The builders are in to carry out some long-awaited renovations to your home. But in all the excitement to get the job finally done, are you at risk of overlooking a potentially critical insurance gap?

Any work likely to affect the structural integrity of the building clearly carries risks. Yet these may also come at a time when your home or a property you let is temporarily unoccupied – with only the builders at work during the day – an occasion when most insurers may regard your existing cover as inadequate or having lapsed entirely.

This typically comes after your home has been unoccupied for longer than 30 to 45 consecutive days – the exact interval varying from one insurer to another.

Your current home insurer is likely to be concerned about several main sources of increased risk during the renovations:

• although the builders may be there most days, your home remains empty at night and when they’re not there, so the property is effectively unoccupied – and an empty property is more vulnerable to loss or damage than one that is continuously occupied;

• many types of building work – including renovations – may impact the structural integrity of your home; and

• while the work is in progress, you will likely have on-site materials and equipment you bought that are more vulnerable to theft or damage.

Renovation insurance

To fill that potentially very expensive gap, you are likely to need standalone cover that is appropriately named renovation insurance/property undergoing works.

This is typically a form of unoccupied property insurance cover specifically designed to cover the period while renovation works are in progress and the property has no one living in it. The renovation insurance policy may be flexible in terms of how long it runs for – such as for 3, 6 or 9 months.

What is renovation insurance/insurance for properties undergoing works while unoccupied?

Renovation insurance is a specialised type of insurance designed to protect properties undergoing renovation, construction, or refurbishment work. Standard home or landlord insurance policies often do not cover the increased risks associated with renovation projects, such as damage to the structure, theft of building materials, or accidents involving contractors.

Renovation insurance may be tailored to ensure that new building works and any impact they may have on the structural integrity of your home are protected against the risks of loss or damage to the building.

Typically it may also provide cover against the risk of theft, loss or damage to building materials, plant, or equipment you may have bought or hired for the building works. This may also extend to indemnity for your public liability for third parties who are injured or have their property damaged as a result of the renovation works.

Won’t the builders have their own insurance?

Yes, they should have contractor insurance. This is something you will want to leave in the proper hands of your contractor – who will need to arrange their own cover to protect against any liability claims related to the renovation work.

When all is done

You’ll be glad, of course, when the renovation works are successfully completed, the builders have packed up and moved on, and you can safely call an end to any unoccupied property insurance and renovation insurance.

Nevertheless, there remains one final gap you will want to plug. The renovation works are almost certain to have increased the capital value of your home. Following a re-evaluation, therefore, you will want to check whether you need to update the total building sum insured of your regular home or landlord insurance.

Whether you are a homeowner or landlord, unoccupied property insurance is needed by anyone who owns a property that will be left vacant for an extended period, typically more than 30 or 60 consecutive days, depending on the insurer.

Standard home insurance policies often don’t cover properties that are unoccupied for a long time due to the increased risks, such as theft, vandalism, water damage, or fire.

Here are some situations where unoccupied property insurance is necessary:

You are a landlord with a void property

If you are a landlord and your rental property is vacant between tenants for a prolonged period, unoccupied property insurance ensures the property remains protected.

You are selling a vacant home

If your home is on the market and empty while you wait for it to sell, unoccupied property insurance is vital to cover potential risks during this period.

Long-term travel or absence

Homeowners who leave their property vacant while travelling for an extended period (for work, retirement, or a long holiday) should consider unoccupied insurance to ensure their home is covered while they’re away.

Probate property

If you’ve inherited a property that will be unoccupied while you decide what to do with it—whether to rent, sell, or move in—this insurance is essential to protect it during the interim.

In all of these cases, you’ll typically need unoccupied property insurance to ensure your property remains properly protected.

Is your residential property undergoing works?

If you’re doing extensive renovations that require the property to be empty for a significant time, you’ll need a specialist type of insurance called renovation insurance to cover any risks while the work is being carried out.

What are the risks faced when a property is unoccupied?

Not only do you stand to lose rental income from your property whilst it is unoccupied, but there are increased risks to which it is exposed for the duration of that vacancy. For example:

Theft and vandalism

• when premises are empty, they attract more than their fair share of vandals, squatters, arsonists, fly-tippers and graffiti artists, eventually leading to such a decline in overall security in the area as to encourage its general decline;

Maintenance and repair

• when there are no tenants in your property, problems needing otherwise routine maintenance and repair are going to go unreported and may therefore develop into full-blown incidents – a dripping tap, for example, might soon leave the property flooded;

Weather

• the British weather is nothing if not unpredictable – and when your property is unoccupied, storm damage, high winds, ice or snow may cause problems which are again unreported and have the potential for causing considerable damage;

Infestations

• a property that is left empty and unoccupied may be at much higher risk of infestation by rodents or other pests

Property fraud

• let property and property which lies empty are two categories identified by Action Fraud as vulnerable to property fraud – if your let property is currently unoccupied, therefore, it may be doubly vulnerable to property fraud.

Insurance

For all of these reasons of heightened risk and vulnerability, insurers are likely to reassess the scope and level of cover for your property once it has been unoccupied for a certain length of time – this may typically be between 30 and 60 consecutive days, depending on your insurer and whether your property is commercial or residential, as the unoccupancy periods may be different.

Once the property has been unoccupied for the prescribed number of days, the insurer may restrict the level of cover offered or regard the policy as lapsed altogether.

Unoccupied property insurance provides standalone cover to replace your regular home or landlord insurance whilst the property remains empty.  It is likely to be essential to maintain your obligation to any buy to let mortgage lender that the property remains fully and adequately insured – including those times when it is temporarily unoccupied.

Further reading: Guide to unoccupied property.

Do you have an unoccupied commercial property?

You can get a quote for unoccupied commercial property here.

Our service

At Cover4LetProperty, we pride ourselves on offering cost-effective, quality let property and unoccupied property insurance cover for residential and commercial properties, backed up with a first class service.

When you transact with us, you are dealing with a company that has roots going back to 1946 – so you can feel confident that we are a well-established and reputable business with longevity.

And while our service is online, this is backed up with a telephone service. Once you have bought a policy, you will also have access to your own dedicated personal account handler. So, you get all the benefits of internet prices as well as a personal service.

Our professional team are always on hand (during office hours) to answer your questions or queries, so you know you are dealing with real people and not a faceless website.

Our products

Because we have been around for many years, we have forged some great relationships with specialist landlords insurers. This means that we have panel of elite insurance companies that we can search through to find what we consider is the most cost-effective and appropriate cover for you.

We have negotiated special deals as well as extra policy features and benefits that other brokers may not have access to. For example, malicious damage caused by a tenant is covered as standard – some other providers will charge you for these elements of protection.

So, why not get a quote now online or give us a call? We’d be only too happy to help.

Landlord’s insurance (also known as buy to let insurance or let property insurance) is something a landlord should consider when purchasing a property with the intention to let it.

If you fail to purchase landlord’s insurance, you are putting yourself at unnecessary financial risk, which could result in disastrous repercussions.

Here we discuss what landlord insurance covers, why it is so important, plus other considerations.

What is landlord insurance?

Buy to let insurance is a specialised type of insurance that covers the unique risks faced by landlords. While it shares some similarities with standard home insurance, it includes additional protection tailored to rental properties and tenants.

A standard home insurance policy will not cover you if you’re renting out your property, which makes landlord insurance a vital part of being a responsible property owner.

Why do you need landlord insurance?

While landlord insurance typically isn’t a legal requirement, if you have a mortgage on the property, then in most cases you will be legally obliged to ensure you have (at the very least) adequate landlords buildings insurance to protect both you and your mortgage provider’s financial interests in the property.

Even if let property insurance is not mandatory, it’s highly recommended for any landlord. Renting out a property comes with many potential risks—damage caused by tenants, legal liability for injuries that happen on the property, or loss of rental income due to unexpected events like a fire or flood.

What does landlord insurance cover?

Landlord insurance can be tailored to meet your specific needs, and policies often come with a variety of options. It is important to note that policy features, benefits, terms and conditions can vary, so the following should be used as a guide only:

• Buildings insurance

This covers the structure of your rental property, including the walls, roof, and permanent fixtures like kitchens and bathrooms. It typically protects against risks such as fire and floods. If your property is damaged by one of these insured risks, your insurer will cover the cost of repairs or even rebuilding the property (up to policy limits of course).

A note on rebuilds costs

When purchasing landlord insurance, you will need to insure it for the reinstatement or rebuild value. The most accurate way of doing this is to have to have a structural survey undertaken. The rebuild or reinstatement value for landlord insurance should typically take in to account the following aspects:

• clearing the site;
• surveyor costs;
• architect costs;
• complying with government and local authority requirements;
• miscellaneous fees.

The Royal Institute of Chartered Surveyors (RICS) also has a rebuilding cost calculator that is free to use.

• Contents insurance

If you rent out a furnished or partly furnished property, contents insurance can cover the cost of replacing furniture, appliances, or other items that belong to you as the landlord.

Note that tenant belongings are not covered under this policy—they will need their own tenants contents insurance for personal items.

• Landlord liability insurance

Property owner’s liability comes as standard with all our landlord insurance policies. This would cover you for example, when a tenant may hold you liable for an injury which was caused within / by your property.

Without this cover, if someone should make a claim against you for loss or injury, then if the case goes to court and your tenant is awarded compensation, you will need to find this money yourself. And with court sums running in to hundreds of thousands of pounds in some circumstances, this could see you in huge financial difficulty.

• Loss of rent insurance

If your property becomes uninhabitable due to damage from an insured event, such as a fire or flood, loss of rent insurance typically will cover the rental income you would have earned during the period that the property cannot be rented out.

Landlord insurance optional extras

There are also optional extras that some landlord insurance providers will offer for an additional cost, such as, but not limited to:

Legal protection insurance

Residential let legal expenses insurance typically covers the cost of legal fees that may arise from disputes with tenants, such as eviction proceedings or recovering rent arrears. With landlord-tenant disputes becoming more common, this can be a worthwhile addition to your policy.

Rent guarantee insurance

Rent guarantee insurance covers unpaid rent (up to pre-agreed limits) if a tenant defaults on their payments. While it’s not included in every policy and if often an add-on to legal protection insurance (see above), it’s may be a valuable option if you want to protect yourself from potential financial losses due to tenant non-payment.

How much does landlord insurance cost?

The cost of landlord insurance varies depending on several factors, including the value of your property, its location, and the level of cover you choose.

Properties in areas with higher crime rates or those prone to flooding may have higher premiums. Additionally, the type of tenants you rent to can impact the cost—renting to students or tenants on housing benefits, for example, might result in higher premiums as some insurers may view these as higher-risk groups.

Our cover

With Cover4LetProperty’s landlord insurance cover there are two options available for the buildings and contents. The first being landlord’s insurance standard buildings cover for a rented property.

The second is landlords buildings and landlords contents cover (the latter being required if perhaps your investment is part-furnished or there are communal areas).

Next steps

If you have any questions, please do not hesitate to contact us on 01702 606 301 – we will be very happy to help.

Britain’s population is both growing and the age profile is getting older. These are just two of the factors contributing to an overall shortage of housing. Add in the fact that there are an estimated 700,000 empty homes in England alone, and you can see why it is important to make use of any empty property as a home – for yourself or for letting to tenants.

So, why are so many homes still empty and what is likely to be involved in returning them to valuable places in which to live?

Why are there so many empty properties?

There may be any number of reasons why a dwelling may be left empty for longer than six months:

• the property might have been inherited – solely or perhaps with other members of the family – and there is uncertainty whether to move into it, sell it or let it to tenants;

• although an empty property might have been bought with the intention of renovating it, the work has been shelved because of pressures of time or money and the necessary building work has come to a halt;

• some owners may be holding on to an unoccupied dwelling in the hope that it may realise a higher sale price in the future – or else they may be holding out for a sale at too high a price; or

• a landlord may have let the property in the past but is unable to afford the expense of those repairs and maintenance required for letting at present.

Whatever the reasons for the property currently lying vacant, any owner is likely to be well advised to ensure that it nevertheless retains the protection of adequate and appropriate insurance – in this case, empty property insurance, a niche product available from specialist providers such as ourselves at Cover4LetProperty.

Please also refer to our Guide to Unoccupied Property for more information.

Are you looking to buy an empty property?

When buying an empty property, there are several important factors and considerations to keep in mind.

1. Condition of the property

• Structural issues: Empty properties may have been neglected for some time, so check for structural damage like cracks, dampness, subsidence, or roofing issues. Commission a full structural survey to identify these.
• Utilities: Water, gas, electricity, and plumbing might be outdated or disconnected. You may need to restore services or upgrade systems.
• Security: Unoccupied properties are more vulnerable to break-ins or vandalism. Consider checking if windows, doors, and security systems are intact or need updating.

2. Legal considerations

• Ownership and Title: Ensure that there are no complications with the property’s title. You’ll need a conveyancer or solicitor to check for any title issues, restrictive covenants, or rights of way that could affect future use.
• Planning permission and regulations: If you plan to renovate or convert the property, check with the local planning authority whether the necessary planning permissions are required. Listed buildings or properties in conservation areas may have restrictions.
• Easements and boundaries: Verify property boundaries and any easements (legal rights others have to use your land, such as for utilities or shared access).

3. Surveys and inspections

• Property survey: A detailed survey (HomeBuyer’s Report or full building survey) is crucial, especially for empty properties that may have been neglected.
• Asbestos and lead: Older properties may have hazardous materials like asbestos or lead pipes. Surveyors can identify these risks, and you may need specialists to handle removal.
• Damp and rot: Empty homes may suffer from damp, dry rot, or wet rot due to lack of heating or ventilation. Look out for mould, soft wood, or unusual smells.

4. Financing an empty property

• Mortgages: Securing a mortgage for an empty property can be more challenging, particularly if the property is in poor condition. Some lenders might offer renovation mortgages, which release funds in stages as work is completed.
• Bridging loans: These are short-term loans that can be used to finance the purchase and initial renovations until the property is habitable or sold.
• Insurance: Insuring an empty property can be expensive or difficult because vacant homes are at a higher risk of damage or theft. You’ll need unoccupied property insurance, which may have stricter conditions.

5. Renovation costs

Renovating an empty property can be costly. Create a realistic budget for repairs and improvements, considering hidden costs like VAT, professional fees, and unexpected problems. Build in a contingency fee, too, for unexpected costs.

Obtain quotes from several builders for any work required. Do consult contractors early to understand what renovations will cost.

Planning

As with any residential building works, the renovation you may be planning for an empty dwelling might require the separate consents of planning permission and compliance with building regulations. Check if the property qualifies for permitted development (certain renovations you can do without planning permission, like some extensions).

If any such applications are necessary, it clearly makes sense to enter into early discussion with the local authority’s planning department to ensure the acceptance of your plans.

You may typically also need renovations insurance, too. (Read our Guide to renovating here).

Incentives

A further financial incentive for anyone planning to return an empty property into residential use is the discounted rate of VAT that your builder and other tradesmen may charge.

At as January 2024, if the property has been emptying for at least two years prior to your beginning the renovations, HM Revenue and Customs (HMRC) allows contractors to charge you VAT at the discounted rate of 5% (instead of the standard 20% on building works). If the property has been empty for the previous 10 years, different rules may apply.

6. Location and resale value

• Neighbourhood: Research the location thoroughly, considering local amenities, transport links, schools, and crime rates. An area undergoing regeneration could boost the property’s future value.
• Future value: Consider the potential resale value after renovations. Speak to local estate agents to understand how the property’s value could increase once improved.

7. Council Tax and Rates

• Council Tax exemptions/discounts: You may qualify for a council tax exemption or discount for unoccupied properties. Check with the local authority if the property has been vacant long-term, as some councils offer discounts for renovation periods.
• Empty Homes premium: Some councils impose a higher council tax rate for properties left empty for at least a year.

8. Grants and Incentives

Renovation grants: It is widely recognised that the long-term vacancy of housing is a waste of a valuable resource. Many dwellings remain empty because their owners lack the funds needed to make them habitable once again.

Government funding is available in some areas, therefore, to stimulate such housing being brought back into use and resources are allocated to local authorities for application in ways in which they see fit.

Each local authority has its own scheme for the use of such funding and the policies designed to stimulate the return of empty property to the housing stock. Many offer a range of services and advice relating to funding that may be available for renovating empty properties, advice on ways in which such renovations may be carried out, opportunities for letting the renovated property, or for its sale.

You can read more about Government empty house grants in our blog here.

Energy Efficiency grants: You might also qualify for grants related to improving the energy efficiency of the property, such as insulation or solar panels. Speak to your local council for more information.

9. Utilities and Energy Efficiency

• Utility connection: Ensure that all essential services (electricity, gas, water, sewage) are connected and in good working order. If disconnected, there may be reconnection fees.
• Energy Performance Certificate (EPC): When purchasing, ensure the property has a valid EPC, as this is a legal requirement. If the property is below Band E, you’ll need to make improvements before it can be rented out.

10. Time frame and planning

• Timescale: Be realistic about how long it will take to complete the purchase, especially if the property is in disrepair. Renovation projects can often take longer than anticipated.
• Project management: If planning a major renovation, consider whether you’ll manage the project yourself or hire a professional project manager to oversee the work.

By considering these factors, you can better navigate the challenges of buying or renovating an empty property and make informed decisions throughout the process.

Disclaimer: The information provided in this blog is correct at the time of writing (September 2024) and is based on our current understanding of the law. Please always seek professional help and advice.

If you own a property that you know will stand vacant and empty for longer than a month or two you might already have heard about the need for unoccupied property insurance.

As we’ve explained in our comprehensive guide to unoccupied property insurance, this additional standalone cover may be essential because your regular insurance becomes severely restricted – or might even be regarded as lapsed entirely – once the property has been unoccupied for longer than a month or so (different insurers specify slightly different limits).

 If yours is commercial property, you might want to review our Unoccupied Commercial Insurance FAQs.

Whether it is your vacant home or business premises you own, it is important to note that unoccupied property insurance providers will invariably require regular, properly logged, visits and inspections of the premises. That monitoring is part and parcel of the cover you buy

Nevertheless, monitoring unoccupied property – whether residential or commercial – also has the benefit of a wide range of technological solutions. Let’s take a closer look at some of those technological advances.

Smart home and commercial monitoring technology

Smart security systems connect to the internet via WiFi. That lets you monitor exactly what is going on in your home or commercial premises from practically any other location. It monitors security in real-time – without any real lag between events and your ability to review recordings:

Your home

• smart home monitoring will alert you to suspicious activity in or around your home and also give advance warning of maintenance issues or accidents – these might include fire and carbon monoxide detectors, along with burglar alarms;

• probably the most popular smart home monitoring systems rely on affordable yet effective doorbell cameras – which are easily installed and can be wireless or wired;

• the invention and development of smart wireless doorbell cameras means that they can be installed literally anywhere that is within range of your home’s WiFi range;

• a wireless system is easy to install – without the need to find the best routes for wires and cables;

• modern doorbell cameras typically offer a range of functions to enhance their operability – features such as multiple music playlists, variable volume, or flashing light alarms;

• just as they are easy to install, so they are easy to take down if, for example, you are moving house and want to take your smart doorbell camera system with you;

• you can also get small, wireless cameras that you can install (wirelessly) indoors and out. These can alert you, and often record, any intruders;

Commercial premises

• the monitoring of unoccupied commercial premises might require even more stringent monitoring to provide constant 24-hour a day fire and smoke detection, the monitoring of any installed fire suppression equipment, and the alarm systems of the premises;

• many commercial premises have smart security systems that monitor access by individuals – often through the incorporation of identity readers;

• commercial premises may also be fitted with closed-circuit TV monitoring of reception areas, corridors, and parking bays – smartly connected to remote screens for readers.

Looking to the future

Integrating smart home technology with unoccupied property insurance is a smart move for homeowners. It will protect the security of your home while you are away. Similarly, smart monitoring systems are invaluable for providing enhanced security for temporarily vacant and unused commercial premises.

As these technologies evolve, their role in safeguarding unoccupied properties will become ever more important, offering enhanced security, convenience, and peace of mind.

Whatever technological support you have employed in the smart monitoring of your home or commercial premises, however, remember that some unoccupied property insurance policies may typically still require regular, faithfully logged, physical visits – arranged informally for your home or through professional security services for your commercial premises.

As summer draws to a close, many landlords will be looking forward to somewhat more settled relationships with tenants as autumn and winter loom on the horizon. What’s likely to lie in store? Let’s take a look at some of the recent property news headlines to find out.

Social landlord admits 25% of properties fail Decent Homes Standard

The officially sanctioned Decent Homes Standards suffered a setback recently when the London Borough of Lewisham admitted that 24% of its social housing fails to achieve the set standard.

Landlord Today on the 27^th of August revealed that the borough has reported itself to the sector’s regulator, the Regulator of Social Housing, admitting a potential breach of the required consumer standards. The Regulator recognises that a failure rate of just 10% would be an acceptable norm.

Lewisham has fallen foul of the Housing Ombudsman in other areas too. It has been accused of “severe Maladministration” – plus instances involving some 5,000 fire safety issues that have not been addressed, along with discrepancies in its reporting of mould and damp in its social housing.

House price growth edged up in July

The latest House Price Index from Nationwide reveals signs of increased vitality in the housing market. The key features of its report for July reveal that:

• house prices rose by 0.3% compared with the previous month;

• that relatively modest increase, however, underlies a current annual rate of growth of 2.1% – significantly higher than the 1.5% recorded in June;

• even so, average house prices remain some 2.8% below the record highs experienced by the market during the summer months of 2022;

• mortgage interest rates remain higher than before the pandemic, but approved applications are still reaching some 60,000 every month – a creditable performance even though they remain about 10% less than before the pandemic;

• higher interest rates mean that affordability is likely to remain an issue – at least until wage growth begins to overtake the increase in relatively stable house prices.

• nevertheless, the latest figures mark the fastest rate of growth in UK house prices since the end of 2022.

Rents start falling in major cities

While the Nationwide reported on house prices, the online listings website Zoopla analysed prices in the rental market in a piece on the 21^st of August. The key takeaways are as follows:

• the boom that has been seen in rising rent levels recently finally seems to be nearing an end;

• whereas the last 3 years saw rents outpacing the growth in earnings, rents are currently rising at their slowest rate since 2021;

• on the demand side of the rental market’s equation, there has been a reduction of 39% compared with last year;

• at the same time, the supply of rental accommodation has also begun to climb, with an estimated 17% increase in the number of homes available – even though demand still significantly outstrips supply;

• as a result, average rents across the UK are estimated to rise by only 3% or 4% during this year – significantly lower than the 11% rise recorded in 2022 or 8% in 2023.

Ofgem announces 10% increase to energy price cap

The energy regulator Ofgem has increased the energy price cap to £1,717 for the interval between the 1^st of October and the end of December this year, confirmed the online listings website Rightmove on the 23^rd of August.

The move represents an increase of £149 in the estimated annual cost of energy for the typical household. That average household is defined as a two or three-bedroom house that is home to 2 or 3 people – the actual energy bill you pay will, of course, depend on your particular consumption, whether you pay by standing order, and where you live.

There are things we make a conscious effort to engage in, and then there are others we just seem to fall into doing almost by sheer chance. In the private rented sector of the housing market, it is this difference which might separate the professional landlord from the so-called accidental landlord.

So, putting aside for the moment the individual who consciously acquires property as part of a long-term business strategy to make a livelihood, how does a different type of property owner become such an accidental landlord?

It might be helpful to look at a few examples, and offer a few tips on what might lie in store if you become a landlord “accidentally”.

How does someone become an accidental landlord?

Here are some common ways someone might become an accidental landlord:

1. Inheritance – a person may inherit a property, often from a relative, and decide to rent it out instead of selling it. This could be due to market conditions, sentimental reasons, or the desire to generate an income from the property;
2. Relocation for work – if you need to move to a different part of the country (or abroad) for work, you might choose to rent out your home rather than sell it, especially if you plan to return;
3. Relationship changes – a change in personal circumstances, such as a divorce or separation, might lead to one partner moving out and renting the property. Alternatively, a couple might choose to rent out one of their properties if they move in together;
4. Property market condition – if the property market is slow or prices are lower than expected, you might decide to rent the property temporarily until the market improves, rather than selling it at a loss;
5. Difficulty selling a property – you are struggling to sell your property so you might rent it out to cover mortgage payments or avoid leaving the property empty for an extended period;
6. Financial necessity – sometimes, financial difficulties might prompt a homeowner to rent out their property to generate additional income, especially if they cannot afford the mortgage payments – such as renting out an unused bedroom in your own home (see below).

What is the Rent a Room Scheme?

The government has put its weight behind greater use of spare room in private homes by introducing the Rent a Room Scheme – essentially, this grants a tax-free allowance of £7,500 a year (as at 2024) on what you earn from rents.

If this is your route to becoming an accidental landlord, you might want to give extra consideration to the insurance that safeguards your home:

• in the first instance, this means letting your standard home building and contents insurer know what you are planning to do;
• depending on your insurer, the response might be acceptance, an increase in the premiums you pay, or a flat refusal to continue insurance cover – especially with respect to cover for your contents;
• in the interests of caution and prudence – and for the avoidance of any doubt – you might therefore want to consider the more general benefits of comprehensive landlord insurance.

A landlord’s obligations

If you do become an accidental landlord, then you need to make sure that you:

• understand the tax implications – rental income is taxable, and accidental landlords must report this income to HMRC. They can also deduct certain expenses, such as repairs, letting agent fees, and mortgage interest, from their taxable income;
• have the correct type of property insurance – standard home insurance policies typically do not cover rental properties. Accidental landlords should obtain landlord insurance to cover risks associated with renting out the property;
• inform your mortgage provider – if the property has a residential mortgage, the lender must be informed of the rental arrangement. Some lenders may require switching to a buy-to-let mortgage;
• adhere to the legislation relating to being a landlord. As a landlord, even if accidental, you must comply with UK laws and regulations, such as ensuring the property meets safety standards, protecting tenants’ deposits in a government-approved scheme, and providing an Energy Performance Certificate (EPC). Please refer to our Landlord Legislation Guide here for more information;
• are aware of, and comply with, health and safety issues – you can read our Landlords Guide to Health & Safety.

There may be any number of reasons why your circumstances change, and you find yourself making the most of a valuable housing resource – or part of that resource – in order to make a little more income. In this way, and as the owner of that valuable piece of property you may consider it to have been an especially happy accident to have become a landlord.

Finally, for more information, you may find our guide – The Accidental Landlord Guide – useful.

You made sure to arrange the building and contents insurance for your home, let or other commercial premises you own. So the property’s perfectly safe. Or is it?

When you last renewed your property insurance did you consider the possibility of it standing empty and unoccupied for a while – intentionally or otherwise?

Did you give any thought to unoccupied property insurance or unoccupied commercial insurance?

Why may a property be empty?

There are many reasons why your home or commercial premises may become temporarily unoccupied:

Residential property

• you might have the builders in and need to vacate while they do their work;

• you might be fortunate enough to take an extended holiday – to visit overseas friends or relatives or to take that long-planned world cruise;

• you might need to work away from home for several months – and taking the family with you leaves your home empty and unoccupied;

• you might have an interest in a property that is currently subject to probate and must await the completion of that legal process before a decision to occupy or sell;

Commercial property

• similar considerations apply to any commercial property you might own;

• closure or vacancy might be necessary during any major expansion or remodelling;

• certain emergencies might lead to the closure of your business premises – the successive lockdowns during the Covid pandemic are a case in point;

• financial difficulties might have forced you to temporarily stop trading and close the premises pending an upturn or a decision on your future property ownership.

Why is empty property insurance needed?

So, what happens to your regular home or commercial property insurance during these periods when the premises are empty and unoccupied?

After a relatively brief period – of between 45 and 60 consecutive days (it varies on the insurer) – your existing property insurance will be reduced or even become void.

This is because practically every insurer will significantly reduce or even remove the cover previously in place when the property was occupied or in use. With any cover lifted, of course, your property becomes a special risk of loss or damage.

Why do insurers restrict or remove cover for an empty or unoccupied property?

Many of the reasons are described in our Complete Guide to being a Commercial Property Landlord – and they all boil down to the increased risk faced by any property (commercial or residential) that is empty and unoccupied.

The Complete Guide explains that any empty and unoccupied building tends to act as a magnet for all kinds of unwelcome attention. This from the likes of squatters, fly-tippers, burglars, other intruders, and even arsonists.

Further risks arise because an unoccupied home or commercial property is vulnerable to loss and damage caused by otherwise relatively minor maintenance issues – such as a dripping tap or electrical fault – that can turn into a full-scale emergency when no one is there to spot the danger in time.

Because of these risks from crime or maintenance issues, insurers restrict the cover they offer or treat as lapsed altogether. That leaves your property unprotected when protection is most needed.

To restore the necessary protection, specialist, standalone unoccupied property insurance is required for your home or commercial premises.

Not all risks may be covered

As we explain in our Guide to Unoccupied Property, empty property insurance may include full cover for up to many more days than that stated in your standard policy. Short-term flexible cover is also typically available from some providers.

Nevertheless, it is essential to check exactly what is covered in any unoccupied property insurance policy because all will differ to some degree. Some policies, for example, may not cover the risk of arson or the theft of contents of the building.

What does unoccupied property insurance cover?

Unoccupied property insurance broadly restores the full range of cover you usually enjoy with your home or commercial premises insurance policy – including the risks of loss or damage to the structure and fabric of the building and its contents.

The level of cover available may vary, so you can choose whether to have just the most basic of cover or enjoy full peace of mind with comprehensive cover.

Therefore, the risks covered may typically include fire, storm damage, escape of water, flooding, and so on.

Exclusions

As with many other types of general insurance, unoccupied property insurance also incorporates exclusions – and it is important to understand exactly what these are.

The detail will vary from one insurance policy to another and may also be reflected in the level of unoccupied property insurance you choose.

Summary

Avoid any false sense of security that your home or commercial premises remain adequately protected and covered by your regular insurance policy. The risks change significantly once the building and its contents have been left empty and unoccupied for longer than a month or so. Because of that change in the risks, insurers typically restrict cover or treat it as lapsed altogether.

The response – and one that will restore the necessary protection to your temporarily unoccupied home or commercial premises – is, depending on your property type, unoccupied property insurance or unoccupied commercial insurance.

It’s still early days for the new Labour government. But it has made clear that priorities will be given to housing – and affordable housing in particular.

So it’s worth taking a look at current property news headlines for a glimpse of the background facing government policies.

Report: £14.6bn economic contribution of the London private rented sector

When the government looks at the private rented sector it will be informed by a recent study by consultants PwC about the value of that market in London alone, according to the National Residential Landlords Association (NRLA) recently.

The key features of the report – entitled The Economic Contribution of the Private Rented Sector – include the following:

• small and medium-sized landlords – those owning 15 or fewer rental properties – contribute £14.6 billion to the capital’s economy or 2.6% of its total regional Gross Value Added (GVA);

• what is more, the report reveals, the private rented sector in London has created – either directly or indirectly – an estimated 128,000 jobs (in various areas of activity);

• the findings reinforce the importance of the part played by the private rented sector not only for employment but also the encouragement of investment in various regions;

• looking at England and Wales as a whole, the report reveals that the private rented sector contributes an estimated total of £45 billion to the UK’s Gross Value Added (GVA);

• across England and Wales, the private rented sector supports an estimated 390,000 jobs;

• the principal industries to benefit from the economic contribution of the private rented sector include public administration, building maintenance, and construction.

UK housing market hotting up – house prices on track for 2% increase in 2024

Evidence from the regular market analyses conducted by the online listings website Zoopla suggests that the UK housing market is heating up. Its latest report on the 30 of July reveals:

• an anticipated average increase in house prices of 2% by the end of this year;

• an increase in the supply of housing – given by the volume of agreed sales – of 16% compared with 12 months ago;

• that buyers are on average paying 96.8% of the seller’s asking price – circa £16,600 below the asking price – making these the highest bids in the past 18 months;

• government policies are expected to have “no material impact” on the housing market – but a cut in interest rates by the Bank of England could instil greater confidence and activity in the market;

• during the previous 12 months, house prices in the north of England have tended to rise while those in the south have fallen.

Top 10 cheapest and most expensive seaside locations

Has the arrival of summer encouraged you to hunt for a home near the seaside? The online listings website Rightmove on the 1^st of August listed the cheapest and the most expensive locations you are likely to find:

Cheapest

• average asking price £114,365 – Saltcoats, Ayrshire;

• £122,520 – Easington, County Durham;

• £124,593 – Peterlee, County Durham;

• £132,660 – Ashington, Northumberland;

• £133,197 – Bootle, Merseyside;

• £135,951 – Grimsby, Lincolnshire;

• £139,547, Girvan, Ayrshire;

• £140,437 – Maryport, Cumbria;

• £141,765 – Workington, Cumbria; and

• £146,674 – Hartlepool, County Durham;

Most expensive

• average asking price £1,582,331 – Sandbanks, Dorset;

• £1,242,181 – Canford Cliffs, Dorset;

• £751,442 – Milford-on-sea, Hampshire;

• £678,058 – Padstow, Cornwall;

• £603,312 – Lymington, Hampshire;

• £562,609 – Barton-on-sea, Hampshire;

• £542,005 – Budleigh Salterton, Devon;

• £521,932 – Lyme Regis, Dorset;

• £501,099 – Sidmouth, Devon; and

• £495,009 – Sandgate, Kent.

First-time buyers spend 40% of pay on mortgages

Citing research by the Nationwide Building Society, the BBC recently revealed that the average first-time buyer currently spends almost 40% of their regular earnings on mortgage repayments.

Nationwide recognises that this is substantially higher than the 30% of earnings that has been the longer-term measure of the ratio of mortgage repayments to earnings. The current rate underlines just how difficult first-time buyers are likely to find their first step on the housing ladder.

Although earnings have risen somewhat, house prices gained 2.1% in the previous 12 months – the fastest increase since December 2022.