small block of two flats to be very straight forward.

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