Thousands of Flat Owners Seek Compensation from Major Freeholders
Thousands of flat owners across the UK are launching a multi-million-pound legal campaign against some of the country’s biggest freeholders, alleging they were charged inflated building insurance costs due to undisclosed commission fees.
Legal documents seen by the BBC claim that freeholders—companies that own the apartment blocks—secretly received commission payments from insurers for arranging building insurance policies. These commissions, the claimants allege, were then passed on to leaseholders as part of their service charges, without their knowledge or consent.
The legal action, led by Velitor Law, targets four major freeholders: E&J Estates, Consensus Business Group, Long Harbour, and Ground Rents Income Funds. On behalf of 2,500 leaseholders, the firm is demanding not only the return of the commission payments but also interest and reimbursement for any Insurance Premium Tax paid.
“This was a secret commission received without our clients’ prior informed consent, and we believe it is unlawful,” said Liam Spender of Velitor Law. He added that as many as 20,000 leaseholders have now signed up to the class action, and more companies may soon face similar claims.
The controversy centres on the growing cost of buildings insurance, particularly since the Grenfell Tower fire, which led to heightened safety concerns and insurance premiums. Since commissions are typically calculated as a percentage of the insurance cost, the amounts involved have surged.
In some cases, leaseholders claim they paid significantly more than necessary. For example, if the total insurance premium for a block of flats was £80,000, the insurer might pay £20,000 in commission to the freeholder—but leaseholders allege the full £100,000 was charged to them, without disclosure.
David Walsh, 50, a flat owner in south-west London, is among those seeking redress. He says the annual insurance bill for his 144-flat building has tripled to over £150,000 due to the presence of dangerous cladding. His service charge this year has reached nearly £5,000.
Despite repeated requests, Walsh says he has been unable to find out how much commission was included in those costs. “They just ignored us for months,” he said. “Then they declined to comment, then they said ‘no, that’s not how we see it.’ I’ve never got to the bottom of the commissions.”
A report by the Financial Conduct Authority (FCA) in April 2023 revealed that insurance commission rates for multi-occupancy buildings could reach as high as 62%. It found that the average commission paid to brokers jumped from £1,785 in 2019 to £2,595 in 2022. Since January 2024, insurers and brokers have been required to disclose commission payments to freeholders.
The freeholders named in the legal action have rejected the claims.
Ground Rents Income Funds said it saw “no valid basis for a claim.” Penult Capital Partners, which handles insurance for E&J Estates, dismissed the claims as “fundamentally misconceived.” Consensus Business Group pledged to “vigorously defend” any legal action. Homeground, acting on behalf of Long Harbour, said its practices follow FCA rules and commissions are “in line with that strict regulatory framework.”
Velitor Law says this is only the beginning of what could become a far-reaching legal battle involving as many as 20 different landlord groups. For thousands of leaseholders facing soaring costs, the case could offer long-awaited transparency—and potentially, financial relief.