Landlord Insurance
You have just spent a lot of money buying a property – either it is your home and you are going to work overseas for a while or in a different part of the country. It might be an investment property a “buy – to let” or a buy to let via a SIPPs Property Pension. You might just have inherited the property or decided to move into your partner’s property. For any of those reasons you must make sure the property is insured. If you are buying just one property purely to let out, you must treat it as a business – keeping proper records for tax authorities etc and like running any business – you need to run this in a professional manner and this means having adequate insurance.
If you don’t what happens if the roof blows off – a tenant falls down stairs and breaks a leg – the pipes burst. Some of these might well be covered if you own an apartment that has includes insurance with the block management – maintenance – ground rent charges. Most apartment blocks have this, however they might not cover theft, or water damage to fixtures and fittings in the event of a burst pipe. It is not a legal requirement to have Landlord Insurance, but if your tenant fell down stairs you could be facing a high claim at the local law court.
If you own a house or bungalow then you will not have this type of insurance. You will have to make your own arrangements. When a there is a mortgage on a property the lender will naturally insist that the building is insured as part of the mortgage deed. The property owner will often have to use the lenders insurer, however like the insurance situation with an apartment, it would normally be very rare for the insurance to cover an contents. 85% of private UK Landlords have mortgages supporting their investment. The interest still has to be paid even when the rent isn’t.
When you let out your property you must let the insurance company know. (If the property is mortgaged then the lender should be advised and you should get their agreement in writing). You could have a situation whereby there is a claim for your property, the insurance company will not honour this because it was not the owner and immediate family living there….it was let out. If the property is your normal domestic home and you and your family are moving to Italy to work for a couple of years and you are letting it out, you must get the insurance changed.
You might also find that your insurance company is not interested in insuring the property when it is rented out (even if you have been living there and you are moving out for a year or so for work reasons). For many years many insurers did not want to take on this type of business, particularly when a property could be empty for periods when it was not let. A couple of companies in the UK get involved in this as they saw it was a real problem for property owners and although the UK buy – to –let business has really grown since the 90’s before that there were many investors in residential property either owning “long term protected lets” and after the introduction of the Protected Shorthold Tenancy from the 1980 Housing Act, similar types of properties as today were then being bought and let out. In the early 1990’s Thomas Winter Insurance Brokers arranged a new product Homesure that was later to become Letsure with the merger of Winter Richmond and then came along a competitor Homelet. Letsure and Homelet are the major companies involved in the UK rental property insurance market.
