Consultation outcome

​​Permitted insurance fees for landlords, freeholders and property managing agents: Government response to consultation and summary of responses​

Updated 11 July 2025

Introduction

1. Freeholders and landlords of multi-occupancy buildings – or property managing agents working on their behalf – are typically remunerated by brokers sharing commission with them for the arranging and managing of building insurance. These commissions are typically included in the overall insurance premium that leaseholders pay through their service charges.

2. In 2022 the Financial Conduct Authority (FCA) published a report into insurance for multi-occupancy buildings followed by a report in 2023 on broker remuneration in relation to that insurance specifically. These reports highlighted a 40% rise in remuneration – including commissions – from 2019 to 2022. Brokers were often unable to articulate what insurance-related services or benefits of value were provided by the freeholders, landlords or property managing agents that were receiving their commission.

3. The Leasehold and Freehold Reform Act, passed in May 2024, contains a range of measures to provide leaseholders with greater rights, powers and protections over their homes. Commencing the full range of provisions within the Act requires a programme of detailed secondary legislation. These measures to protect existing leaseholders sit alongside the UK government’s aim to move away from leasehold to commonhold as the default form of tenure.

4. Section 59 of the Leasehold and Freehold Reform Act 2024 created powers to address longstanding concerns that leaseholders are being charged excessive commissions, which are given to landlords, freeholders or property managing agents by brokers for the arranging and managing of buildings insurance.

5. These powers, when brought forward by the UK and Welsh governments via secondary legislation, would stop leaseholders being charged for any costs relating to the managing and arranging of buildings insurance by freeholders, landlords or property managing agents working on their behalf, outside of a specified “permitted insurance payment”.

6. Any ‘permitted insurance payment’ that freeholders, landlords or property managing agents receive could be charged directly to leaseholders as payment for insurance distribution activities, rather than the current system whereby leaseholders pay for buildings insurance premiums in their service charge that include commissions which have been handed on.

7. The UK and Welsh governments launched a joint public consultation on this permitted insurance fee policy on 2 December 2024, which concluded on 24 February 2025. This is a joint response from both governments.

Consultation process and responses

8. Our public consultation – Consultation on introducing permitted insurance fees for landlords, freeholders and property managing agents – ran from 2 December 2024 to 24 February 2025. The consultation received 838 responses in total. 815 responses were received on the Citizen Space online platform, 22 survey responses via email and 1 printed response. Of these, two of the Citizen Space responses were unusable due to unanswered questions, giving a total usable response number of 836.

9. It should be noted that these numbers are inclusive not just of individuals but also membership organisations who in turn have consulted their members. Examples of this include End Our Cladding Scandal, the British Insurance Brokers’ Association, the Property Institute and the Association of British Insurers. This is particularly important to note in the case of non-leaseholder groups where the number of total responses was lower.

Breakdown of responses

Respondents	Number of responses	Percentage
Leaseholders and representative groups	708	84.69%
Leaseholder / Resident Organisations	62	7.42%
Freeholders	21	2.51%
Property Managing Agents	21	2.51%
Housing Associations	7	0.84%
Brokers	5	0.60%
Insurers	2	0.24%
Other	10	1.20%
Total	836	100%

10. We also received 82 emails giving thoughts on this policy area separate from survey responses. We have incorporated that input into our analysis.

11. During the consultation period we also hosted three sectoral roundtables to discuss the policy area. They were grouped as follows:

• leaseholders and representative groups
• freeholders and property managing agents
• buildings insurance brokers and insurers

12. Feedback from those workshops also formed an input into this consultation, alongside encouragement of attendees to also submit full responses to the consultation itself.

Part 1: Current practice

Consultation questions

13. Part 1 of this consultation included questions to understand the way in which current remuneration arrangements are taking place and the experiences of those in the supply chain.

Question 1: To what extent do you recognise the above description of how freeholders, property managing agents, brokers and insurers manage and arrange insurance and how they are remunerated for it? For example – what other intermediaries are involved in the supply chain of building insurance for multi-occupancy buildings, how are they remunerated and what for?

Question 2: Either from your personal experience, or knowledge of practices more widely, to what extent do you think the current system of remuneration for property managing agents and freeholders for their activities managing and arranging insurance provides fair outcomes for both leaseholders and those supplying these services? Do you have examples or case studies to illustrate?

Question 3: If you are a leaseholder, are you aware of what payments – if any – your freeholder or property managing agent receives for the arranging or managing of insurance? Payments could take the form of direct remuneration – such as the sharing of commission – or be more indirect such as through retaining money from discounts or non-monetary payments.

[If yes] Please provide further details. For example – are these payments for particular services in relation to the managing and arranging of insurance? If so, which activities? Do you know what percentage of your insurance costs is accounted for by these payments?

Question 4: If you are a leaseholder, have you tried to challenge the payment of your freeholder or property managing agent for the arranging or managing of insurance?

[If yes] How did you challenge this? What information did you obtain in support of your challenge, and how did you obtain it? What was the outcome?

Question 5: If you are a property managing agent or freeholder, what type of payments – if any – have you received for arranging and managing insurance? Payments could take the form of direct remuneration – such as the sharing of commission – or be more indirect such as through retaining money from discounts or non-monetary payments.

Question 6: If you are a property managing or freeholder, for which activities have you been remunerated for through payments – such as commission by the broker?

Of these, which of these are regulated activities as defined in the Financial Services and Market Act, such as through the FCA or the RICS Designated Professional Body scheme, and which are not?

Summary of responses

14. For question 1 the general view across respondent groups is that the model of remuneration described was generally accurate. Numerous respondents noted that buildings insurance supply can often include other intermediaries who are remunerated other than those mentioned such as loss adjustors, risk assessors, surveyors, and legal / financial advisors.

15. Across these questions leaseholders recognised our description of the building insurance supply chain. Leaseholders stressed that the lack of transparency meant that they had little visibility of what was being charged to them and who is being remunerated. Numerous respondents had a difficult experience receiving information on remuneration within reasonable timeframes, or at all. For Question 3 only 27% of respondents who answered this question said yes, indicating the opacity of remuneration in buildings insurance.

16. Where information is available, leaseholders were mostly of the view that the commissions involved were disproportionate to the work contributed. They often pointed to brokers as being the ones who did more substantive insurance-related work, making it unclear why significant commissions go to freeholders, landlords or property managing agents. They also raised the lack of evidence of work done to justify commissions.

17. Leaseholders were also concerned about the incentives in the buildings insurance supply chain encouraging intermediaries such as landlords, property managing agents or freeholders to choose insurance products on the basis of commissions offered rather than value for the leaseholder. A frequently quoted example of this was the use of preferred brokers or brokers connected to a landlord, property managing agent or freeholder.

18. Although leaseholders did reference some successful cases through tribunals, they found the system to be time-consuming, complex and that the system favoured better-resourced landlords. There was also limited success reported in getting information through disclosure requirements or directly contesting costs with alternate quotes. Leaseholders find the dispute mechanisms available to them time-consuming and complex, and said that the lack of transparency was a significant barrier to further action.

19. Landlords, freeholders and property managing agents were generally of the view that their activities in the chain were substantial and merit remuneration. Although most property managing agents were using the commission model, a number of respondents said they were already operating a fee-based model. They also highlighted that in most cases their insurance distribution activity is subject to regulation via the Financial Conduct Authority (FCA) or the Royal Institution of Chartered Surveyors (RICS) Designated Professional Body scheme.

20. Property managing agents did note the difference in the buildings insurance supply chain between themselves and freeholders, noting that often a property managing agent would be working for a client who is not a freeholder such as leaseholder-led Right to Manage arrangements.

21. Brokers generally recognised the description of remuneration but felt the description did not sufficiently acknowledge the obligations on brokers in relation to commission sharing – for example complying with requirements under FCA rules updated at the start of 2024 to ensure fair value for leaseholders.

Government response

22. The majority view of leaseholders is the current system of remuneration is unfair and opaque. It is quite clear that commission-sharing with freeholders and property managing agents by brokers they are selecting does not have the widespread trust of leaseholders. The government is seeking to improve this situation to ensure that insurance-related costs paid by leaseholders are fair and transparent. We will take into account the responses to this consultation, and the detailed issues raised, as we refine our policy and consider secondary legislation.

23. One of the most consistently reported issues by leaseholders is the lack of transparency – we recognise this forms a barrier to redress or challenge. We welcome the FCA’s reforms that require FCA-regulated brokers and insurers to provide insurance information, including on any commissions shared, to the customer, which is often the landlord, freeholder or property managing agent. However, the experience of leaseholders would indicate this information is not being consistently passed on to leaseholders. This clarifies the importance of the implementation of transparency measures elsewhere in the Leasehold and Freehold Reform Act 2024. Of most relevance is the secondary legislation relating to section 60 of that Act, which will require freeholders and landlords to proactively provide insurance information to leaseholders.

We are consulting on the details of implementing this measure, alongside other measures to empower and protect leaseholders.

24. We note that property managing agents do not just manage and arrange insurance on behalf of freeholders, but also for leaseholders in various alternate arrangements such as Right to Manage companies or Commonhold Associations. This policy measure to address building insurance commissions will therefore be required in a range of building management scenarios both now and in the future.

25. We note the fact that a number of property managing agents are already operating using fees rather than commissions, and similarly that as part of the insurance broker pledge agreed with industry, a number of brokers have agreed not to share commission with parties arranging insurance for high-rise residential buildings with fire safety issues. This shows that moving away from commission is possible and is already happening in some areas.

26. Landlords, freeholders and property managing agents have raised the fact that in many cases the activities they are being remunerated for in relation to insurance are authorised activities and therefore require they obtain authorisation such as through the FCA or the RICS Designated Professional Body scheme. We are working with these regulators in our policy development to reflect the role of regulators in the building insurance supply chain.

Part 2: Permitted insurance fee proposals

Consultation questions

27. Part 2 of this consultation sought feedback on the proposal overall, what kind of activities might be permitted and how costs might be calculated.

Question 7: A permitted insurance fee would be defined to only allow remuneration for specific activities being provided by freeholders and property managing agents, and prevent leaseholders being charged for any other payments to freeholders and property managing agents relating to the managing and arranging of insurance. Do you agree with this approach?

Question 8: What specific activities relating to the management and arranging of insurance do freeholders and property managing agents currently carry out and are remunerated for? Please define these activities as fully as possible.

Question 9: What specific activities relating to the management and arranging of insurance should freeholders and property managing agents be permitted to carry out and be remunerated for through a leaseholder’s service charge?

Question 10: Are there any specific activities relating to the management and arranging of insurance that freeholders and property managing agents should not be permitted to carry out and be remunerated for through a leaseholder’s service charge?

Question 11: Do you think the permitted fee should be calculated in prescribed ways – such as specific percentages, maximum charges and / or fixed fees for the arranging and managing of insurance or activities therein – or that a transparent fee subject to the reasonableness measures in the Landlord and Tenant Act 1985 would be sufficient?

Question 12: Are there any exceptional cases or circumstances you would suggest merit different treatment with regards to what is permitted or not permitted?

Summary of responses

28. Leaseholders had mixed views on question 7: 48% of those who answered were supportive of the policy, whereas 52% were opposed. Reasons given by those supportive included that having a transparent cost directly related to activities would be fairer and more easily scrutinised. Of those opposed, some were concerned that the policy would legalise income currently taken through commissions, arguing that secret commissions could already be challenged. Others argued that as a block of flats is often the freeholder’s asset, the freeholder should be responsible for all costs relating to insurance. Others were of the view that any charges for activities relating to the managing and arranging of insurance should be part of a freeholder or property agent’s monthly management fee.

29. On question 7 landlords and freeholders were largely opposed, with 71% opposed to the policy. Views for this position included that the current remuneration system is subject to appropriate regulation for their insurance distribution activities through the FCA or the RICS Designated Professional Body Scheme. Landlords and freeholders felt that a permitted insurance fee policy would not have the required flexibility to accommodate the varying buildings insurance requirements of multi-occupancy buildings and risked vital insurance activities not being able to be remunerated appropriately.

30. On question 7 property managing agents had mixed views with 55% being opposed to permitted insurance fees whilst 45% were supportive. Those opposed made similar arguments to freeholders that alternate remuneration systems would lack the flexibility to reflect varying activities and requirements. Those in favour felt this system would reward good faith actors in the market, and a number of respondents said they were already utilising a fairer fee model.

31. For questions 8-10 leaseholders would often accept that there were a modest number of tasks a freeholder or property managing agent may be required to do such as supporting claims, facilitating premium payments, sharing information and getting quotes through a broker. However, they were largely sceptical that these activities were substantial or merited significant payment and saw the majority of work on insurance being done by brokers and insurers. This was particularly the case when landlords, freeholders or property managing agents were using preferred or connected brokers and so were not demonstrably testing the market.

32. For questions 8-10 property managing agents and freeholders gave a variety of activities to justify remuneration. These included the collation of risk information for brokers, obtaining and evaluating quotes through brokers, paying premiums, checking policy documents, completing risk improvements required by insurers, sharing information with leaseholders and brokers, and determining appropriate cover required. More widely it was felt that activities varied significantly across building types and risk areas, and that a prescribed list was difficult given the customisation required.

33. For question 11, leaseholder respondents were generally supportive of some form of calculation, such as a set maximum charge to restrict costs in a fair way. This was often felt to be a clear alternative to what is seen as a complex and unreliable challenge process through the First-tier Tribunal or Leasehold Valuation Tribunal. Leaseholders were generally not in favour of any percentage-related calculation as this would tie charges to the overall premium.

34. For question 11, landlords, freeholders and property managing agents were generally opposed to set calculations for a permitted insurance fee as the work involved for buildings varied so greatly. For this reason, set formulas or amounts risk not allowing fair remuneration for importance insurance-related activities if limits are too low, whereas limits set too high risk setting a new price level above current charges. They also expressed concern that an overly prescriptive fee model could undermine the way in which freeholders and property managing agents secure insurance at a portfolio level (where they own or manage a portfolio of multiple buildings), which they see as a key way of lowering cost and spreading risk beyond what could be secured for individual buildings.

35. For question 12 respondents in most groups had few exceptions to suggest. Some did mention that significant risk events such as fires or floods may merit different treatment in exceptional circumstances.

Government response

36. The permitted insurance fee policy proposals aim to address leaseholder concerns about current remuneration practices. Moving to a fairer and transparent system of remuneration proportionate to work contributed would seek to address the broken incentive model whereby landlords and freeholders – or property managing agents working on their behalf – are choosing brokers who in turn share commission back to them.

37. A number of leaseholders opposed to a permitted insurance fee said that whatever payments are permitted should be covered by the management charge issued by landlords / freeholders or property managing agents working on their behalf. However, any payments, wherever found in the service charge statement such as within the management charge, would need to be permitted via secondary legislation.

38. Some leaseholder groups are concerned that these proposals could legalise payments that are currently illegal, arguing that secret commissions are currently prohibited under common law. We note these concerns, but we have no intention of undermining any existing protections that do apply. Given the large number of case studies provided through the consultation process, it does not appear that the current legal framework is preventing excessive commissions.

39. We recognise and agree with the view of leaseholders and representative groups that forms of ownership other than leasehold tenure can offer more direct involvement for leaseholders or residents in building insurance arrangements, which can address unfair commissions and payments, and this is consistent with the UK government’s commitment to bring the leasehold system to an end. However, we do not see this as a reason not to proceed with this policy. Alternative arrangements with more leaseholder engagement in management of buildings – such as Right to Manage or commonhold – often still require the use of property managing agents to arrange insurance. It would therefore remain important to apply measures to improve transparency and fairness in buildings insurance remuneration.

40. We recognise that the view that any permitted insurance payments would need to reflect the fact that building needs differ widely. However, it should be noted that a number of responses from property managing agents stated they were already operating under a fee model, suggesting the model is compatible with varying insurance needs. We will continue to work with industry to established what activities are required and what remuneration is proportionate.

41. We note stakeholder concerns about exceptions and other cases such as ensuring this policy would support those in shared ownership and the need to provide clarity for mixed use building scenarios.

Part 3: Additional criteria for permitted insurance fees

Consultation questions

42. Part 3 of the consultation sought views on potential criteria that could be applied to a permitted insurance fee.

Question 13: Do you consider that the existing framework for challenging unreasonable service charges – such as the Landlord and Tenant Act 1985 – is sufficient to ensure that if freeholders or property managing agents charge excluded insurance costs to leaseholders, that they could be challenged and that any permitted insurance fees would be proportionate?

Question 14: Do you think a permitted insurance fee – however calculated – should be subject to additional criteria to ensure it is proportionate and fair, or that the “reasonableness test” set out in the Landlord and Tenant Act 1985 would be sufficient?

Question 15: If additional criteria were included in the definition of permitted fees to ensure fair and proportionate remuneration for activities by freeholders and property managing agents, what criteria do you think would be most effective and how could they be calculated?

• That the price of permitted fees for services paid by the leaseholder should provide fair value to leaseholders
• That the price of permitted fees for services paid by the leaseholder should have a reasonable relationship to the benefits provided, considering the costs incurred in providing it
• That any conflict of interest with related parties in the insurance supply chain, such as the broker, can be shown to have been considered
• Other (please set out alternate / additional criteria)

Question 16: If additional criteria referred to above were applied to permitted fees to ensure fair and proportionate remuneration for activities by freeholders and property managing agents, what evidence should be required to prove this? What costs or challenges would there be in gathering and providing that evidence? Which are singular implementation costs and which would be recurring?

Summary of responses

43. For question 13 leaseholders were mostly of the view that the current rules are not working. 93% of leaseholders answered no to this question. Leaseholders feel that challenging costs through the First-tier Tribunal in England – or Leasehold Valuation Tribunal in Wales – is a complex, time-consuming process that does not deliver fair outcomes. For insurance costs in particular, the “reasonableness test” (section 19 of the Landlord and Tenant Act 1985) is felt to be too subjective and unclear in how it applies to insurance costs. Transparency, as quoted in previous questions, is cited as an obstacle to enforcement. A particular recurring barrier was the difficulty for leaseholders being able to individually obtain buildings insurance quotes to test against their costs. Leaseholder respondents felt there were not sufficient penalties for landlords found to have charged leaseholders unreasonably.

44. 75% of freeholders / landlords, and 50% of property managing agents said yes to question 13, agreeing that the framework for challenging unreasonable service charges is working. Those in favour argued that existing regulatory obligations, alternate complaints routes, and the tribunals themselves were together delivering fair outcomes.

45. For question 14, 73% of the leaseholder respondents who answered the question were in favour of specifying additional criteria to a permitted insurance fee. Property managing agents were more mixed at 50%, whilst only 35% of freeholders / landlords answered yes. This broadly reflects views from the previous question on adequacy of the current framework.

46. For question 15, amongst leaseholders, fair value was the most popular criteria (54%), followed by conflict of interest (51%), a reasonable relationship to the benefits provided, considering the costs (47%) and other criteria (29%). Multiple selections were frequent. Some of the suggestions for other criteria included set caps linked to inflation, hourly breakdown of costs and evidence of competition with regards to brokers and insurance quotes themselves.

47. Amongst freeholders, conflict of interest (76%) was followed by fair value (57%) and a reasonable relationship to the benefits provided, considering the costs (33%). No freeholder suggested other criteria.

48. Amongst property managing agents fair value was the most popular criteria (48%). The reasonable relationship to benefits provided and conflict of interest were weighted equally at 43%. 10% suggested other criteria.

49. For question 16 leaseholders stressed the importance of a requirement to provide enough evidence in order to identify unfair costs and challenge them across these criteria. Leaseholders who opposed further criteria often did so because they did not agree with any permitted insurance fee at all for reasons given above set out in question 7. Leaseholders were particularly keen that in-house brokerages or captive insurers used by freeholders or property managing agents are included within conflict of interests considerations.

50. For question 16 property managing agents and freeholders / landlords were concerned about additional subjective principles being applied and adding more uncertainly to what First-Tier Tribunals or Leasehold Valuation Tribunals would need to rule on. Some also argued that fair value would be duplicative, given that freeholders / landlords or property managing agents working on their behalf are often regulated in their insurance distribution activities by the FCA or the RICS Designated Professional Body scheme, part of which requires fair value is demonstrated.

Government response

51. Leaseholder concerns about the current system of enforcement through the First-tier Tribunal and Leasehold Valuation Tribunal are longstanding. It should be noted that the permitted insurance fee policy forms one part of a wider package of measures in the Leasehold and Freehold Reform Act 2024 which aims to improve transparency of information for leaseholders and reduce the barriers to challenging landlords by rebalancing the litigation costs regime where, currently, many landlords are able to recover their litigation costs from leaseholders regardless of the outcome of any legal challenge. Taken together these measures aim to improve the process of challenge for existing leaseholders, alongside the wider commitment to bring the feudal leasehold system to an end.

52. UK and Welsh governments note the general support amongst leaseholders for additional clarity and rules regarding what insurance related activities are permitted, such as through additional criteria.

53. The concerns of property managing agents and freeholders / landlords about how additional permitted insurance fee criteria would interact with fair value rules in particular, emphasises the importance of ensuring the permitted insurance fee policy proposals are considered in tandem with the existing regulatory landscape for insurance distribution activities. We will work with regulatory bodies as we develop the policy.

Part 4: Implementation considerations

Consultation questions

54. Part 4 of the consultation sought views on implementation considerations of a permitted insurance fee, such as the impact of transition, impact on costs, and impact across other areas relating to protected characteristics and the environment. It also considered impact in Wales and on the Welsh language in particular, given this is a joint consultation.

Question 17: What implementation changes, challenges and/ or costs do you anticipate landlords, freeholders and property managing agents will face in moving from existing remuneration practices for the managing and arranging of insurance – such as commission sharing – to a new permitted fee structure charged directly to leaseholders?

Question 18: Do you anticipate that a permitted insurance fee to remunerate property managing agents and freeholders will lead to higher or lower insurance costs for leaseholders?

Question 19: What impact will the removal of the ability to share commission with freeholders and property managing agents have on overall commissions received by brokers?

Question 20: What impact will the removal of commission sharing have on insurance premiums more widely?

Question 21: If you are a freeholder or property managing agent, how do you currently structure your services relating to arranging and managing insurance?

Question 22: Do you anticipate that the ending of percentage-based commissions for remuneration could lead to alternate ways of securing profits in relation to the arranging and managing of insurance? If so, what are they?

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible.

• Age
• Disability
• Sex
• Gender Reassignment
• Marriage or civil partnership
• Pregnancy and maternity
• Race
• Religion or belief
• Sexual orientation

Question 24: Do you anticipate any environmental impacts from this policy, either positive or negative?

[If yes] Please elaborate. How could positive impacts be maximised or negative impacts be mitigated or minimised?

Question 25: Do you anticipate that this policy would be likely to impact the judicial system? Examples could be an increase or decrease in applications to court or tribunals, increasing the length or complexity of cases, and new requirements on judicial recruitment or training.

Question 26: Do you anticipate that this policy would disproportionately impact local authorities?

Question 27: If you are a leaseholder, where is your property located?

Question 28: If you are a property management agent, freeholder, broker, insurer, or other interested party, where are the properties that you deal with located?

Question 29: Are you aware of any differences in the operation of buildings insurance for multi-occupancy residential buildings between England and Wales?

Question 30: What, in your opinion, would be the likely effects of these proposals on the Welsh language? We are particularly interested in any likely effects on opportunities to use the Welsh language and on not treating the Welsh language less favourably than English.

Do you think that there are opportunities to promote any positive effects?

Do you think that there are opportunities to mitigate any adverse effects?

Question 31: In your opinion, could these proposals be formulated or changed so as to have positive effects or more positive effects on using the Welsh language and on not treating the Welsh language less favourably than English?

Question 32: In your opinion, could these proposals be formulated or changed so as to mitigate any negative effects on using the Welsh language and on not treating the Welsh language less favourably than English?

Summary of responses

55. For question 17, property managing agents and freeholders / landlords said that if the policy does not allow adequate remuneration then the insurance distribution activities they currently do would not take place at all, leading to worse insurance outcomes for leaseholders.

56. They also highlighted the administrative costs of implementation, such as updates to accounting practices, updates to IT software, changes to contractual arrangements and whatever information monitoring would be required as part of the policy. A number of them stressed the annual nature of the insurance cycle and the related need for appropriate implementation timeframes.

57. For questions 18 and 20 leaseholders had mixed views. Those supportive said that a less opaque system of remuneration would allow for greater scrutiny. Those opposed felt it would lead to higher costs as it would be a new charge, or that freeholders and property managing agents would seek alternate ways to secure equivalent revenue.

58. For questions 18 and 20 property managing agents and freeholders highlighted that a new standalone fee would be subject to 20% Value Added Tax rather than the 12% rate of Insurance Premium Tax. They also said that the new remuneration model would potentially restrict the ability to procure insurance at a portfolio level, leading to more expensive premiums. For question 20 a number of respondents argued that the key drivers of insurance premiums were not commissions or remuneration, but underlying factors such as building safety concerns and numbers of claims over time.

59. For question 19 leaseholders were generally of the view that broker commissions would reduce, as they would no longer be incentivised to maximise commission for sharing with the property managing agent or freeholder. Property managing agents and freeholders would not be incentivised to select insurance policies with higher commission levels. Brokers were of the view that commissions were already falling as a result of FCA regulatory changes, and that the fair value rules applied by the FCA would mean brokers would not retain the commission that is currently shared with property managing agents or freeholders. Insurers and brokers did warn that if the policy leads to brokers doing activities they were previously passing on to property managing agents and freeholders, then those activities would require remuneration through additional commission.

60. For question 22 86% of leaseholders who answered said they thought this would lead to alternate ways of securing profits. The two main areas for this were through increasing other charges – such as administrative or management fees – or securing profits through the use of connected brokers, other connected intermediaries, or captive insurance arrangements.

61. All other respondent groups agreed this would lead to alternate approaches. Some broker and insurer respondents said that captive arrangements were not necessarily detrimental to leaseholders provided they could lead to more efficiency than would be the case otherwise.

62. For question 23 the majority of respondents either did not answer or said that the policy would have no impact on individuals with protected characteristics. Those that did say it would have an impact were largely split between positive and negative. For question 24 84% of respondents who answered the question said the policy would have no environmental impact.

63. For question 25 views were more mixed, with 58% saying this would impact the judicial system. Those who said this would be the case said that the newer system would allow greater challenge of unfair insurance costs. Those who said it would not asserted that clearer rules would give greater clarity prior to the process of legal dispute. A number of leaseholders said the lack of deterrence or fines for repeat offenders puts more pressure on the system through repeated legal disputes.

64. On question 26 86% of respondents said the policy would not impact local authorities disproportionately.

65. For question 29 respondents were consistent in their view that that there were no differences in the operation of building insurance between England and Wales. Whilst the majority of respondents did not provide an answer or indicated that they had no comments to questions 30-32, of those that did there were no positive or negative impacts borne out in the explanatory evidence provided with regards to the Welsh language, or on treating the Welsh language less favourably than English.

Government response

66. UK and Welsh governments note that there may be some implementation considerations for changes to building insurance remuneration across insurers, brokers, property managing agents and freeholders, and that these will require appropriate time for implementation.

67. Our governments recognise stakeholder concerns that alternate avenues of revenue elsewhere in the service charge may be sought. We would highlight the importance of wider reforms to legal costs and transparency that will apply to leasehold costs through the implementation of the Leasehold and Freehold Reform Act 2024.

68. We note comments by actors across the buildings insurance supply chain that there are a range of drivers of high insurance premiums for leaseholders. We recognise that commission for insurance distribution activities is one of multiple drivers of high premiums and accordingly a range of measures is required outside the scope of this policy.

69. For example, in December 2024 the UK government’s Remediation Acceleration Plan committed to building on the industry-led UK-wide Fire Safety Reinsurance Facility through further work with the buildings insurance industry to consider whether government might support the industry to reduce fire-related liabilities.

Annex A: Analysis of consultation responses

Question 3: If you are a leaseholder, are you aware of what payments – if any – your freeholder or property managing agent receives for the arranging or managing of insurance? Payments could take the form of direct remuneration – such as the sharing of commission – or be more indirect such as through retaining money from discounts or non-monetary payments.

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	180 (25%)	490 (69%)	38 (5%)
Leaseholder / Resident Organisations	27 (44%)	32 (52%)	3 (5%)
Freeholders	5 (24%)	2 (10%)	14 (67%)
Property Managing Agents	2 (10%)	6 (29%)	13 (62%)
Housing Associations	0 (0%)	0 (0%)	7 (100%)
Brokers	1 (20%)	0 (0%)	4 (80%)
Insurers	0 (0%)	1 (50%)	1 (50%)
Other	3 (30%)	5 (50%)	2 (20%)
Total	218 (26%)	536 (64%)	82 (10%)

Question 4: If you are a leaseholder, have you tried to challenge the payment of your freeholder or property managing agent for the arranging or managing of insurance?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	383 (54%)	287 (41%)	38 (5%)
Leaseholder / Resident Organisations	44 (71%)	15 (24%)	3 (5%)
Freeholders	4 (19%)	2 (10%)	15 (71%)
Property Managing Agents	4 (19%)	3 (14%)	14 (67%)
Housing Associations	0 (0%)	0 (0%)	7 (100%)
Brokers	0 (0%)	1 (20%)	4 (80%)
Insurers	0 (0%)	0 (0%)	2 (100%)
Other	4 (40%)	4 (40%)	2 (20%)
Total	439 (53%)	312 (37%)	85 (10%)

Question 7: A permitted insurance fee would be defined to only allow remuneration for specific activities being provided by freeholders and property managing agents, and prevent leaseholders being charged for any other payments to freeholders and property managing agents relating to the managing and arranging of insurance. Do you agree with this approach?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	330 (47%)	358 (51%)	20 (3%)
Leaseholder / Resident Organisations	39 (63%)	21 (34%)	2 (3%)
Freeholders	5 (24%)	12 (57%)	4 (19%)
Property Managing Agents	11 (52%)	9 (43%)	1 (5%)
Housing Associations	5 (71%)	0 (0%)	2 (29%)
Brokers	4 (80%)	1 (20%)	0 (0%)
Insurers	1 (50%)	1 (50%)	0 (0%)
Other	7 (70%)	3 (30%)	0 (0%)
Total	402 (48%)	405 (48%)	29 (3%)

Question 13: Do you consider that the existing framework for challenging unreasonable service charges – such as the Landlord and Tenant Act 1985 – is sufficient to ensure that if freeholders or property managing agents charge excluded insurance costs to leaseholders, that they could be challenged and that any permitted insurance fees would be proportionate?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	47 (7%)	594 (84%)	67 (9%)
Leaseholder / Resident Organisations	7 (11%)	49 (79%)	6 (10%)
Freeholders	12 (57%)	4 (19%)	5 (24%)
Property Managing Agents	10 (48%)	10 (48%)	1 (5%)
Housing Associations	4 (57%)	1 (14%)	2 (29%)
Brokers	2 (40%)	1 (20%)	2 (40%)
Insurers	1 (50%)	0 (0%)	1 (50%)
Other	2 (20%)	8 (80%)	0 (0%)
Total	85 (10%)	667 (80%)	84 (10%)

Question 14: Do you think a permitted insurance fee – however calculated – should be subject to additional criteria to ensure it is proportionate and fair, or that the “reasonableness test” set out in the Landlord and Tenant Act 1985 would be sufficient?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	450 (64%)	165 (23%)	93 (13%)
Leaseholder / Resident Organisations	38 (61%)	19 (31%)	5 (8%)
Freeholders	6 (29%)	11 (52%)	4 (19%)
Property Managing Agents	10 (48%)	10 (48%)	1 (5%)
Housing Associations	2 (29%)	1 (14%)	4 (57%)
Brokers	3 (60%)	0 (0%)	2 (40%)
Insurers	1 (50%)	0 (0%)	1 (50%)
Other	8 (80%)	1 (10%)	1 (10%)
Total	518 (62%)	207 (25%)	111 (13%)

Question 15: If additional criteria were included in the definition of permitted fees to ensure fair and proportionate remuneration for activities by freeholders and property managing agents, what criteria do you think would be most effective and how could they be calculated?

• That the price of permitted fees for services paid by the leaseholder should provide fair value to leaseholders
• That the price of permitted fees for services paid by the leaseholder should have a reasonable relationship to the benefits provided, considering the costs incurred in providing it
• That any conflict of interest with related parties in the insurance supply chain, such as the broker, can be shown to have been considered
• Other (please set out alternate / additional criteria)

Respondent Group	Fair Value	Benefits / Costs	Conflict of Interest	Other
Leaseholders and representative groups	384 (54%)	331 (47%)	359 (51%)	208 (29%)
Leaseholder / Resident Organisations	35 (56%)	36 (58%)	38 (61%)	17 (27%)
Freeholders	12 (57%)	7 (33%)	16 (76%)	0 (0%)
Property Managing Agents	10 (48%)	9 (43%)	9 (43%)	2 (10%)
Housing Associations	2 (29%)	2 (29%)	2 (29%)	0 (0%)
Brokers	3 (60%)	3 (60%)	3 (60%)	1 (20%)
Insurers	0 (0%)	1 (50%)	1 (50%)	1 (50%)
Other	7 (70%)	5 (50%)	5 (50%)	3 (30%)
Total	453 (54%)	394 (47%)	433 (52%)	232 (28%)

Question 22: Do you anticipate that the ending of percentage-based commissions for remuneration could lead to alternate ways of securing profits in relation to the arranging and managing of insurance?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	355 (50%)	60 (8%)	293 (41%)
Leaseholder / Resident Organisations	37 (60%)	4 (6%)	21 (34%)
Freeholders	10 (48%)	2 (10%)	9 (43%)
Property Managing Agents	14 (67%)	4 (19%)	3 (14%)
Housing Associations	3 (43%)	0 (0%)	4 (57%)
Brokers	4 (80%)	1 (20%)	0 (0%)
Insurers	1 (50%)	1 (50%)	0 (0%)
Other	5 (50%)	1 (10%)	4 (40%)
Total	429 (51%)	73 (9%)	334 (40%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Age)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	119 (17%)	227 (32%)	175 (25%)	187 (26%)
Leaseholder / Resident Organisations	15 (24%)	29 (47%)	5 (8%)	13 (21%)
Freeholders	1 (5%)	4 (19%)	3 (14%)	13 (62%)
Property Managing Agents	0 (0%)	11 (52%)	2 (10%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	1 (10%)	5 (50%)	1 (10%)	3 (30%)
Total	138 (17%)	280 (33%)	186 (22%)	232 (28%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Disability)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	113 (16%)	227 (32%)	170 (24%)	198 (28%)
Leaseholder / Resident Organisations	14 (23%)	29 (47%)	6 (10%)	13 (21%)
Freeholders	1 (5%)	4 (19%)	3 (14%)	13 (62%)
Property Managing Agents	0 (0%)	11 (52%)	2 (10%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	1 (10%)	5 (50%)	1 (10%)	3 (30%)
Total	131 (16%)	280 (33%)	182 (22%)	243 (29%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Sex)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	75 (11%)	310 (44%)	115 (16%)	208 (29%)
Leaseholder / Resident Organisations	10 (16%)	35 (56%)	4 (6%)	13 (21%)
Freeholders	1 (5%)	6 (29%)	1 (5%)	13 (62%)
Property Managing Agents	0 (0%)	12 (57%)	1 (5%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	0 (0%)	7 (70%)	0 (0%)	3 (30%)
Total	88 (11%)	374 (45%)	121 (14%)	253 (30%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Gender reassignment)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	67 (9%)	317 (45%)	105 (15%)	219 (31%)
Leaseholder / Resident Organisations	9 (15%)	36 (58%)	4 (6%)	13 (21%)
Freeholders	0 (0%)	7 (33%)	1 (5%)	13 (62%)
Property Managing Agents	0 (0%)	12 (57%)	1 (5%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	0 (0%)	7 (70%)	0 (0%)	3 (30%)
Total	78 (9%)	383 (46%)	111 (13%)	264 (32%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Marriage or civil partnership)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	80 (11%)	300 (42%)	116 (16%)	212 (30%)
Leaseholder / Resident Organisations	9 (15%)	35 (56%)	4 (6%)	14 (23%)
Freeholders	0 (0%)	7 (33%)	1 (5%)	13 (62%)
Property Managing Agents	0 (0%)	12 (57%)	1 (5%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	0 (0%)	7 (70%)	0 (0%)	3 (30%)
Total	91 (11%)	365 (44%)	122 (15%)	258 (31%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Pregnancy and maternity)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	88 (12%)	276 (39%)	136 (19%)	208 (29%)
Leaseholder / Resident Organisations	9 (15%)	35 (56%)	4 (6%)	14 (23%)
Freeholders	0 (0%)	6 (29%)	2 (10%)	13 (62%)
Property Managing Agents	0 (0%)	12 (57%)	1 (5%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	1 (10%)	6 (60%)	0 (0%)	3 (30%)
Total	100 (12%)	339 (41%)	143 (17%)	254 (30%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Race)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	81 (11%)	288 (41%)	131 (19%)	208 (29%)
Leaseholder / Resident Organisations	10 (16%)	35 (56%)	4 (6%)	13 (21%)
Freeholders	0 (0%)	7 (33%)	1 (5%)	13 (62%)
Property Managing Agents	0 (0%)	12 (57%)	1 (5%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	0 (0%)	7 (70%)	0 (0%)	3 (30%)
Total	93 (11%)	353 (42%)	137 (16%)	253 (30%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Religion or belief)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	68 (10%)	314 (44%)	109 (15%)	217 (31%)
Leaseholder / Resident Organisations	8 (13%)	37 (60%)	3 (5%)	14 (23%)
Freeholders	1 (5%)	6 (29%)	1 (5%)	13 (62%)
Property Managing Agents	0 (0%)	12 (57%)	1 (5%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	0 (0%)	7 (70%)	0 (0%)	3 (30%)
Total	79 (9%)	380 (45%)	114 (14%)	263 (31%)

Question 23: Do you believe any of the proposals put forward could negatively or positively impact individuals who have a protected characteristic? Please explain your rationale, and evidence your thinking where possible. (Sexual Orientation)

Respondent Group	Positive Impact	No Impact	Negative Impact	Not Answered
Leaseholders and representative groups	65 (9%)	317 (45%)	108 (15%)	218 (31%)
Leaseholder / Resident Organisations	8 (13%)	36 (58%)	4 (6%)	14 (23%)
Freeholders	0 (0%)	7 (33%)	1 (5%)	13 (62%)
Property Managing Agents	0 (0%)	12 (57%)	1 (5%)	8 (38%)
Housing Associations	0 (0%)	2 (29%)	0 (0%)	5 (71%)
Brokers	2 (40%)	1 (20%)	0 (0%)	2 (40%)
Insurers	0 (0%)	1 (50%)	0 (0%)	1 (50%)
Other	0 (0%)	7 (70%)	0 (0%)	3 (30%)
Total	75 (9%)	383 (46%)	114 (14%)	264 (32%)

Question 24: Do you anticipate any environmental impacts from this policy, either positive or negative?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	86 (12%)	415 (59%)	207 (29%)
Leaseholder / Resident Organisations	4 (6%)	50 (81%)	8 (13%)
Freeholders	2 (10%)	7 (33%)	12 (57%)
Property Managing Agents	2 (10%)	15 (71%)	4 (19%)
Housing Associations	0 (0%)	2 (29%)	5 (71%)
Brokers	0 (0%)	3 (60%)	2 (40%)
Insurers	0 (0%)	1 (50%)	1 (50%)
Other	0 (0%)	7 (70%)	3 (30%)
Total	94 (11%)	500 (60%)	242 (29%)

Question 25: Do you anticipate that this policy would be likely to impact the judicial system? Examples could be an increase or decrease in applications to court or tribunals, increasing the length or complexity of cases, and new requirements on judicial recruitment or training.

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	296 (42%)	225 (32%)	187 (26%)
Leaseholder / Resident Organisations	38 (61%)	18 (29%)	6 (10%)
Freeholders	11 (52%)	2 (10%)	8 (38%)
Property Managing Agents	10 (48%)	8 (38%)	3 (14%)
Housing Associations	2 (29%)	1 (14%)	4 (57%)
Brokers	1 (20%)	2 (40%)	2 (40%)
Insurers	0 (0%)	1 (50%)	1 (50%)
Other	5 (50%)	2 (20%)	3 (30%)
Total	363 (43%)	259 (31%)	214 (26%)

Question 26: Do you anticipate that this policy would disproportionately impact local authorities?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	77 (11%)	421 (59%)	210 (30%)
Leaseholder / Resident Organisations	1 (2%)	51 (82%)	10 (16%)
Freeholders	2 (10%)	9 (43%)	10 (48%)
Property Managing Agents	1 (5%)	15 (71%)	5 (24%)
Housing Associations	0 (0%)	3 (43%)	4 (57%)
Brokers	0 (0%)	3 (60%)	2 (40%)
Insurers	0 (0%)	1 (50%)	1 (50%)
Other	1 (10%)	6 (60%)	3 (30%)
Total	82 (10%)	509 (61%)	245 (29%)

Question 27: If you are a leaseholder, where is your property located?

Respondent Group	England	Wales	Both	Not Answered
Leaseholders and representative groups	636 (90%)	10 (1%)	3 (0%)	59 (8%)
Leaseholder / Resident Organisations	57 (92%)	2 (3%)	0 (0%)	3 (5%)
Total	693 (90%)	12 (2%)	3 (0%)	62 (8%)

Question 28: If you are a property management agent, freeholder, broker, insurer, or other interested party, where are the properties that you deal with located?

Respondent Group	England	Wales	Both	Not Answered
Freeholders	8 (38%)	0 (0%)	5 (24%)	8 (38%)
Property Managing Agents	10 (48%)	0 (0%)	4 (19%)	7 (33%)
Housing Associations	2 (29%)	2 (29%)	0 (0%)	3 (43%)
Brokers	2 (40%)	0 (0%)	1 (20%)	2 (40%)
Insurers	0 (0%)	0 (0%)	1 (50%)	1 (50%)
Other	3 (30%)	0 (0%)	0 (0%)	7 (70%)
Total	25 (38%)	2 (3%)	11 (17%)	28 (42%)

Question 29: Are you aware of any differences in the operation of buildings insurance for multi-occupancy residential buildings between England and Wales?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	26 (4%)	499 (70%)	183 (26%)
Leaseholder / Resident Organisations	2 (3%)	48 (77%)	12 (19%)
Freeholders	2 (10%)	11 (52%)	8 (38%)
Property Managing Agents	0 (0%)	16 (76%)	5 (24%)
Housing Associations	0 (0%)	4 (57%)	3 (43%)
Brokers	1 (20%)	2 (40%)	2 (40%)
Insurers	0 (0%)	1 (50%)	1 (50%)
Other	0 (0%)	8 (80%)	2 (20%)
Total	31 (4%)	589 (70%)	216 (26%)

Question 31: In your opinion, could these proposals be formulated or changed so as to have positive effects or more positive effects on using the Welsh language and on not treating the Welsh language less favourably than English?

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	27 (4%)	134 (19%)	547 (77%)
Leaseholder / Resident Organisations	4 (6%)	23 (37%)	35 (56%)
Freeholders	0 (0%)	7 (33%)	14 (67%)
Property Managing Agents	0 (0%)	5 (24%)	16 (76%)
Housing Associations	0 (0%)	1 (14%)	6 (86%)
Brokers	0 (0%)	2 (40%)	3 (60%)
Insurers	0 (0%)	0 (0%)	2 (100%)
Other	0 (0%)	4 (40%)	6 (60%)
Total	31 (4%)	176 (21%)	629 (75%)

Question 32: In your opinion, could these proposals be formulated or changed so as to mitigate any negative effects on using the Welsh language and on not treating the Welsh language less favourably than English

Respondent Group	Yes	No	Not Answered
Leaseholders and representative groups	18 (3%)	134 (19%)	556 (79%)
Leaseholder / Resident Organisations	4 (6%)	22 (35%)	36 (58%)
Freeholders	0 (0%)	6 (29%)	15 (71%)
Property Managing Agents	0 (0%)	6 (29%)	15 (71%)
Housing Associations	0 (0%)	1 (14%)	6 (86%)
Brokers	1 (20%)	1 (20%)	3 (60%)
Insurers	0 (0%)	0 (0%)	2 (100%)
Other	0 (0%)	4 (40%)	6 (60%)
Total	23 (3%)	174 (21%)	639 (76%)