If you have joined the ranks of an estimated £2.8m buy to let landlords in the UK, your property is an investment – probably one of the most valuable investments you are likely to make.
It makes sense, therefore, to protect that investment with one of the wide range of products designed to provide the safeguards you need, according to the changing circumstances of your property holding.
But before we actually look at some of the principal ways in which landlord insurance may continue to protect your property, let’s take a look at the different types of landlord there are in the UK. This is important as, typically, different types of property insurance will be required depending on the type of landlord and letting situation.
The different types of UK landlords
In the UK, there are several types of landlords who own and rent out properties:
- Private landlords: These are individuals who own one or more properties and rent them out to tenants. They can range from individual property owners to those who own multiple rental properties as part of their investment portfolio.
- Corporate landlords: These are companies or organisations that own and manage rental properties on a larger scale. They may own residential properties, commercial properties, or a combination of both.
- Social landlords: Also known as housing associations or registered providers, social landlords are designed to provide affordable housing to people in need. They often receive funding from the government and may specialise in housing for specific groups, such as low-income families, the elderly, or individuals with disabilities.
- Local authorities: Local councils or government authorities in the UK also act as landlords by providing social housing to residents. They own and manage properties within their jurisdiction and allocate them to eligible tenants based on housing needs and criteria.
- Institutional investors: These are institutional investors such as pension funds, insurance companies, and private equity firms that invest in the UK property market. These investors may own large portfolios of rental properties either directly or through investment vehicles.
Each type of landlord may have different motivations, responsibilities, and regulatory obligations when it comes to renting out properties in the UK.
For the purpose of this article, the focus is on private and corporate landlords.
Insurance for landlords
There are several insurances that landlords need to consider, depending on their circumstances.
Landlord insurance
UK landlord insurance is a specialised type of insurance designed to provide cover for individuals who own properties that they rent out to tenants. This insurance typically goes beyond standard home insurance to address the unique risks and liabilities associated with being a landlord.
Landlord insurance typically includes cover for the building structure, as well as optional cover for any contents owned by the landlord that are included with the rental property. Additionally, it may offer liability cover in case a tenant or visitor is injured on the property.
Depending on the policy, landlord insurance may also provide cover for loss of rental income if the property becomes uninhabitable due to an insured event, such as fire or flood. It may also include cover for malicious damage caused by tenants, legal expenses, and alternative accommodation costs for tenants if the property becomes uninhabitable.
Overall, UK landlord insurance is tailored to meet the specific needs and risks faced by property owners who rent out their properties to tenants.
Recap:
- let property insurance typically provides cover for the structure and fabric of your let property, and if required, any contents which you own within the premises;
- as with any property insurance, the worst case scenario needs to be envisaged, so that the total building sum insured covers the estimated cost of completely reconstructing the premises, clearing the area and legal and professional fees;
- but landlord insurance may also cover much more than the physical risks and perils to your let property;
- your liabilities for the health, safety and well-being of your tenants, for instance, might be looked after thanks to the cover provided to indemnify you against claims of negligence in your duty of care as a landlord;
- landlord insurance may also ensure that your anticipated rental income is just about maintained even after a major insured event has rendered your let property temporarily unfit for letting.
HMO insurance
If you own an HMO (House in Multiple Occupation) then you will require HMO insurance. This is a specialised type of insurance designed to provide cover for landlords who rent out a property to multiple tenants who are not part of the same household.
HMO insurance typically offers protection beyond standard landlord insurance to address the unique risks associated with HMO properties. Cover may include protection for the structure of the building, liability cover in case a tenant or visitor is injured on the property, cover for loss of rental income in case the property becomes uninhabitable due to an insured event, and optional cover for contents owned by the landlord.
HMO insurance may also provide additional features such as cover for malicious damage caused by tenants, cover for properties with a high number of tenants, and cover for specific tenant types such as students or individuals receiving housing benefits. Read more: A landlord’s guide to HMOs.
Commercial property insurance
With similar emphasis on safeguarding the structure and fabric of your let property, commercial landlord insurance also recognises the particular needs and requirements of those owning property that is let for business purposes.
Whether the premises are let as a shop, a workshop, a salon, a bed and breakfast business, a pub, bar or restaurant, commercial landlord insurance is tailored to safeguard the particular business operations of the enterprise.
In addition to the security generally provided by landlord insurance, therefore, this specialist cover also focuses on the provision of compensation for business disruption in the event of an insured incident.
If the commercial property is unoccupied, then unoccupied commercial insurance will be required.
Portfolio insurance
In the context of property investment, portfolio insurance typically applies to landlords or property investors who own multiple rental properties.
Just as the name suggests, it is possible to arrange insurance not only for a single let property but for a whole portfolio of such premises – typically earning the landlord attractive discounts on the cost of insuring premises versus on a case by case basis.
Portfolios insurance has the added advantage of keeping all of your buy to let properties under a single insurance policy, with just one annual renewal date to manage.
This type of insurance typically offers comprehensive cover for the entire property portfolio, providing protection against various risks such as damage to the properties, loss of rental income, liability claims, and legal expenses. It may also include cover for contents within the properties and additional features tailored to the specific needs of property investors.
Portfolio insurance is essential for landlords or property investors who want to safeguard their investment portfolio against unexpected events that could potentially result in financial loss or legal liabilities. It helps to mitigate risks and provides peace of mind, allowing property owners to focus on managing and growing their investment portfolio effectively.
Unoccupied property insurance
With the best will and the greatest care in the world, you are unlikely to avoid vacancies in tenancies – whether through incoming and outgoing tenants or your decision to refurbish the premises themselves. In either event, there is every possibility of your let property lying empty for more than a few months.
Given the particular risks and perils to which an empty property may be exposed – whether through unattended maintenance problems or the unwanted attentions of burglars and vandals – purpose designed empty property insurance is necessary to maintain the level of cover and security demanded by the typical landlord. Read more here: Guide to unoccupied property.
Renovation insurance/property undergoing works
You might have bought it with the express intention of refurbishment or decided to revamp a property you already own, but there is likely to be a place for landlord’s renovation insurance in your plans.
Renovation insurance may be the key to ensuring the protection not only of the existing structure and fabric of the property you own, but also the works in progress and the final extension, reconfiguration or remodelling itself.
All the while, your property owner’s liabilities may also be safely protected with indemnities likely to start at a minimum of £2m
During the course of any renovation building works you are also likely to want cover for the plant, machinery, tools and materials employed in the project. Read more here with our Guide to renovating.
UK holiday home insurance
This is aimed at individuals who own a second home or a holiday property that they rent out in the UK and is, in many ways, a blend of both standard home insurance and landlord insurance. Here’s why:
- ownership and occasional occupancy: You own the property and likely use it intermittently as your holiday getaway;
- potential for rental income: Since you don’t occupy it year-round, your holiday home has the potential to generate extra income by renting it out to paying guests. In this scenario, you assume the role of a landlord to short-term tenants.
The unique, almost hybrid, nature of holiday home insurance sets it apart from both standard home insurance and landlord insurance.
For further insight into the necessity of holiday home insurance, refer to our Guide to UK Holiday Homes.
Summary
As may be clear, therefore, owning your buy to let property might not just call for a basic, all-purpose landlord insurance policy, but one that is specially tailored to meet the diverse and changing needs and circumstances of the typical landlord.
Ensuring that you are prepared to meet some or all of these changing demands, you might want to consider the expertise and experience that a specialist insurance provider such as ourselves may bring.
Please contact us today on 01702 606 301 to see how we can help.
