It is normal for managing agents to charge extra for work outside their typical remit, Mr Boyd said. However, he added: “It seems the Government is approving very high levels of fees for pre-contract work.”
A lack of official data was an additional problem. “How do we, the taxpayer, have any certainty we are getting value for money?” he asked.
Rising insurance bills have also come with commission paid to freeholders and managing agents. Nichola Venables, of analysis firm the New Build Database, said: “There is a severe lack of transparency about how much commission is being paid. They are incentivised to find the most expensive cover or the highest percentage commission and inflate their income.
“We have seen commissions of up to 50pc and one instance of a broker offering to increase a commission without limit so they could retain the annual insurance renewal on a large block.”
At Waverley House and Balmoral House in Bristol, a failed external wall safety (EWS1) assessment meant the buildings’ insurance premium jumped from £38,000 to £134,000 – a rise of nearly 250pc.
The freeholder, E&J Capital Partners, received a 9.99pc commission from the insurer, Zurich, part of the cost of the insurance bill. This was a reduction on the rate charged the previous year, but just as each leaseholder saw their insurance bill increase by £920, E&J received £9,590 more than the year before. The commission was set by the insurer and designed to reflect work undertaken by E&J’s insurance department, such as managing the policy renewal.
Residents asked E&J to cut its commission to the same monetary value that it received last year to save each leaseholder about £100, but it refused.
An E&J spokesman said the commission reflected the services provided by its internal insurance department and was set at a lower rate than the previous year. He added: “E&J exhausted every avenue to identify better alternative terms.”
A Zurich spokesman said: “We actively monitor commission levels to ensure they are appropriate, regularly negotiating with our brokers to control them across our portfolio.”