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Insurance for blocks of flats in London

No two properties are exactly the same. In London this is even more evident. With a wide variety of flats, be they purpose built or conversion, reinstatement costs will inevitably be different.

Although BCH values blocks of flats all over the UK, we see a high concentration in and around London. This has allowed us to develop an expertise in recognising specific factors that affect the reinstatement cost of an individual property.

The purpose of a Reinstatement Cost Assessment (RCA) is to ensure that in the event of a major insured incident, sufficient funds are available to rebuild the property to the same specification as existing. Over and above the standard labour and materials costs, BCH gives further consideration to the following 5 key factors when preparing a RCA in London or other urban areas.

1. The flats are in a listed or conservation area

FF_Listed

An allowance for higher professional fees must be included. Skilled labourers, specialist architects, surveyors and consultants who focus on listed buildings will be required.Approval from a local authority and possibly English Heritage will be required.Key contractors may not be immediately available at the time of a loss.

The time taken to complete the reconstruction of a listed building will be longer due to the co-ordination of various professions, trades and the necessary permissions.

Maintaining the use of traditional materials and forms of construction will be a key factor here and is more expensive.

The site could be of archaeological interest or listed as high potential for new discoveries. Pausing works so that local authorities can carry out research could be a possibility.

Allowances must be made for compliance with current legislation such as Building Regulations.

2. The flats are in a prime central location

Reinstatement cost assessment in central london

It is essential to make allowances for the location of a property. The fact is it costs more to rebuild in London than elsewhere in the country. Inner London boroughs such as Westminster, Kensington and Chelsea and Camden, attract a premium and the same can be said for outer London boroughs such as Ealing and Richmond Upon Thames.Currently, there are more billionaires in London than any other city in the world. Improved confidence in the economy and property market, has seen an influx of overseas investment which has impacted on the ‘Prime Central London’ location factor. Development is increasing which is pushing tender prices higher.The profile of a client has now to be considered. Seeking perfection and flawless finish takes longer to achieve and inevitably contractors price their fees accordingly.

Other factors such as the congestion charge, which has been uplifted twice since 2009, should not be overlooked.

3. Site factors

Insurance valuation for property in London

Restricted access is evident all over urban areas and dramatically increases the costs of working and the necessary application of the Party Wall Act.Many properties have no direct access to the rear façades and access over neighbouring properties would need to be sought.

A site with limited or no space for working or storage of materials during reconstruction may require specialist scaffolding or temporary work lifts over pavements etc. The suspension of parking bays for loading/ unloading and locating of skips can cost £10,000s.

Proximity to railway lines, rivers, canals etc. may require deeper foundations, extra damp proofing, or further consideration to type of materials and construction technique used.

For retaining abutting neighbouring properties, temporary works such as bracing, propping or façade retention may be required. This may also include the retention of neighbouring boundary walls and other external items.

Further consideration must be made for lateral extensions/ flying freeholds into/ over/ under neighbouring properties; making sure that the structure of the building above/ below your property is not forgotten. For example, the policy may only include the 1st, 2nd and 3rd floors of a building, but the ground floor still provides support for the upper-floors. Likewise, the roof covers the ground floor as well as the upper floors, so apportionment is necessary.

Certain areas and roads in London apply restrictions on working hours. This will affect scheduling and time on site which would be more costly.

4. Internal and external features

Flats building insurance london

Some properties in London, although not listed or located within a Conservation Area, are saturated with internal and external period features.Ornate and decorative features cost more to reconstruct because of the materials and specialist labour required.

Items such as stone, lead, stucco rendering, bespoke cast iron and wrought iron work are just a few features which are prevalent in London. The difference between building in simple brickwork and stone could be an increase in cost of as much as 50%.

Some buildings may have a plain façade but reveal an abundance of features internally. Items impacting the RCA significantly are stone cantilevered staircases with ornate wrought iron balustrades, passenger lifts with original iron cages, cornicing and ceiling details and terrazzo, marble and mosaic tiled floors to name but a few.

Externally, features such as entrance porticos, balconies, window surrounds, pediments, band courses, chimneys and gables are common in London, as the majority of property in the central boroughs are of the Georgian, Victorian and Edwardian eras. Some external features, such as under-pavement stores are often overlooked.

In London, properties historically had one or two levels of basement and, with the boom in the creation of the ‘ice-berg’ basements, one has to be prepared for surprises. A feature such requires more excavation, deeper foundations, damp proofing and highly engineered retaining walls; all increasing the RCA.

5. Commercial aspects

Insurance valuation for flats in London

A large proportion of residential blocks that BCH are instructed to assess include commercial units.

On occasion, the commercial aspect is actually insured on a different policy but consideration still needs to be given as, if for example, it sits beneath your block of flats, allowances will need to be made within the RCA for its structure as it supports the building above.

With commercial aspects present, VAT will need to be addressed. In the case of a block of flats with retail units on the ground floor, the rebuild cost of the flats would be zero-rated (VAT included on professional fees and demolitions only) whilst the shops would be standard rated, as commercial usage does not qualify for zero-rating. If the property owner is not VAT-registered, the commercial part of the building will be subject to VAT, which will need to be added to the rebuild calculation.

BCH asks questions of the freeholder and tenant to ensure that the correct allocations for fixtures and fittings are included within the RCA.

This paper was written and researched by: Hannah Chamberlain

If you have concerns about the insurance valuation for a block of flats please call Barrett Corp & Harrington on 01455 293510.