Buildings insurance is one of the largest and least transparent line items in many leaseholders' service charges, and reform is genuinely underway from two different directions at once. This guide covers what a leaseholder can already demand to see, the distinct FCA conduct rules and Leasehold and Freehold Reform Act commission ban both landing in 2026, and a coverage gap in the policy itself that catches many leaseholders out.
Figures below reflect FCA press releases (December 2025), the Leasehold and Freehold Reform Act 2024 sections 61-64, and LEASE (Leasehold Advisory Service) guidance, current to mid-2026. This is general information, not legal or insurance advice; a specific policy or service charge dispute should be reviewed by a solicitor.
1. The scale of the commission problem
An FCA review found average per-policy broker commission on multi-occupancy leasehold buildings insurance rose by around 40 to 46% between 2019 and 2022. Commission can still comprise up to 40% of the premium on some policies today, historically as high as 50% or more, shared between brokers, freeholders, and managing agents, frequently without clear evidence that this benefits leaseholders in any way. This affects an estimated 4.8 million leasehold homes across England and Wales.
2. Two separate reforms, often confused
These are genuinely separate mechanisms operating on different parties: the FCA rules constrain how insurance firms and brokers themselves must behave, while the LFRA provisions constrain what a landlord or managing agent can actually recover from leaseholders through the service charge. Both are aimed at the same underlying problem, hidden or excessive commission, but neither replaces the other.
3. What you can already demand to see, today
Separately from either 2026 reform, leaseholders already have existing rights worth using immediately. A leaseholder, or the secretary of a recognised residents' association, can request a written summary of the buildings insurance cover once per insurance period, typically annually, and can request evidence of premium payment and inspect the actual policy documents. The landlord or managing agent must comply with such a request within 21 days. Any private landlord or manager who arranges the buildings insurance directly must themselves be authorised to do so by the FCA.
4. The coverage gap most leaseholders don't check
A block's buildings insurance policy doesn't automatically extend to damage within your own flat caused by disrepair originating in a neighbouring flat, sometimes described as a third-party liability gap. This is a genuinely common source of dispute after a leak or similar incident, where a leaseholder assumes the block policy covers everything and discovers only afterward that it doesn't extend that far. Checking the specific scope of your building's policy, rather than assuming, is worth doing before an incident happens, not after.
5. Status at a glance
| Right or reform | Status |
|---|---|
| Right to request an annual insurance summary and inspect documents | Already in force |
| FCA fair-value and commission disclosure conduct rules | Effective from early 2026 |
| Ban on recovering commission via service charges (LFRA ss.61-64) | Targeted for 1 April 2026, secondary legislation pending |
6. Frequently asked questions
How much of my building insurance premium is commission?
It varies, but commission can still make up as much as 40% of a leasehold building's insurance premium today, and has historically been as high as 50% or more in some cases, shared between brokers, freeholders, and managing agents. An FCA review found average broker commission on this type of policy rose by around 40 to 46% between 2019 and 2022.
Are there two separate insurance commission reforms happening in 2026?
Yes, and they're often confused. FCA conduct rules require insurance firms to act in leaseholders' best interests and disclose all commission, effective from early 2026. Separately, sections 61 to 64 of the Leasehold and Freehold Reform Act 2024 are targeted to prohibit landlords and managing agents from recovering insurance commission through service charges at all, replacing it with transparent, itemised "permitted insurance fees" instead, targeted for 1 April 2026, though detailed secondary legislation was still pending at the time of writing.
Can I already ask my freeholder to show me the building's insurance details?
Yes, this right already exists. A leaseholder, or the secretary of a recognised residents' association, can request a written summary of the buildings insurance cover once per insurance period, and can request evidence of premium payment and inspect the policy documents. The landlord or manager must comply within 21 days of the request.
Does my building's insurance automatically cover damage to my own flat?
Not necessarily. A block's buildings insurance policy may not extend to damage in your own flat caused by disrepair originating in a neighbour's flat, sometimes described as a third-party liability gap. It's worth checking the specific scope of your building's policy rather than assuming any water or structural damage from a neighbouring flat is automatically covered.
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