Oxford City Council is reviewing the cost of rebuilding its homes and buildings. This is called a building costs reinstatement exercise. The exercise will help us make sure our buildings insurance provides an appropriate level of cover.
This page explains what a reinstatement exercise is, why it is needed, and how it may affect both building insurance costs and service charges for leaseholders and shared owners.
What our buildings insurance covers
Under the terms of the lease, we, as the landlord, must insure the building and pass the costs of insurance on to leaseholders and shared owners. You cannot arrange separate buildings insurance for the building.
The buildings insurance we arrange does not cover the contents of your home.
We recommend you take out your own contents insurance to protect your belongings. Before taking out a policy, check that it does not duplicate cover already provided through the buildings insurance.
What is a reinstatement exercise
A building costs reinstatement exercise is a professional assessment carried out by a Royal Institution of Chartered Surveyor (RICS). It calculates how much it would cost to rebuild a building if it were completely destroyed by a major event, such as a fire.
The assessment looks at the cost of:
- demolishing and clearing the site
- rebuilding the property
- construction materials and labour
- professional fees, such as architects and surveyors
- meeting current building regulations and safety requirements
The reinstatement cost is not the same as the market value of your home. It is simply the amount it would cost to rebuild the building from scratch.
We last carried out a reinstatement exercise in 2017. Since then, we have increased reinstatement values each year in line with inflation.
Why is the exercise needed
Building costs change over time. The price of materials, labour and construction work can rise significantly, especially during periods of high inflation.
If the building is not insured for the correct amount, there is a risk that it could be underinsured.
This means that if the building suffered major damage, there may not be enough money available from the insurer to cover the full cost of rebuilding it.
Regular reinstatement assessments help make sure that:
- the building has the right level of insurance cover
- insurance information remains up to date
- residents are protected from the risks of underinsurance
- leaseholders and shared owners are protected from excessive insurance cover
- the building can be rebuilt if a major incident occurs
An up-to-date building costs reinstatement assessment is a requirement of all residential building insurers.
Cost of the exercise
The costs of the reinstatement exercise will not be passed on to leaseholders and shared owners through the service charge or a separate invoice.
Impact on buildings insurance costs
The rebuilding value of a building is one of the factors insurance companies use when calculating the insurance premium.
If the rebuilding cost has increased
If the revaluation shows that it would cost more to rebuild the building than previously thought, the amount of insurance cover required will increase.
This may result in:
- a higher insurance premium
- better protection for the building
- reduced risk of being underinsured
If the rebuilding cost has decreased
If the revaluation shows that the building has been insured for more than it needs to be, the amount of cover may be reduced.
This could result in:
- a lower insurance premium
- more accurate insurance costs
- leaseholders not paying for unnecessary cover
The purpose of the revaluation is to make sure the building has the correct level of insurance cover, not to increase insurance costs.
Impact on service charges
Under your lease, you contribute towards the cost of insuring the building through your service charge.
The building insurance premium is one part of the overall service charge you pay.
If the insurance premium changes, the amount collected through service charges may also change.
If the insurance premium increases
You may see an increase in the insurance element of your service charge. This reflects the higher cost of providing sufficient insurance cover for the building.
If the insurance premium decreases
You may benefit from a reduction in the insurance element of your service charge because the cost of insuring the building has fallen.
It is important to remember that the insurance premium is only one part of the service charge. Other costs, such as repairs, maintenance, cleaning, grounds maintenance, and management costs, will also influence the overall amount payable.
Who is affected
This exercise is carried out across all our stock regardless of tenure. This includes council tenants.
How we get the best price
In recent years, most insurance providers have stopped providing buildings insurance for local authority leaseholders, and the few providers that offer this cover are charging higher rates than when the market was more competitive.
We last carried out a tender exercise, including consultation with leaseholders and shared owners, in 2024 and Zurich was the successful company. Our contract with them expires in 2029.
How to find the insurance documents
You can find a copy of the building insurance documents on Insuring your home for leaseholders and shared owners.
If you can’t download the documents, speak to customer services and we will send them to you.
Customer services can also provide a copy of the cover note for your property or block.
