Does our RTM Co have to use the freeholder’s insurance?

This a question that we are regularly asked by RTM directors, namely – can the freeholder insist we use their buildings insurance for our block?

The short answer is ‘No’, as Ian Hollins of Clear Building Management explains.

By securing the Right to Manage for your block, your RTM company has taken over the management functions – and this includes arranging insurance for the building.


The Commonhold and Leasehold Reform Act 2002 sets out that the freeholder can arrange additional insurance but that this must be at their own expense.

This is something that a lot of managing agents get wrong.

RTM enables leaseholders to gain control of the management of their developments. It gives you more influence over the management functions, enabling you to save money, improve service levels and put you back in control of your investment.

After securing the Right to Manage, insurance is almost always one of the key areas of property management in which savings can be made. Freeholders will however often try to hang on to arranging the insurance for a development, as the insurance can provide a useful income stream through commissions that are paid to the freeholder and then recharged to the service charge.

However, as an RTM company, you have the right to take over the block insurance for your development and your managing agent will be able to help you manage this process.

Ask your managing agent to put your block insurance ‘out to market’ and secure a minimum of three competitive quotes. This will usually generate a more cost-effective premium and, more often than not, better insurance cover.

Clear Building Management is a managing agent based in central Manchester and works with RMC directors and leaseholders across the Midlands and North West.

Ian Hollins, Director at Clear Building Management

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