Checking out of a rented property can still present problems for those needing to maintain social distancing. The Deposit Protection Service (DPS), therefore, has issued new guidance to landlords and tenants in England and Wales about the final handover.

Outlining the guidance in a story dated the 24^th of June, Landlord Today, reminded readers that the government announced changes in the restrictions on moving home during the current pandemic.

Although the easing of restrictions meant that landlords could make the necessary visits to their let property to facilitate tenants moving in and out – to take hand-over inventories, for example – they could do so only by minimising any physical contact. To maintain the necessary social distancing between landlords and tenants, one option, suggested government advice, was for tenants to stay in a different room during any visit by their landlord.

To ensure a smooth checking out and hand-over, that avoids any misunderstanding or dispute over a deposit that needs to be repaid, the Deposit Protection Scheme suggests:

Contact details

• if there is subsequently a dispute about the return of a deposit, arbitrators will need the telephone numbers or email addresses of both tenants and landlords – so make sure you retain a record of these;

Cleaning

• charges for the cleaning bill are at the centre of 63% of the disputes over the return of security deposits, says DPS;

• but precautions introduced because of the pandemic mean that landlords may need to spend more than usual on performing a deep clean before re-letting the property;

• unless you carried out such deep cleaning before your current tenants moved in, you cannot reasonably charge them for the deep clean that now needs to be made when they are moving out;

Deposits cannot be used for rent

• both landlords and tenants need to remember that a deposit cannot be used to pay any rent that falls due;

• if a landlord has reduced the rent payable, for example, it cannot be recuperated simply by withholding the return of some part of the deposit;

• if tenants are having difficulty paying the rent, that needs to be taken up early with the landlord and any lingering issues communicated to the deposit-holding company;

Picture it

• date-stamped photographs continue to play an important role in recording the condition of any let accommodation at the end of a tenancy, if a face-to-face visit and inspection is impossible because of coronavirus precautions;

• photographs may also be used for estimating the likely cost of repairs to any damage;

Gas and electricity safety checks

• despite the potential restrictions on access to let property, landlords continue to be responsible for maintaining gas and electricity installations in a safe state of repair and for conducting the necessary periodic checks and certification;

• nevertheless, there may be inevitable delays in arranging for those inspections to be carried out – pending the further lifting of lockdown restrictions;

Keep DPS in the picture

• if either landlords or tenants encounter any problems in gathering the evidence necessary for a smooth check-out at the end of a tenancy, DPS needs to be informed as soon as possible.

Although the situation for both landlords and tenants may be slowly returning to a new “normal” there are still situations in which it may be difficult to conduct final inspections and inventories at the end of a tenancy – and these are necessary, of course, to decide on the amount of any deposit to be returned to tenants.

The suggestions outlined by DPS are designed to avoid such difficulties.

Please note, this information is correct at the time of writing, but may be liable to change.

Landlord insurance – also known as let property insurance or buy to let insurance -– is generally not a legal requirement (unless you have a mortgage on the property, but we will get to that later). But if you do not have it, the considerable investment represented by your let property may be at dire risk and in peril.

It is in peril because of the risks to which any let property is exposed and against which let property insurance is designed to offer effective cover and protection.

By whatever name, therefore, landlord insurance aims to protect the structure and fabric of the let premises, its contents, the third-party liability risks arising from your having tenants – and, from time to time, their guests – on the property.

Deciding that landlord insurance, or any component of it, is anything other than essential might be unwise.

Landlord insurance and your buy to mortgage

If you have an outstanding balance on the buy to let mortgage you arranged to purchase your let property, the lender is almost certain to have asked you to sign a legally binding document confirming that you have and will maintain, appropriate let property insurance at all times.

At the time your mortgage was taken out, they may also have requested a copy of your landlord insurance policy.

That’s because they will be keen to ensure that their loan capital is well protected if something unfortunate happens to your property.

If it is logical for a mortgage lender to seek to protect their investment in this fashion, then the same reasoning may dictate that it would be highly advisable for you to do likewise.

Owner-occupiers standard home insurance vs. landlords insurance

If you live in a property you own and nobody apart from you and your family usually are resident there, you will be considered to be an “owner-occupier” by insurance providers.

Typically, non-paying guests staying over or using your property for a short period are not a problem. Your insurance will not be at risk, providing that there are no commercial arrangements in place in such circumstances.

However, the moment you start charging somebody for accommodation in a property you own, whether or not you live in it yourself, you have made a commercial arrangement. By law, you have become a landlord, and you will also find that you have certain legal responsibilities and obligations.

The risks involved in offering insurance for a property vary depending upon whether or not it is owner-occupied or let out for rental income. That means that typically there are two very separate and distinct forms of property insurance:

• owner-occupier; and
• let property insurance.

With tenants occupying the dwelling, the risks are of a different order and magnitude, so that specialist let property insurance is essential – indeed, if you rely on your standard home insurance when the property is let, you are likely to find any claim rejected.

If you previously lived in the property as an owner-occupier and had standard home buildings and contents insurance in place, this cover will become invalid the moment you start renting your property out. That may even apply if you only rent out part of it, such as a couple of bedrooms.

In such circumstances, you will typically need to switch to landlords’ insurance to ensure continuity of cover.

Note that you may also be in contravention of the terms of any existing owner-occupier mortgage you have on your property, and it may be advisable check the implications of change with your mortgage lenders in advance.

That is why you need specialist landlord let property insurance.

Who needs let property insurance?

Let property insurance is required, therefore, if the home you own is let to tenants. But this, too, may embrace a wide range of possibilities. So, let’s take a closer look at who needs let property insurance. That is the specialist cover you are likely to require:

• even if you are only letting out a single room in the house you, too, continue to occupy (under the government’s Rent a Room scheme, for example);
• if you are letting friends live in your property or part of it, in return for them paying you a rent;
• if you are letting your property out only occasionally, for example, for holiday rental purposes during the summer months;
• in situations where your lettings are infrequent and sporadic, usually being done on a short-term basis to raise some extra cash when needed;
• whether your property is furnished or unfurnished; and
• whether or not you have a formal written tenancy agreement in place.

The basic condition to keep in mind is that if you are using your property for the generation of any sort of rental income, then you need let property insurance.

As a general note, if you intend to change the use of your property – for example, you decide to let it out for a few weeks during the summer – you must inform your mortgage provider. Failure to do so could see you in breach of your mortgage agreement.

What does let property insurance cover?

Any consideration of the importance of let property insurance, of course, needs to examine just what the typical policy covers. Although there are many and varied products available, let property insurance typically focuses on providing indemnity against the following risks:

Building insurance

• at the heart of let property insurance – just as with your home insurance – is the protection of the structure and fabric of the building itself against such potentially severe risks as fire, flooding, storm damage, impacts, vandalism, and theft;
• arrange your insurance through us here at Cover4LetProperty and the building insurance also typically protects you against the risk of subsidence, malicious damage by tenant and, offers trace and access cover as standard – something you are unlikely to find with some other let property insurance providers;

Contents insurance

• although your property is let – and your tenants are responsible for insuring their own possessions and belongings – let property insurance may also protect those contents you own;
• if a tenant causes malicious damage to your property or its contents, our policies also include as standard cover against such acts (up to set limits);

Landlord liability insurance

• the moment you let your property to tenants, you also assume responsibility for ensuring their health and safety in the dwelling;
• if one of your tenants, a visitor of theirs, some other caller at the property, a neighbour or a member of the public suffers an injury or has their property damaged through some contact with the premises you own, you may be sued for a substantial sum in damages – especially if someone has been physically injured;
• levels of landlords’ public liability protection may vary considerably, with some policies being more generous in this area than others – which might be significant given the potential size of some court awards for damages;
• while let property insurance typically incorporates at least £2 million indemnity against such claims, in the case of policies arranged by us here at Cover4LetProperty, there is the option to go up to £5 million;

Loss of rental income

• whether you are a full or part-time landlord, the rent you receive from your tenants is a valuable source of income;
• that income stream is likely to be disrupted, however, following a significant insured event which leaves your property temporarily uninhabitable pending repairs and reinstatement of any damage;
• let property insurance (as an optional add-on to your policy) may, therefore, provide for compensation for such loss of rental income – up to prescribed limits, of course, typically related to a percentage of your total sum insured.

Unoccupied let property insurance

If your property becomes unoccupied (by which insurers may typically mean that the property remains empty for 30 to 45 consecutive days or more but depends on individual providers), then insurers typically require you to notify them of this fact.

Failure to notify the insurer of a property becoming unoccupied in that period may result in an insurer refusing to pay a claim in the event of a fire, storm or other peril that may otherwise have been covered.

Circumstances in which such vacancies may arise include:

• problems finding new tenants or delays in them moving in;
• building or refurbishment work overrunning;
• legal proceedings like divorce or probate; etc.

At times like this, when your property is going to be empty, specialist vacant property insurance policies are available (not just for landlords, but for anyone whose property stands empty for 30-45 consecutive days or more. These might be people who are having an extended holiday or working away from home for some time, for example).

Carrying out a let property insurance review

In the light of the discussion so far, or because any existing landlord insurance policy is soon up for renewal, then carrying out a let property insurance review may be something that might be of benefit to you.

You might be inclined simply to renew your existing cover. But if you do this, you may be missing out on some opportunities to provide yourself with more extensive protection and perhaps save some money into the bargain.

You may find, for example, that some features of cover that you may consider to be an essential part of any landlords insurance policy, may be provided as standard by some policies but are an optional extra – for which you must pay more – on others.

Your let property insurance review allows you to identify those policies which most closely correspond with the features of cover that you may feel that you need for your peace of mind as a landlord.

So, you may find that some policies may offer as standard:

• subsidence cover;
• malicious damage by tenants;
• cover for students and DSS;
• differing upper level limits;
• trace and access cover.

Getting the cover you feel comfortable with may only be part of the battle. As we have seen, you may also need to consider what, if anything, you need to do if your property is empty for an extended period.

Comparing let property insurance policies

As part of your review of existing arrangements, you may decide to compare the competing products available – whether you are an existing landlord, new to the role or even an “accidental” landlord.

If you are able both to compare landlord insurance and arrange a suitable policy online at the same time, so much the better.

And that is precisely what we can offer you here at Cover4LetProperty. We can show you some buy to let insurance quotes that are specifically tailored to your requirements. From these, you can choose and purchase online the one which you feel most closely matches your expectations. Or, you can give us a call if you’d prefer to discuss your quote with one of our specialist team.

Of course, not all landlords require exactly the same levels of cover. If you are letting your property out on an unfurnished basis, for example, you may not need landlord contents cover.

Even for those aspects of landlords’ insurance that all landlords may require like buildings cover and third party liability, there may be significant differences in the levels of cover on offer from different providers. So, taking some time to read through what’s on offer from let property insurance online may be necessary.

With our help, you may arrange and compare let property insurance online.

Understanding what is available in the insurance marketplace to help you protect the investment you have made in your property, may be important to the success of your letting business. A short time spent looking at options may then allow you to take finding let property insurance online, off your list of things to do.

As with all financial products, there may be some paperwork to review. Issues you may wish to pay close attention to include the amount of any excess in the event of a claim (the first part of any successful claim for which you are personally responsible), the exclusions or limitations incorporated within any policy, and what your obligations are under the buildings and contents insurance for landlords to keep the cover valid (for example, your duty to notify the insurer if the property should become vacant, to keep it in a good state of repair, to meet certain property security requirements, and so on).

We are always on hand to answer any questions or queries you have, so please feel free to contact us – we’d be delighted to help.

Homes may be left unoccupied for any number of reasons and voids are not the only explanations for a normally let property to lie empty. Whatever the reasons, if no one is living in the home for longer than a month or so, either the owner-occupier or the landlord is likely to be looking for an unoccupied property insurance quote.

When is a property classed as unoccupied?

A standard home insurance or landlord insurance policy allows for periods when a property may be temporarily unoccupied – for example, when the tenant or owner goes on holiday, or for weekends away etc.

But once a property has stood empty for a number of consecutive days – typically between 30-45 days depending on the policy as this can vary – then you will need purpose designed unoccupied property insurance.

A property is classed as unoccupied even if it is fully furnished.

Reasons for the property being unoccupied

If you are the owner-occupier, your home might be unoccupied because:

• you are on an extended holiday away from home;
• your home is under extensive refurbishment or remodelling;
• you and your partner may be setting up home together and you may be in the process of selling one of your properties;
• your job takes you to a different part of the country – or even abroad – to work for longer than a month or so; or
• you might have an interest in a property that is subject to probate and remains empty until that legal process is complete.

If you are a landlord, you may have a longer than usual void – caused by a difficulty in finding tenants or because:

• the normally let property is being redecorated or refurbished; or
• sitting tenants are away for longer than a month or so, yet still decide to keep on the tenancy.

Why seek an unoccupied property insurance quote?

Statistics may suggest that unoccupied properties are more at risk from things such as leaking pipes or storm damage, simply because there is nobody present to notice and rectify the problem before it becomes serious.

Unoccupied properties may also prove to be far more attractive to thieves and vandals, as their chances of being disturbed will be considerably reduced.

As the risks are higher, insurers typically require a specific cover to be put into place – unoccupied property insurance.

As we touched on above, typical home buildings and contents insurance for both landlords and owner-occupiers may contain clauses to the effect that portions of your cover (or the entire policy) may no longer apply if your property stands unoccupied for more than a specified amount of consecutive days. The restriction – and the need for standalone unoccupied property insurance – is typically required because the risks that face an empty property are different from those that potentially exist when the property is inhabited.

If the property is unoccupied for reasons beyond your control

If your home or buy to let property becomes empty for reasons beyond your control, it makes no difference to your likely need for unoccupied property insurance. Your insurers are concerned that the property is unoccupied and not the reasons why.

If building works, refurbishment or a redecoration project has taken longer than envisaged and the home continues to be unoccupied or if new tenants delay the date on which they plan to move in that might still result in your need to seek an unoccupied property insurance quote.

Can I get short-term empty property insurance?

Yes, you can get flexible unoccupied property insurance. For example, we offer short-term unoccupied property insurance for a period of three, six and twelve months. We also offer three levels of cover, so you can choose the protection must suited to your needs.

Your continuing responsibilities

As with any general insurance policy, if you have arranged unoccupied property insurance, you still have a duty to mitigate the risks of loss or damage. Your insurer has the right to expect your exercise of that caution and may reject any subsequent claim – or consider your failure to do so a cause of contributory negligence.

Whatever the reason for your property being unoccupied, you may wish to be aware of the terms and conditions attaching to your unoccupied property insurance quote. These may require, for example:

• that you arrange to have your property inspected regularly and carry out ongoing maintenance, as well as attending promptly to necessary repairs;
• you may also be required to keep a log of these visits;
• you might also want to ensure that a light or two is on a timer to come on in the evenings and that external garden and other areas are kept in tidy and well-maintained condition (in fact, some policies may require it); and
• from a landlord’s point of view, keeping the garden tidy and free from rubbish and litter may not only make your property look more attractive to potential tenants, but it may also help to make the property looked lived in and so deter thieves and vandals.

Steps to take

If you expect your home or let property to be left unoccupied for longer than a consecutive period of 30 to 45 days, you might want to contact your insurance provider for your home insurance or landlord’s insurance to discuss the level of cover to expect.

You are likely to be advised to arrange specialist, standalone unoccupied property insurance.

If you are uncertain about the status of your property when you leave it empty or have any questions or concerns about unoccupied property insurance, here at Cover4LetProperty we aim to help, advise and steer you in the direction of suitable cover.

Further reading: Guide to unoccupied property and Guide to renovating. Watch our short video at the foot of the linked page.

Using an insurance broker to find your buy to let insurance cover may be one way of ensuring that you find the most cost-effective and appropriate protection for your property.

Specialist landlord insurance brokers may be able to match your requirements to a range of policies, which you can then compare – choosing the one that most closely matches your particular needs and requirements.

Looking for a suitable solution to your insurance needs

Unless you have unusually intimate knowledge about the workings of the insurance market – and landlord insurance in particular – you might want to consult a specialist landlord insurance broker.

Going it alone by shopping around and attempting to compare one policy with another is likely to prove time-consuming. It may still not lead to the perfect match between your insurance needs and the policies available.

Do I have to use a broker?

No, you don’t need to use such a broker. You could trawl through many websites trying to obtain individual quotations, or visit your high street, then narrow them down to the policies that most meet your needs.

It’s not just about comparing prices though – you need to ensure that your comparisons are on a like-for-like basis. Individual policies can have different product features, benefits, terms and conditions, so you do need to take care when comparing your landlord insurance options.

A landlord insurance broker can help in that search and make the necessary comparisons on your behalf.

Using landlords’ insurance brokers may be something that saves you time, money and leads to greater satisfaction with your eventual landlord insurance solution. By using an online landlord insurance broker, the legwork is done for you.

What are the advantages of using a landlord insurance broker?

The Money Advice Service says that there are more than 2,000 registered insurance brokers in the UK.

What services are offered to support such a relatively large population of brokers? The British Insurance Brokers Association (BIBA) lists the reasons why many people – including those looking for landlord insurance – seek the help of a broker:

• brokers have access to insurance products from across the entire market;
• in addition to providing advice, a broker can also give advice and, if it comes to it, help you in submitting an insurance claim;
• a broker may help you to manage the risks you face as a landlord and the insurance policies that protect you against those perils;
• brokers are obliged to be completely transparent about the costs associated with arranging your insurance;
• they are regulated by the Financial Conduct Authority (FCA), and your fair treatment is further guaranteed through the Financial Ombudsman Service.

In a nutshell, a landlord insurance broker possesses the specialist expertise and experience to help ensure that you identify and arrange a suitable insurance policy at a competitive rate.

Landlord insurance to protect your buy to let business

Just like many another responsible and prudent landlord, you may consider landlord insurance to be essential.

Investment in buy to let property is essentially a business concern. As such, your objective may typically be expressed along the lines of trying to obtain the maximum occupancy you can, for the highest possible rates while, at the same time, reducing your costs and risks. Using a landlord insurance broker may help you with the latter part of that objective.

Brokers typically know the market well and have access to multiple insurers. They generally are specialists who may be able to match your requirements against those of their insurers, to avoid you having to do the work of comparing dozens of offers against each other.

Your mortgage and buy to let insurance

You may need your landlord insurance policy in place to protect the structure of your building (if you have a buy to let mortgage, such cover may be obligatory as part of your contract with your lender) as well as its contents. You may also place great importance on having appropriate third-party liability cover.

Important as all those things may be to you, you may also have two further objectives relating to your landlord’s insurance:

• to try and obtain the most appropriate landlord’s cover you can; and
• to try and keep down the costs of your let property insurance to the most cost-effective level possible.

These two objectives may, in some respects, appear to conflict with each other, and you may welcome some assistance in trying to achieve both these goals.

This balancing isn’t unique to insurance, of course, because it forms part of modern life. When thinking about landlords’ cover, however, landlord insurance brokers such as ourselves may be able to help you achieve it.

Unoccupied property insurance

It might be worth taking a closer look at how the specialist knowledge of a landlord insurance broker may prove especially useful.

For example, a broker might be able to advise on your possible need for an unoccupied property insurance quote.

An unoccupied property quote may be required in situations where you have a property standing unoccupied for a period exceeding 30-45 consecutive days (an event that may automatically invalidate any existing, standard landlord insurance).

This is because a standard buy to let insurance policy may not provide you with cover if your property has no tenants in it for a period of 30-45 consecutive days (the period may vary depending on the insurance provider).

An empty or unoccupied property may or may not be furnished – it is the absence of tenants that is the critical factor. It might arise for a variety of reasons that may not be particularly important from an insurance point of view – the important fact is that the property is unoccupied and unoccupied property insurance may be required.

That may be because when there are no tenants in your property, small problems may develop into larger ones with no one there to spot them (and get them fixed) and thieves and vandals may be more likely to strike when they may know that there is no one around.

An insurance broker’s proactive advice and high-level view of the marketplace may prove to be invaluable to you.

Additional specialist knowledge

Unoccupied property cover may not be the only feature of landlord insurance that you want to ask your broker about

Your landlord insurance policy, for example, may also be able to offer you cover for malicious damage by tenants as standard or damage caused by subsidence.

You may also welcome the flexibility of being able to choose exactly who you let your property to – some buy to let properties may exclude students or DSS tenants from cover and this may impact on your ability to earn a living.

At the end of the day, what you are looking for in your landlord insurance broker is the chance to select a policy for your investment property which offers you the peace of mind and the flexibility you may need.

Why not contact us today to see how we can help? Or, alternatively, you get an online landlord insurance quote here.

The property market is reopening after having lain dormant for nearly three months.

Little wonder, then, that news is again picking up on various topics of interest to property owners. Here are some of the latest snippets.

Leicester is the best city in the UK to invest in property

As the first green shoots of renewed interest in property investment begin to show, you might have wondered where the best place is not just to invest in property but also to set up your business.

An article in Property Wire on the 28^th of May claims to have the answer – and that place is the city of Leicester.

In recent years, the survival rate for new businesses in and around Leicester has been an encouraging 91% – leading the second and third-placed cities, Bristol and Coventry, at 90.6% and 88.7% respectively.

House prices in Leicester have also risen by 28.3% in the past two years – an average increase of over £69,000, from £176,382 to the current £246,000.

Calls for a Stamp Duty holiday

Although the pent-up demand from the recent lockdown looks set to restart the housing market, it might have a much-needed kickstart by giving some buyers at least a tax break in the shape of a Stamp Duty holiday.

A story in Estate Agent Today recently explained online listings website Zoopla’s reasoning.

If Stamp Duty were temporarily put on hold, buyers would be expected to increase their activity, and the bounce back in property transactions might help to fill the 43% deficit in Treasury receipts from Stamp Duty during the month of April alone.

Because it would be a temporary holiday only, buyers may be expected to act sooner rather than later, when the tax could be re-applied as normal when the market stabilised.

The article recognises that any tax holiday would benefit some buyers more than others, depending on how much they were paying for their new home. Stamp Duty is currently zero-rated on the first £125,000 of the purchase price, 2% up to £250,000, 5% on the balance up to £925,000, and 10% on any balance up to £1.5 million. First-time buyers are exempt from Stamp Duty on homes costing up to £300,000 and pay 5% on the amount between £300,000 and £500,000.

The London postcodes that have seen the biggest drop in rental prices

One of the key sectors of the housing market most immediately affected by the recent lockdown was the private rented sector, explained a recent article in Homes & Property magazine.

One of the worst affected parts of the country is London and, as a result, rents in the capital have fallen by as much as 15% since the beginning of March.

The worst-hit boroughs are in Zone 3, where rents are 7.9% down on the same time last year – to an average of £1,870 a month. Nearer the centre, in Zone 2, rents have fallen by 6.9% to an average of £2,520 a month. While in Zone 1, the fall has been some 5% to an average of £2,910.

Student landlords threaten legal action over non-payment of rent

Some landlords appear to be breaking advice and guidance issued by the Competition and Markets Authority (CMA) by not granting refunds of rent when accommodation was cancelled by students returning home during the coronavirus lockdown.

In a story dated the 26^th of May, Landlord Today drew attention to those landlords currently threatening legal action against their student tenants to recover rent that remained unpaid when they packed up and returned home, on the advice of their universities and colleges.

With their rented accommodation unoccupied, many students simply stopped paying their rent and have decided not to resume payments during the summer holidays, while uncertainty surrounds any return to their studies in September.

Universities have urged landlords to follow CMA guidance in offering refunds where tenancies have been cancelled, but some landlords and their agents persist in taking legal action.

If you are the owner of a buy to let property, you might be the landlord of either or both:

• residential let property; and
• commercial let property.

Naturally enough, residential property is occupied by private tenants making their home. In contrast, commercial property is occupied by business tenants with their own commercial enterprises to run – be they shops, restaurants, offices, or light industry.

Finding commercial landlord insurance that matches your exact needs may be critical for you to maximise your income and minimise your costs.

What is the difference between a commercial landlord and a residential landlord?

As the names suggest, the most significant difference between the two types of landlord relates to the purposes the property will be used for – commercial or residential. So, letting a small warehouse would make you a commercial landlord. Letting a flat would mean that you’re a residential landlord.

That difference is important because:

• the prevailing legislation governing letting is different for each type. A landlord must be sure they understand the appropriate laws affecting their commercial properties and their operations and comply accordingly;
• different landlord business insurance policies typically apply.

It might be worth noting that sometimes hybrid or mixed-use properties are involved – a shop with upstairs accommodation included, for example. Specific local authority regulations might then apply, while you might also need specialist mixed-use landlord insurance.

For present purposes, let’s restrict our discussion to commercial property insurance.

When it comes to insurance for commercial let property, one of the distinguishing features is that it is typically subject of one or more of the lease conditions.

The clarification is essential since it is customary for the owner of the let property to arrange commercial landlord insurance and to include the cost of this in a general management charge to the business tenant. The terms and provisions of the insurance cover and who pays what, are included in the lease between landlord and tenant.

If the same building has several different tenants, suggests the Royal Institute of Chartered Surveyors (RICS), individual leases might describe how the costs of the relevant service charges, including insurance, are apportioned – based on the floor area rented in each case, for example.

Why arrange insurance for commercial landlords?

Most of us want to think that our financial interests are protected by appropriate insurance.

If you’re letting a commercial property, then commercial landlord insurance should be seen as being essential. In fact, it might be contractually required by your funds or mortgage provider, if you are purchasing the property using finance.

Both your commercial landlord insurance and any loan agreements might specify restrictions in terms of tenant types and their associated commercial activities.

One such example might be tenants running a production process using dangerous chemicals or those planning to use your premises for purposes they were not designed or licensed for.

As this can be a complicated type of business insurance, using the services of a specialist provider to find the most comprehensive and cost-effective commercial property insurance required for your own unique circumstances makes sense. At Cover4LetProperty, we are more than happy to advise on these and other special circumstances.

What is covered by a typical commercial landlord insurance policy?

There are several important headings which are likely to apply both to residential and commercial lettings and some provisions appropriate only to the latter.

A specialist provider of commercial landlord insurance – such as those of us here at Cover4LetProperty – is in a position to offer greater detail about the following typical headings:

Building insurance

• at the heart of the insurance for commercial landlords is cover against loss or damage to the structure and fabric of the building or buildings;
• the structure and fabric of the building is protected against damage by what are known as the insured perils – these include flooding, fire or smoke damage, storms, or earthquakes;
• it is customary for the total building sum insured to reflect the worst-case scenario in which the complete premises need to be rebuilt (as well as the site being cleared beforehand);
• to arrive at an accurate cost of reconstruction – and to keep that estimate up to date – the landlord is likely to commission periodic valuations by a qualified surveyor and valuer, including the costs of such surveys in the tenants’ management charges;
• reference might also be made to the Commercial Reinstatement Tool published by the Royal Institute of Chartered Surveyors (RICS);

Contents cover

• any contents you own in your let commercial property may have some partial cover from your tenants’ insurance – but that may require you to prove that liability for a subsequent problem resided with them;
• the circumstances leading to the loss or destruction of your contents might be your responsibility (natural causes);
• you might also have liability in terms of the tenants’ stock and contents residing in your property, should those be damaged by say a leak caused by your failure to maintain the property appropriately;

Landlord’s liability insurance

• property owner’s or landlord’s liability insurance is there to protect you financially should someone make a claim against you for legal claims loss, damage or injury caused while in or around your business premises;
• not all policies offer the same levels of cover against this risk. Policies arranged here at Cover4LetProperty incorporate up to £5m worth of indemnity insurance cover as standard;

Loss of rental income

• clearly, the landlord relies upon the rent from tenants to sustain his business;
• if a major insured event leaves the premises unusable by the business tenants, the lease might provide for the suspension of rent or the termination of the tenancy;
• in either event, of course, the landlord is likely to look to insurance providing compensation for any such loss of rental income;
• meanwhile, the tenants, too, are likely to seek compensation for the disruption to their trading activities and may want to be involved in the scheduling of repairs to the property and priorities for spending any insurance settlement;

Unoccupied property insurance commercial

• making sure that you have empty or unoccupied property insurance may be particularly crucial for your commercial property;
• an empty property is one that typically stands untenanted for a period of 30-45 consecutive days or more (the period may vary depending on which insurer your current policy is with);
• you may also need to find a commercial landlord insurance policy which can cover partially occupied premises or those where there is a mix of commercial and residential use – once again, we are happy to help field any such enquiry.

Summary

Commercial landlord insurance is a particular, specialist type of insurance which might be complicated not only by the nature of the risks it covers but also by how those risks are apportioned between landlord and business tenant. As may be clear, the terms and conditions of the lease need to spell out these respective responsibilities.

There are multiple combinations of circumstances that might materially affect your choice of business and commercial insurance for landlords. So, it is worth thinking carefully about the issues involved and consulting suitable specialist advice.

Further reading: Complete guide to being a commercial property landlord.

If you own any kind of property, it is rarely with the intention of it remaining empty.

Whether it is a house or flat you live in or a buy to let property of which you are the landlord, if it is left empty for a period typically longer than between 30 and 45 days (the exact period varying from one insurer to another) it becomes formally unoccupied for the purposes of insurance.

That is the time you are likely to need specialist unoccupied property insurance to ensure that adequate protection remains in place for your empty property.

Should you look for the cheapest unoccupied insurance?

As with all financial products, one man’s cheap insurance may be another man’s “basic” insurance, and different property owners may undoubtedly be looking for different things for their money. The key thing about any kind of house insurance policy may be to find one that suits your own individual requirements at a price that meets your expectations.

How do properties become unoccupied?

One thing is certain: no matter what your property is like, you may easily cross the line from having a property that has been vacant for a couple of weeks, to having one that has become unoccupied in the eyes of an insurer.

So, one day your current policy may be adequate, but the next you may have to search for a suitable unoccupied home insurance for your property. This may be the case whether you are an owner-occupier or a landlord.

There are many reasons why a property may be empty:

• you might be a landlord facing a longer than usual void – the period when your let property is unoccupied because one set of tenants has moved out and you are still waiting for a new tenancy to begin;
• you have to work away from home for longer than a month or are taking an extended holiday;
• unfortunately, building, decorating, plumbing and electrical works are prone to overrun, so refurbishment projects and other building works may take longer than expected – and all the while the building remains unoccupied because works are still in progress; or
• the unoccupied home may be a probate property. Sometimes, after you lose a loved one, it can take a while for probate to be sorted out. And when probate has finally been granted, it may take even longer for the property in question to be sold. In these circumstances, it is easy to see how 30 days or more may elapse, and therefore how the property can become “unoccupied” for the purposes of insurance.

Why do you need specialist unoccupied home insurance?

When you are living in your owner-occupied home or your property has tenants in place your regular property insurance policy may offer appropriate protection for the set of circumstances that may arise.

When your property is empty or untenanted on the other hand, the property may face risks that just may not be covered by your policy.

In case you were wondering why you cannot just plod on with your current regular property insurance, you may wish to check the terms and conditions of your policy. If you do not have suitable vacant property insurance cover, you may find that the insurer may not pay out if something were to happen on the grounds that the policy would be void if the property were unoccupied.

In other words, insurance providers typically recognise that the risk profile associated with an empty property is significantly different from that seen with a property that is occupied.

Of course, insurance providers accept that your property may be temporarily empty from time to time as part of normal events. Examples of such occurrences may include things such as holidays, changeovers between tenants or possibly short periods where you have decided your property needs a quick refresh before it is let again or during renovations.

That is where the 30-day period comes from – your property becomes unoccupied in the eyes of your insurer once there has been no one living there for longer than 30 to 45 consecutive days.

Why do empty properties present more risks?

With a bit of luck, your empty property may be no more likely to befall a disaster than it would be when let or lived in by yourself. In that case, you may wonder whether you have to bother with getting any empty property insurance at all.

But insurers perceive vacant properties as being at a greater risk of damage simply because there is no one there to notice and act upon the kinds of perils that are insurable.

So, if there is a fire or a flood at the property, the mere fact that there is not a tenant or owner on hand to get out the fire extinguisher or sandbags may mean that the risk of damage may be higher. A small problem – like a leaking drip of water or a broken window – may, over time, become worse or allow the ingress of the weather with the end result being that the damage caused maybe a lot worse than it may have been if you or tenants were at home and the problem was spotted and dealt with earlier.

Furthermore, empty properties may attract the unwanted attentions of thieves, vandals, squatters, and arsonists.

Seeking an empty home insurance quote

As we have seen, when you arrange your house insurance or landlord’s insurance, the policy incorporates terms and conditions relating to the occupancy status of your property. Regular policies such as these are based on the assumption that your property is occupied – by you and your family or by tenants.

Naturally, this does not mean that someone has to be on the premises every minute of every day and night. Provision is made for periods of absence which are of relatively short duration – including a week or two on holiday or some such.

If the property remains unoccupied for longer than a month or so, however, you are likely to need unoccupied property insurance to maintain the cover and protection your home continues to require.

You may also find that having suitable insurance at all times is typically a condition of your mortgage contract if you have a home loan on the property.

Playing your part

Even though you might have arranged suitable unoccupied property insurance to cover an extended period when you or tenants are going to be away, as the owner of the property you still have an obligation to take all reasonable steps to mitigate any loss or damage while the premises are empty.

Unlit windows and a garden becoming more and more untidy, for example, may prove all too encouraging signs for thieves and vandals. So, install some timer switches for the lights to come on of an evening and arrange for the garden to be kept neatly in trim.

It may be necessary to keep a diary of the dates and times that you visited and a note of any work you undertook by way of preventative repairs and maintenance. Formal or informal inspections such as these may be a condition written into your unoccupied property insurance policy.

Remember that cheap unoccupied property insurance may be required irrespective of the reason your property is standing unoccupied. Even in situations where you have been unable to influence events (e.g. expected tenants failed to arrive) your insurance may be at risk if you go over the 30 or 45-day period.

As with other forms of house insurance cover, it is generally correct to say that what may be cheap unoccupied property insurance for one homeowner or landlord may not prove to be so for you, so shopping around to make sure you get the most appropriate deal is important.

If you are unsure what type of cover you need for your empty property, or what is the most suitable insurance for you please feel free to contact us – we’d be delighted to explain your options.

Further reading: Guide to unoccupied property and Guide to renovating.

Strange and unusual times have been brought about because of the coronavirus crisis.

Just as in practically every other walk of life, those changes have been felt as keenly in the housing market as anywhere else. Here is a brief review of some of the current effects of lockdown.

£82bn of property transactions on hold on due to coronavirus

Sales of some 373,000 homes have been suspended and remain on ice during the current lockdown, tying up transactions worth some £82 billion, says Property Reporter on the 28^th of April.

Unsurprisingly, orders to stay at home and maintain social distancing have had an immediate and major impact on the housing market. During the month of March, for example, apparent demand for housing fell by around 70%. Early April saw that trend gradually bottoming out, so that demand had fallen to about 60% of the level recorded before March.

As April progressed, so interest in property transactions continued to revive, so that demand is currently only around 35% lower than at the beginning of March.

Despite these figures, though, the underlying conclusion is that the market is currently on hold rather than in any terminal decline. Few homes have been withdrawn from the market and the majority continue to be offered for sale, with the volume of listings only around 4% lower than at the beginning of March.

Average monthly rents remain almost unchanged in Q1 2020

The past 12 to 18 months have seen average rents across the country remain more or less static. During the first quarter of this year, the average rose just £2 on the levels achieved at the end of 2019 – to £775 a month – according to a report by Landlord Today on the 29^th of April.

Citing figures from the Deposit Protection Service (DPS), the article confirmed that the highest levels of rent are, of course, in London – an average of £1,345 a month, the same as at the end of 2019, and equivalent to around 42% of the average Londoner’s income.

The long-term effects of the coronavirus crisis – and a lockdown during which households are encouraged not to move home – remain to be seen. The article reports that some landlords, however, are asking how to claim against a deposit if the tenant leaves without giving notice.

One in seven mortgage borrowers have taken a payment holiday

Landlords have been offered an estimated 1.6 million buy to let mortgage repayment holidays – around one in seven of all monthly repayments owed to lenders – according to Property Wire on the 29^th of April.

The offers are made to landlords facing financial difficulties during the current crisis and the so-called payment holiday allows them to defer an agreed number of repayments until a later date, when the missed payments (including interest) become payable.

Giving the reasoning behind government’s encouragement of buy to let mortgage payment holidays, the Financial Conduct Authority (FCA) explains that, for their part, landlords are expected to refrain from pursuing any action against sitting tenants for repossession of their let property. Provisions ensuring the protection of tenants from eviction are incorporated into Section 81 Schedule 29 of the Coronavirus Act 2020.

New app can prove landlords’ gas engineers tried to gain access

Guidance issued by the Ministry of Housing, Communities and Local Government recognises that the need for certain vulnerable tenants to self-isolate means that landlords may be unable to conduct routine health and safety inspections.

The guidance reassures landlords that they will not be unfairly penalised for failing to conduct inspections in those circumstances, especially if they can show that arrangements have been made for them to be made at a later date.

On the 28^th of April, Landlord Zone carried an article about a free mobile app, called Gas Tag, which landlords can use as evidence that they attempted to conduct one such critical inspection – for gas safety – but that the tenant had refused entry.

If you are a homeowner, you are probably aware of the importance of building and contents insurance to safeguard against the risks of serious loss or damage to both the structure and fabric of your home and its contents.

When you arrange building and contents insurance for the home in which you are living, your insurer knows that you are the owner-occupier – and the risks associated with providing the cover requested are calculated on that basis.

If you decide to let that property to tenants, however, there is a fundamental change in the entire basis on which the property is used – rather than the home in which you live, it becomes a business proposition in which you generate income from the rents you charge tenants. This is where landlords insurance is typically required.

“Accidental” landlords

That is true whether you are a full-time landlord making your entire livelihood from let property or a so-called “accidental landlord” after finding yourself with a property in which you decided not to live.

That fundamental change of use – from a property in which you live to one that you let to tenants – also means that any standard home buildings insurance policy is no longer likely to be valid and you must instead arrange purpose-designed landlord insurance – or buy to let insurance as it is also known.

In a nutshell, any existing regular form of home building and contents insurance is unlikely to provide the cover you need.

Your mortgage

That difference in use is critical to mortgage lenders – with the Council of Mortgage Lenders explaining how buy to let mortgages are quite different to standard residential mortgages for owner-occupiers.

That difference is just as critical to insurers. So much so, in fact, that any standard home insurance you might have arranged to safeguard your home and its contents when you lived there as the owner-occupier, is likely to be invalidated the moment it is occupied by tenants – hence the need for purpose-designed landlord insurance.

One of the fundamental conditions of your buy to let mortgage is almost certain to be the requirement for sufficient buildings insurance always to be in place to at least cover the outstanding balance of your mortgage.

Our Beginners Guide to becoming a landlord explains all more about the role of landlord insurance, while another of our free guides is designed with accidental landlords specifically in mind.

What does landlords insurance cover?

Whether your buy to let property is the focus of a concerted business undertaking or whether you have fallen into the role as a more or less “accidental landlord”, the moment tenants are paying to rent your dwelling, you still want to know just what is covered by your landlord insurance.

Although the nature and extent of the landlord insurance cover may vary from one policy to another, the standard forms of landlord insurance typically provide protection – or the option to add on elements of cover – under the following broad headings:

Buildings insurance

• In common with other forms of property insurance, the principal objective of a landlord insurance policy is to safeguard the structure and fabric of the building itself;
• there are usually many risks covered, including storm damage, flooding, fire, escape of water, impacts (from vehicles and falling objects such as trees and branches), theft, and vandalism;
• the total sum insured needs to be sufficient to cover the estimated cost of clearing the site and rebuilding the property from scratch, following the worst-case scenario in which a severe incident has totally destroyed the let premises;

Contents insurance

• since most landlords are likely to own at least some of the contents of the let property, the insurance policy may also provide cover against loss or damage of such items;
• the contents may be limited to items such as furniture and furnishings in common areas or include all the landlord’s contents in a furnished let – your contents insurance may be adjusted accordingly;
• cover for your tenants’ possessions typically needs to be arranged by themselves;

Landlord liability insurance

• where let property insurance offers an especially important element of protection is in so-called landlord liability insurance;
• as the landlord you have a duty of care towards your tenants – if one of them, a visitor to the let premises, a neighbour or a member of the public suffers an injury or has their property damaged in some connection with the property, you may be sued for compensation;
• landlord liability indemnity insurance offers indemnity against claims which may be made by tenants, their visitors, neighbours or members of the public who have been injured or had their own property damaged through some contact with the let property, for which they hold you, the landlord, liable;
• claims such as this may assume substantial proportions – especially if physical injuries are concerned – and the liability insurance incorporated into landlord insurance typically provides at least £2 million of cover. With our landlord insurance cover, there are also options to increase this element of protection up £5 million worth of cover;

Compensation for loss of rental income

• your buy to let property is a principal business asset – from which the income stream is generated by the rent you collect from tenants;
• if a major insured event occurs and the property becomes temporarily uninhabitable, you stand to lose that rental income until the completion of the necessary repairs and reinstatement;
• some landlord insurance policies typically offer compensation for the loss of rental income (up to prescribed limits, typically calculated according to the total sum insured under your policy) in the event of the property becoming uninhabitable – and therefore unlettable – following a major insured event. This is known as loss of rent insurance;
• it is important to note that not all landlord insurance cover includes loss of rent cover as standard.

Quick summary of insurance for landlords

Landlord insurance may not be a legal requirement (though it may be a condition of any buy to let mortgage you have on the property), but without it, you run the risk of financial losses at least equivalent to the value of your investment in the property.

In brief summary, therefore, here are the key benefits of arranging landlord insurance:

• the risks you face as a landlord are simply different to those of an owner-occupier – for example, you have tenants and that may bring a range of risks and issues that typically will not apply to an owner-occupier;
• your property is also a business concern, even if you also live in it yourself – that means that, in effect, you still require a form of commercial landlord insurance;
• as a result, you are asking the insurance provider to deal with an entirely different set of risk circumstances, and they need to provide policies that will cover those risks for you;
• therefore, it is illogical to expect a landlord insurance policy to be broadly the same as an owner-occupier policy and sold at the same price;
• note that the moment you rent out even a part of your existing home, any standard owner-occupier policy you have in place typically becomes invalid – something well worth bearing in mind even if you rent out a room or two during the holiday season;

• keep in mind also that if your property stands unoccupied for more than 30-45 consecutive days, then any standard landlord’s insurance or even owner-occupier home insurance may become invalid and you will need to consider unoccupied property insurance;

• unoccupied property insurance (also known as vacant property insurance) is one area where the position for landlords and owner-occupiers may be identical, as a similar condition may apply in a standard owner-occupier policy;

• if you are still tempted to try and make do with owner-occupier cover, remember that insurers have ways of checking the occupancy status of any property where an insurance claim has arisen – making a false declaration may not only lead to your claim being refused but you may find it difficult to obtain insurance in future (it may also, in some circumstances, be an offence);

• so, it may pay to think carefully about a landlord insurance policy and to avoid dismissing it as unnecessary!

There is a compelling argument, therefore, for arranging suitable landlord insurance from the moment you begin letting any property to tenants.

The continued spread of COVID-19 and the social distancing measures that have followed in its wake quite rightly grab most of the headlines these days.

But people still own property that they live in, have tenants, and continue to manage their mortgages. So here are some of the latest snippets of news on these and related subjects.

Property owners rush to remortgage

With no early let-up of the coronavirus emergency in sight, these are uncertain and difficult times.

For anyone in enforced unemployment or reduced working hours, paying the mortgage is going to be a major worry.

That may help to explain a recent surge in remortgage applications, reported by Landlord Today on the 3^rd of April, as homeowners look to secure more competitively priced deals in an attempt to reduce their monthly repayment commitments.

Favourable deals may be more plentiful since the decision by the Bank of England on the 11^th of March to reduce the base lending rate from 0.75% to its lowest ever 0.25%.

Coronavirus and Universal Credit advice for landlords

On the 2^nd of April, the Residential Landlords’ Association (RLA) drew attention to a guide for landlords recently published by the Department for Work and Pensions (DWP) on Universal Credit which might be claimed by some tenants.

The DWP’s newsletter reminds landlords of the application process which a tenant may need to make before receiving Universal Credit, and the special measures – including the suspension of Job Centre appointments – introduced because of the COVID-19 emergency.

The newsletter also reminds landlords of the suspension of any eviction of tenants in social or private rented accommodation for the next three months, in return for a similar buy to let mortgage repayment holiday for landlords.

The DWP has also updated the procedures through which landlords may directly receive the rent support component of a tenant’s Universal Credit payments. Such Alternative Payment Arrangements (APAs) may be granted by the DWP only if the tenant has defaulted on the whole or part of the rent due during the past two months or previously qualified for direct payment of their Housing Benefit directly to the landlord (and their circumstances have not changed since).

What should you do if you are halfway through a renovation project?

On the 2^nd of April, online property listing website Rightmove relayed advice from both the government and the Federation of Master Builders (FMB) about what to do if you started a renovation project on your home before the outbreak of the current coronavirus crisis and the building works are not yet complete.

Safety first dictates the need to maintain social distancing wherever possible. That means:

• renovation work must stop in any home where the residents are self-isolating or are especially vulnerable (because of their age or underlying health conditions, for example);

• the only exception is where emergency repairs may be needed – to prevent a home from being flooded by an escape of water, for instance;

• no building work – including emergency work – should be done by a builder or tradesman who has coronavirus symptoms, however mild those may be;

• if both the resident household and the builders are all free from any coronavirus symptoms, renovation works may continue as normal; but

• the FMB has said that half of all builders have already stopped at least 75% of their commissioned work – 80% of which involves domestic renovation.

If you are a homeowner awaiting the completion of renovation work, therefore, exercise care, caution, patience and understanding before insisting that the work be done right now.

Spring has sprung – navigating property maintenance

The coronavirus emergency has not stopped the changing seasons – although it might have affected the way you approach seasonal maintenance and repairs to your let property, suggested guidance from the National Residential Landlords’ Association (NRLA) on the 2^nd of April.

In essence, the advice boils down to the fact that there has been no change in your responsibilities as a landlord to maintain your let property in a good state of repair.

That means continuing to conduct the property inspections you would normally expect to make at this time of year – and arranging any necessary repairs and maintenance arising from damage during the winter.

But the necessary inspections and works must also be balanced against the need to keep you, your tenants and the relevant tradesmen safe from exposure to the virus during these times of social distancing and self-isolation by affected or vulnerable members of the population.