Source · Select Committees · Public Accounts Committee
Recommendation 28
28
Accepted
Spiralling insurance costs and 'nil' mortgage valuations for leaseholders remain largely unaddressed
Conclusion
In 2020 the previous Committee concluded that MHCLG had not done enough to address spiralling insurance costs affecting leaseholders and ‘nil’ mortgage valuations. It found that private leaseholders in blocks with dangerous cladding had received ‘nil’ valuations for their properties, meaning they had found it impossible to sell or remortgage, while their insurance premiums had risen over 400% in some cases. At the time of its evidence session, MHCLG told the Committee that this was an ‘industry issue’, but in the Committee’s view MHCLG needed to step up and ensure matters were resolved quickly. It recommended that MHCLG should ensure that leaseholders were not facing escalating insurance premiums and MHCLG committed to working with insurers to address these concerns.48
Government Response Summary
The government agrees on the importance of building evidence on the cost of buildings insurance and commits to continuing to gather data with industry and stakeholders. This data will inform the consideration of government support to reduce fire-related liabilities, and an update on progress will be shared by the end of 2025.
Government Response
Accepted
HM Government
Accepted
4.1 The government agrees with the Committee’s recommendation. Target implementation date: December 2025 4.2 The government agrees with the Committee that it is important to build evidence on the cost of buildings insurance. MHCLG therefore continues to work with industry and other stakeholders to gather data on insurance costs including premiums for buildings before, during and after remediation. This data will inform MHCLG’s work with industry, announced in December 2024, the Remediation Acceleration Plan (RAP), to consider whether for the duration of remediation programmes, government might support industry to reduce fire related liabilities, in order to reduce the high insurance bills some leaseholders are facing. The evidence being collected will help to ensure any options for support are targeted and effective. 4.3 The government’s view is that remediation reduces risk and that this should be reflected in pricing. PAS 9980 has been developed by the British Standards Institute who drew on expert advice from professionals across industry and public consultation. Recognising that insurers set prices based on risk and their obligation to provide products that are fair value, MHCLG has also asked the insurance industry to build the evidence on the claims performance of remediated buildings and to share that with the government. 4.4 The government will share an update on progress by the end of 2025.