Owning the freehold means owning the building and land outright, indefinitely, with no superior landlord above you. Owning a leasehold interest means owning the right to occupy for a fixed term — historically 99, 125, or 999 years — subject to the terms of a lease granted by the freeholder, who retains ultimate ownership of the building and land. Leasehold is the dominant model for flats and purpose-built apartment buildings in England and Wales. The distinction matters enormously for buildings insurance because the lease specifies who is responsible for arranging and paying for it.

For a freehold house, the position is simple. The freeholder owns the building and is solely responsible for arranging buildings insurance. If the property is mortgaged, the lender will require evidence of buildings insurance as a condition of the loan. For a landlord with a freehold buy-to-let, the obligation rests entirely with them regardless of who occupies it.

For leasehold flats, the obligation to arrange buildings insurance is determined by the lease. In the vast majority of UK leases, this falls on the freeholder rather than the individual leaseholder. The practical reason is straightforward: a block of multiple individually owned units needs a single buildings policy to avoid overlapping cover, gaps between policies, and disputes when damage affects shared areas. Under this model, the freeholder arranges the insurance and leaseholders contribute to its cost through the service charge.

Every leasehold flat should have a lease that explicitly addresses buildings insurance. The relevant clauses typically oblige the freeholder to arrange cover for the whole building, specify the minimum level required, allow the freeholder to recover the cost through the service charge, and require the freeholder to produce evidence of the policy on request. Some older leases create ambiguity about exactly where the freeholder's cover ends — whether internal non-structural walls, fitted items, or decorations fall to the leaseholder. If you are unsure what your lease says, a solicitor or lease advisory service can review the relevant clauses.

Under the Landlord and Tenant Act 1985, service charges — including the insurance element — must be reasonably incurred. If a premium appears excessive, for example because the freeholder has placed cover through a connected insurer or added a management margin, leaseholders can challenge it.

Leaseholders are also entitled under the Landlord and Tenant Act 1985 (as amended by the Commonhold and Leasehold Reform Act 2002) to request written details of the insurance within 21 days of a written request. If leaseholders believe the insurance is unreasonable, they can apply to the First-tier Tribunal (Property Chamber), exercise the Right to Manage under the Commonhold and Leasehold Reform Act 2002, or pursue collective enfranchisement to purchase the freehold outright.

In a conventional block with a single freeholder, the freeholder or their managing agent arranges a single buildings policy covering the whole building. This should cover the main structure, communal areas, shared services, and property owners' liability. Where the block is managed by a residents' management company, the RMC directors take on the insurance responsibility — along with the governance obligations that come with it. Our specialist block of flats insurance page sets out how we structure cover for freeholders, managing agents, and RMCs across England and Wales.

Share of freehold is common in England and Wales, particularly in converted houses split into two or three flats. The leaseholders collectively own the freehold — typically through an RMC — and each holds a share in that company alongside their individual leasehold interest.

The critical insurance consequence is that there is no external landlord to arrange or be accountable for buildings insurance. The RMC directors — usually the leaseholders themselves — bear the obligation directly. They must arrange cover at the correct reinstatement value, place it with a financially rated insurer, recover the cost from all leaseholders, and renew annually. Most insurers will automatically note mortgagees' interests when the policy is set up, though on buildings with multiple mortgaged flats it is worth confirming this has been done correctly rather than assuming. Failure exposes them to personal liability claims from fellow leaseholders if underinsurance leads to a shortfall or if the building is uninsured during a renewal gap.

Directors' and Officers' Liability

RMC directors are typically unpaid volunteers, but they hold real legal responsibilities. If a director selects an inadequate policy, fails to renew on time, or mismanages a claim, they may face personal claims beyond the company's own assets. Directors' and officers' (D&O) insurance covers the legal costs and damages arising from such allegations. Our guide to Directors' and Officers' Insurance for Residents' Management Companies sets out what RMC directors need to know.

Common Problems in Share of Freehold Buildings

Inadequate sum insured. Without a current reinstatement cost assessment, the figure often lags behind construction cost inflation, leaving the building underinsured.

Policy placed informally. Some buildings are insured through one director's own insurer as a convenience, without the policy being placed in the RMC's name or structured to reflect all interests.

Mortgagees' interests not confirmed. Most insurers note these automatically, but on an informally arranged policy this is easily missed. Where multiple leaseholders have mortgages it is worth confirming with the insurer that all lenders have been recorded rather than assuming it has been done.

No D&O cover in place. A single disputed insurance decision among leaseholders can quickly become a personal liability matter for the director who signed off on the policy.

Freeholder's policy doesn't cover enough. Usually caused by underinsurance — the sum insured is below the reinstatement value — or a policy that excludes the specific peril involved.

Internal vs external responsibility. Older leases can create ambiguity about what the leaseholder owns and must insure internally. A burst pipe inside a flat may or may not fall under the freeholder's policy depending on the lease and policy wording.

Freeholder fails to arrange insurance. A breach of lease obligations. Leaseholders should take legal advice and may need to arrange emergency cover while pursuing the freeholder.

Disputed liability following damage between flats. Water from an upper flat damaging a lower flat's ceiling raises questions of liability and subrogation between the buildings policy and any leaseholder or contents policies. A specialist broker can help navigate these.

Taurus Risk Management works with freeholders, RMCs, RTM companies, and managing agents to structure buildings insurance correctly — and to make sure the people responsible for arranging it are themselves protected through appropriate D&O cover.