Were insurance charges made by landlord reasonable? No

Insurance charges made by a landlord of a block of flats were not payable by the tenants, as they were not "reasonably incurred", the Upper Tribunal agreed with the First Tier Tribunal following an application by one of the tenants.

The case of Cos Services Ltd v Nicholson and Willans revolved around a purpose-built block of flats in its own grounds. Four storeys high, it comprised 16 flats and a separate garage area of two blocks containing eight garages in each block. The respondents were the registered leasehold proprietors of 15 Chiltern Court, which they purchased on 5 September 2014. The appellant was the freeholder of the block which had been managed by agents since 1989. In these proceedings the tenants challenged insurance premiums claimed by the landlord through its agents for the years 2014, 2015 and 2016.

It was clear from the authorities that the burden was on the landlord to satisfy the relevant tribunal on the balance of probabilities that the costs in question were reasonably incurred. The Upper Tribunal confessed in its conclusion that it remained a mystery why there was such a discrepancy between the premiums charged to tenants under the landlord’s block policy and the premiums obtainable from other insurers on the open market. The landlord was unable to explain this mystery.

The Tribunal said that the insurance premiums being charged by the landlord to the tenants were excessive. Moreover, insofar as there may have been certain advantages with the landlord’s policy, they were so insubstantial that they could not justify the amount being charged. The Tribunal said that the landlord had failed to satisfy the Tribunal that the amounts sought to be charged to the tenants were “reasonably incurred”. The Tribunal therefore reached the same decision as the FTT, and the landlord’s appeal from that decision was dismissed.


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