Landlord insurance and tenants

Posted: 3rd Feb 2016

Happy Young Woman On Phone Outside Estate AgentsAt times, the relationship between landlord and tenant might be complicated. Especially if you are a new or “accidental” landlord you might be tempted into thinking that the best way of getting along with your tenants is to treat them almost as friends, in order to maintain an easy and mutually civil relationship.

This is likely to miss the more fundamental point that the relationship between landlord and tenant is essentially a business contract. Like all business contracts, there are responsibilities and obligations on both parties.

Keeping those respective responsibilities and obligations firmly in mind is also an important aspect of your landlord insurance. It might be helpful to consider just why that is:

Landlord’s responsibilities and obligations

  • these are commonly set out in the tenancy agreement which form the legally binding contract between landlord and tenant;
  • in a nutshell, these boil down to the landlord ensuring that the accommodation provided to the tenant is safe to live in and poses no hazards to the health of the tenants;
  • specifically, these health and safety obligations relate to fire precautions and the safety of all gas and electrical installations – most recently, these have extended to the installation of smoke alarms and carbon dioxide detectors;
  • further obligations relate to providing the tenant with a copy of the accommodation’s Energy Performance Certificate (EPC), the safe keeping by a third party of tenants’ deposits and the landlord’s responsibility for checking that the tenant and members of the tenant’s household have an immigration status granting them the right to rent the accommodation;
  • these obligations have important implications for the landlord insurance with which the owner of buy to let property typically seeks to protect the let premises and his business generally;
  • this stems from the general principle embodied in any insurance contract that the insured has a duty to mitigate the risk of any loss or damage – in the same way as though there were no insurance protection in place;
  • a landlord’s failure to comply with the law or to exercise a proper duty of care towards his tenants has an impact on his landlord insurance policy in a way that might be illustrated quite simply;
  • if a tenant, a visitor or a member of the public suffers an injury on the property and the landlord is shown to be quite blatantly in breach of his duty of care, an insurer is entitled to question any claim on the landlord’s liability indemnity cover and may reduce the amount of any settlement in view of the landlord’s “contributory negligence”;

Tenants’ responsibilities and obligations

  • as with any other business contract, the responsibilities and obligations are not all one way and not everything falls on the landlord’s shoulders – tenants have their responsibilities too;
  • by far the most important requirement on the tenant’s part, of course, is to pay the rent when it falls due;
  • but the tenant also has a general duty to take care of your property and to treat it with the care due to any home;
  • the tenant also shares your duty of care towards the safety and well-being of any visitor that may be invited to the tenant’s accommodation – a duty upon which your insurers are likely to insist in the event of any injury or damage to the property of such a visitor;
  • by the same token, your tenant has a responsibility for granting you reasonable access to the let accommodation in order to carry out any repairs.

Far from it being an informal arrangement between “friends”, therefore, it might be seen that the relationship with your tenants is very much a business relationship, with responsibilities and obligations on both parties to the tenancy agreement.