Insurance costs rise for Mansfield Council’s London investment building

The increase is partly due to defects found inside it and difficulties securing an agreement, a new report says.

The report shows the authority’s insurance agreement on the building will cost £284,863 for 2023-24, up from £268,554.54 the year before.

The building, on Bedford Road, Clapham, was acquired as an investment in 2017 at a cost of £5.95 million. It has business space on the ground floor with 40 apartments above.

It brings in more than £300,000 per year to help shore up council budgets, but an independent assessment in 2018 following the Grenfell Tower disaster found several fire safety defects.

Repair works are planned and residents living inside it will begin leaving their homes in May – the council expects to spend almost £20m on addressing the issues before completion in 2025.

Now a new council report has outlined the cost of insuring the building has risen. The authority says it “experienced difficulty securing an insurer for the property” due to its condition.

Its current agreement with Touchstone Underwriting splits the risk across multiple insurers to protect against losses arising from its defects.

The council had been consulting its brokers to find a different insurer, but says insurers are “actively stepping away from providing terms” on buildings with known fire safety issues, meaning the authority had to renew with Touchstone.

In the report published alongside the decision, the council says 15 per cent of the new £284,863 agreement will be charged back to people in the building – amounting to £42,729.45, which will be split between the properties and lift manufacturer Kone on the ground floor through service charges.

The remaining £242,133.55 must be met through council budgets, with more than £12m allocated for the building in the upcoming financial year.

Philip College, council corporate asset manager, said: “The extent of the defects at the property makes this an unattractive building to insure.

“At present, risks where there are known issues in relation to fire safety are hard to place and insurers are stepping away from providing terms.

“The brokers, therefore, recommend we renew with Touchstone on the terms presented.

“Given the defects and associated cost in obtaining insurance cover the overall premium has increased.”