Managing agents have been accused of charging an average of 42 per cent in hidden commission for arranging buildings insurance at blocks of leasehold flats.

Research from Urban Owners, a group specialising in block management, has found that property owners in blocks of leasehold flats are typically paying £965 more than necessary for insurance cover.

The consumer group Which? on Monday called for the Government to reform the leasehold property management sector by improving transparency.

“Which? regularly hears of problems for leaseholders and welcomes any efforts to make the existing law work better for them,” said James Daley of Which? Money.

The consumer group said leaseholders can avoid excessive charges by taking control of their block through the Right-to-Manage (RTM) process. This involves groups of leaseholders taking over the management of their block from the freeholders of the property.

In one example, after taking control of the management of the building, leaseholders at a block of flats in Woolwich, South London, were able to cut their insurance premium by 77 per cent.

One group in London’s Notting Hill were able to save a total of £7,177 – or 63 per cent a year.

Steve Wylie of Urban Owners said a lack of transparency means that the true scale of the problem is hidden from leaseholders.

“Leaseholders should not accept high charges and poor service from managing agents. The RTM legislation allows flat owners to take control of the management of their block, and choosing to use transparent block administration services will provide full accountability over the use of funds,” he said.

Leaseholders seeking advice can look at the The Leasehold Advisory Service – a public body funded by the Government to provide free advice on the law affecting residential leasehold property in England and Wales.

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