Flat owners could be owed £3,500 over ‘secret' insurance charges according to new lawsuit
COMPO CLAIM Flat owners could be owed £3,500 over 'secret' insurance charges according to new lawsuit
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FLAT owners could be owed £3,500 over "secret" insurance charges, according to a new lawsuit worth millions of pounds.
Some 20,000 people who own flats in the UK are taking legal action against the companies that own their apartment blocks.
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Flat owners could be owed up to £3,500 according to a new lawsuit
Legal letters claim freeholders - the building owners - took commission fees for arranging buildings insurance, which was then secretly added to the service charges paid by the flat owners.
The homeowners have accused their landlords of "milking them for cash" at a time when thousands have been struggling with the cost-of-living crisis, dubbing it a "national scandal".
Lawyers have suggested that each flat owner could be awarded between £1,500 and £3,500 in compensation.
They say up to 900,000 homeowners who most commonly own flats in multi-occupancy blocks could be affected.
The freeholders were allegedly paid the fees by insurance companies in exchange for buying their products.
These were then added to the cost of the buildings insurance by the freeholders or their agents, and the total amount was then charged to the flat owners in the form of service charges without their knowledge, the leaseholders claim.
All freeholders involved in the lawsuit have denied any wrongdoing.
David Walsh owns a flat in a block in West London, and is one of the homeowners taking legal action.
"This is nothing short of a national scandal," he said.
"Hundreds of thousands of leaseholders have been struggling with ever-increasing service charges, mortgages, and like everyone else, the cost-of-living crisis.
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"So, it is even more shocking that our landlords have been milking us for cash by jacking up insurance premiums with hidden commissions.
"I'm looking forward to unscrupulous landlords being held to account and paying back what they owe."
Velitor Law, the firm taking the class action lawsuit, has written to four of the UK's largest freeholders - E&J Estates, Consensus Business Group, Long Harbour and Ground Rents Income Funds - to recoup the fees.
It is expected that around two dozen landlords, who control the leaseholds for close to 900,000 homes, may eventually be subject to the Leaseholder Action claim.
The claim seeks to recover a minimum of six years' worth of commissions from landlords, but lawyers have applied to suspend the usual period of limitation, which could see the claim stretch back as far as 1997 in some cases.
Liam Spender, the lawyer at Velitor Law, which is taking the class action lawsuit, commented: 'We have now reached a critical milestone in the legal process to get homeowners their money back.
"Thousands have signed up enabling us to get to this point. If you are a homeowner in a block of flats, and your landlord arranges your buildings insurance, we'd encourage you to sign up to the claim.
"This first set of landlords are now on notice of this claim and they are now going to have to answer in court.'
Velitor Law said a second tranche of legal letters to landlords will be issued before the end of the year.
Who can make a claim?
Up to 900,000 homeowners who primarily own flats in multi-occupancy blocks may be affected, lawyers for the leaseholders say.
Velitor Law said that interested flat owners should sign up via www.leaseholderaction.com.
It added that the final amount of damages will depend on where the building is, the overall level of commission, whether it is possible to claim for more than six years, and whether the court awards interest and allows recovery of Insurance Premium Tax.
The Sun has contacted all four freeholders involved for comment.
A spokesperson for HomeGround told the Sun: 'HomeGround's insurance services are subject to the Financial Conduct Authority's regulatory regime and it receives commission in line with that strict regulatory framework.'
A spokesperson for Ground Rents Income Fund said: "We do not consider there to be any valid basis for a claim against GRIF."
It comes after Mastercard was ordered earlier this year to pay out £200m in compensation to 47 million customers in a landmark legal battle.
Mastercard customers were entitled to a compensation payout worth up to £70 each as a result of the long-running case.
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