FAO: Hastoe leasehold and shared owner residents
As set out in your lease, Hastoe Housing Association, as the freeholder, arranges buildings insurance. You contribute to this through your service charge.
On 31 December 2023, the current insurance policy (and the 5-year agreement that we currently have) with Protector Insurance will be coming to an end.
Where we are now
Like many other rising costs in products and services recently, we have also seen a dramatic rise in the cost of buildings insurance across the housing sector. Hastoe is aware of many other housing associations seeing steep increases in the cost of insurance, with the average insurance premium increasing by 83%. In some cases, we are seeing increases of up to 500%.
Normally, when our policy is up for renewal, we would invite different insurance providers to tender (bid) for our business for buildings insurance. This approach would usually get us the best deal. However, given the turbulent nature of the insurance market at the moment, and having spoken to our professional advisors, this option would in fact result in a significant increase to the insurance premium, and by extension, an increase to service charges.
To avoid this, we have explored various options and been able to negotiate a new agreement with our current provider, Protector Insurance.
To secure the best possible deal for residents, we have negotiated a new 3-year insurance deal with Protector Insurance. Our negotiations have resulted in Protector agreeing to only increase the insurance cost in line with normal rebuild costs for Hastoe’s leasehold homes, and – most unusually - not take into account limited market conditions brought about by factors such as Brexit, insurer’s risk appetite and rising costs of materials, labour and energy. These factors all affect an insurance premium, and by mitigating these through our negotiations, we have been able to avoid the significant premium increases we are seeing across the insurance market at the moment of up to 500%.
To ensure this is the best possible deal, we have appointed an independent insurance consultancy called Gibbs Laidler. Gibbs Laidler is a group of leading insurance consultants in the sector, and is used by more than 100 housing associations as their primary insurance advisors. We asked Gibbs Laidler to look at the deal and produce a piece of professional advice setting out the current insurance market conditions, how the new insurance deal works, and to consider whether it is the best outcome Hastoe leaseholders. In summary, Gibbs Laider concluded that;
‘Hastoe, due to its impressive risk management and relationship with its insurers, has been able to negotiate a good deal for leaseholders, where, in this year, its premiums will only increase in line with an increase in rebuild costs. We emphasise that this is an extremely advantageous position, and this deal may not be achieved elsewhere in the insurance market.’
If you are a leaseholder or shared owner, you will have been posted the full report to read, alongside the same information in this article.
In normal circumstances, we would have consulted residents (under Section 20 of the Landlord and Tenant Act 1985) before looking to tender the insurance contract, and then consulted on the bids that we receive.
However, as we have not been able to follow the usual process this year due to the extraordinary market conditions, we will be applying for dispensation from the Section 20 consultation process from the First Tier Tribunal. If dispensation is granted, this means that we would be exempt from undertaking the usual consultation exercise.
While we cannot carry out the usual full consultation process mentioned above, we would welcome Hastoe residents' views on the proposed deal.
If you are a Hastoe leaseholder or shared owner and have any observations or questions about the proposed deal, please feel free to contact us at Procurement@hastoe.com or via your online MyHastoe account.
In order to allow sufficient time for us to respond to any queries, we kindly ask that you respond by midnight on Friday 8 December 2023.