The lowdown on landlord insurance
Click here to discover advice about what your landlord insurance policy should cover from some of London’s leading estate and letting agents.
More than half of UK households aged under 40 will be living in private rented accommodation by 2025.
Research conducted by professional services firm PwC concludes that 7.2 million households will be renting their home by 2025, compared with about 5.4 million today and just 2.3 million in 2001.
But many of the growing ranks of private landlords are failing to protect their rental income, warns lettings specialist Assetgrove.
Neil Jennings, operations director at Assetgrove, explains that his London-based company helps manage the property portfolios of both buy-to-let investors and accidental landlords – individuals who find themselves with a home they no longer need due to the need to move for work or when two homeowners decide to move in together.
The majority of private landlords take out insurance policies designed for rental properties, he adds.
Just like the policies owner-occupiers take out, landlord insurance provides cover against damage to both the building and the property owner’s contents, although they rarely cover the tenant’s possessions.
One key type of cover that landlord policies often include is loss of rent insurance.
But Assetgrove warn many landlords are often confused by loss of rent cover and rent guarantee insurance.
Neil explains that if a rental property suffers accidental damage or is even destroyed by fire or flood and becomes uninhabitable loss of rent insurance will replace the lost income.
However, a guaranteed rent scheme is designed to ensure landlords receive fixed monthly payments even if the property is not rented out. These arrangements are offered by a limited number of property management specialists and offer the added advantage of removing the day-to-day hassle of running a property portfolio from a private landlord.
While landlords are advised to check the terms of any loss of rent cover they take out, there are many other types of insurance designed to protect a landlord’s assets.
Here, we ask lettings agents from London – where average monthly rents are now more than £1500 – what type of cover they think landlords should include in their insurance policies.
1 Accidental damage
While the majority of home insurance policies taken out by owner-occupiers include accidental damage cover as standard, Brixton and Battersea-based estate and letting agent Eden Harper says is worthwhile checking it comes with landlord insurance and covers the likes of a tenant putting huis or her foot through the loft, accidentally hammering a nail through a pipe or a heavy snowfall damaging guttering.
2 Malicious damage
When a tenant signs any type of rental agreement, a landlord’s insurer will take the view that you have given them permission to be in your property. Most household insurance policies specifically exclude malicious damage but many private landlords have a long list of horror stories about tenants’ behaviour and tales about smashed windows, sinks and even toilets.
Award-winning central London estate and letting agent LDG recommends this type of cover because it not only guards against the cost of repairs, it can help ease the emotional pain caused by a tenant taking out revenge on you in the event of a dispute.
3 Home emergencies
Like many policies designed for owner-occupiers, this guards against the cost of arranging emergency repairs following a gas leak, burst pipe, break-in or pest infestation. Policies not only typically reimburse the cost of call-out charges, labour and materials they ensure a qualified professional will be on hand to deal with household emergencies 24 hours a day, 365 days a year.
Fulham property specialist Lawsons & Daughters says home emergencies typically occur at the most inconvenient time. This cover comes highly recommended because it can stop landlords having to attend their rental properties at midnight to deal with a blocked toilet.
4 Landlord liability
This can protect a landlord should a tenant, visitor or workman become injured or their belongings damaged as a result of a fault in the rental property. Award-winning letting agent Paramount Properties explains that with claims now valued at up to £2m, no private landlord should neglect taking out this type of cover.
5 Legal expenses
This covers a landlord’s legal costs following a dispute with tenants. The cover typically includes evicting squatters, repossessing the property and the cost of defending yourself against any criminal action.
East London estate and letting agent Peach Properties adds that legal expenses cover can also be used to recoup the legal costs incurred if a tenant fails to keep up with their rent.