Leaseholders, buildings insurance and the commission nobody explains
Commission-sharing on block insurance is being replaced by a transparent fee. What leaseholders can ask for now, and why the claim matters.
If you own a flat, you almost certainly pay for a buildings insurance policy you did not choose, through your service charge. Part of that premium has often been commission, shared by the broker with the freeholder or managing agent who picked the policy.
That arrangement is on its way out. On 15 July 2026 the government confirmed it will “look to introduce a transparent and fair permitted building insurance payment”, and will prescribe disclosure of “relationships and arrangements between landlords and managing agents with brokers and insurers” (GOV.UK, government response, July 2026). The Leasehold Advisory Service expects regulations later in 2026, with leaseholders seeing changes during 2027 (Leasehold Advisory Service). No commencement date has been confirmed.
The problem is not new. FCA reports found a 40 per cent rise in remuneration, including commissions, between 2019 and 2022, as the government’s earlier response on permitted insurance fees records (GOV.UK, permitted insurance fees response). Only 27 per cent of respondents who answered said they knew what their freeholder or managing agent received for arranging insurance.
Here is my problem. Most of the debate has been about price, but leaseholders usually discover how their block insurance works at the worst moment, with water coming through the ceiling from the flat above. That is when they learn the policyholder is the freeholder, the claim goes through an agent, and they have no direct relationship with the insurer.
You do not have to wait for 2027 to ask. Ask your landlord or agent, in writing, for a summary of the insurance, any commission shared, how the policy was chosen and whether the broker is connected to them. Ask who you report a claim to, what the excess is and who pays it. FCA rules already require brokers to give that information to their customer, usually the landlord, and the government notes it “is not being consistently passed on to leaseholders”.
A leaseholder should know who will pick up the phone before the ceiling comes down.