Are you a portfolio landlord – perhaps with a couple of let properties and plans to expand further?
As the number of your properties grows, however, so too do the risks. Not only are there more let dwellings but also more tenants, broader maintenance requirements, more housing rules and regulations with which to comply, the possibility of more frequent property insurance claims, and the overall burden of administering your portfolio.
With multiple rental properties, your priorities are likely to be a careful balance between risk management of the portfolio as a whole and safeguarding each individual property.
What risks do portfolio landlords need to manage?
Rental property risk management spans a wide range of potential perils. The scale and nature of each of these risks may not necessarily be identical across every property in the portfolio.
Let’s consider just a few of the likely risks:
The building
- your properties are quite literally the bricks and mortar of your investment;
- each one may be vulnerable to fire, flooding, escape of water or other types of damage to the structure and fabric of the building.
Tenants
- tenants are the lifeblood of your portfolio investment, generating the rental income on which your business depends;
- even the most responsible tenants may cause accidental damage to your property or the contents you own.
Theft and malicious damage
- not all tenants may be as responsible in treating your property with the respect it deserves;
- tenants, their guests and others may steal property you own in the let accommodation or cause accidental or malicious damage – although whether such events are insured will depend on the cover provided by your individual policy.
Liability
- as your portfolio grows, you may face greater risks of liability;
- if a tenant or visitor at one of your properties suffers an injury or has their property damaged, you may be held legally liable in some circumstances;
- landlord liability insurance may provide cover against such claims, subject to the limits, terms, conditions and exclusions of your policy.
Unoccupied property
- as tenants come and go, it is almost inevitable that there may be voids or periods when one or more of your let properties remain empty and unoccupied;
- empty properties can face additional risks because problems such as leaks, damage or break-ins may go unnoticed for longer;
- if a period of vacancy extends beyond the interval allowed by your insurer, your existing property insurance cover may become restricted or additional conditions may apply;
- the permitted period varies between policies, so check your policy wording and consider whether specialist unoccupied property insurance may be necessary.
Loss of rental income
- your landlord insurance may provide cover against a number of events, but resulting loss or damage could leave the affected property temporarily uninhabitable and unlettable pending repairs;
- in those circumstances, you may suffer a loss of rental income, for which some landlord insurance policies may provide cover following an insured event.
Maintenance
- however many properties comprise your portfolio, each one needs a suitable maintenance regime to keep the dwelling in a good state of repair;
- your insurance may also require you to take reasonable precautions to maintain the property and reduce the risk of loss or damage.
Clearly, risks can vary across your portfolio according to the property type, location, condition and tenant profile. What presents a concern at one property may be of little relevance at another.
Assessing risk across your property portfolio
As the range of risks varies across your growing portfolio, it may be helpful to conduct regular, portfolio-wide risk reviews. Accurate and up-to-date records of those reviews may also provide a valuable management tool.
By no means exhaustive, the following may be useful areas on which to focus:
- take into account the age, construction methods and condition of each property;
- consider location-specific risks such as flooding or subsidence;
- review the security implications for individual properties;
- assess the condition and arrange servicing where necessary for heating, plumbing and electrical systems;
- ensure every property has had its required gas safety checks;
- record variations in occupancy and tenant type;
- review your property portfolio insurance;
- manage planned renovations or changes of use affecting one or more properties; and
- anticipate whether individual properties may become temporarily vacant, identifying those where specialist unoccupied property insurance may be necessary.
Managing maintenance and preventing losses
Preventative maintenance schedules and routines may prove valuable to efficient rental property risk management. Through regular maintenance and prompt attention to repairs, you may help reduce the likelihood or severity of insured events.
Your portfolios insurance may also require you to take reasonable precautions to prevent or minimise loss or damage.
A routine of regular inspections may help to identify:
- areas in need of prompt repair;
- heating systems that may need servicing;
- the condition of roofs, gutters and rainwater goods;
- plumbing faults and water leaks;
- problems with the electrical supply or appliances;
- gas safety issues; and
- potential security vulnerabilities.
With several properties to look after, keeping a record of inspections, repairs and recurring maintenance issues makes it easier to see what has been done and what still needs attention.
What insurance should portfolio landlords consider?
When you have multiple rental properties, it may become more important than ever to regularly review your property insurance arrangements – not only to confirm that the policy for each property is up to date but that it continues to offer the cover you require.
No two properties are necessarily the same, and they may not require exactly the same insurance safeguards.
With cover, exclusions, limits and conditions varying from one policy to another, you should check the individual policy wording rather than assume that each property and eventuality are covered in the same way.
Some of the areas of insurance cover you may wish to review for each property include:
- buildings insurance;
- landlord contents, where applicable;
- property owners’ liability;
- cover for loss of rental income following an insured event, where applicable;
- accidental and malicious damage, where covered;
- unoccupied property cover and any related conditions;
- accurate declarations to the insurer about the occupancy and use of each property;
- sums insured and rebuilding costs; and
- notifications to insurers of relevant changes where required under the policy.
Should portfolio landlords review all their insurance together?
You might be used to reviewing individual insurance policies as and when each one comes up for renewal. In that way, you can help make sure that no single policy is overlooked.
There may also be benefits in looking at the insurance arrangements for your property portfolio as a whole.
For example, a portfolio-wide review can provide a ready reference showing whether properties have been bought or sold, whether rebuilding values have changed and whether the tenants or uses of particular properties are different.
It can also help you keep track of properties undergoing repairs, those with maintenance scheduled and any that are likely to be empty for a period.
Taken together, these considerations may indicate whether existing cover continues to be appropriate for your circumstances.
This may also be a useful time to consider the relative advantages of a portfolio insurance policy covering several of your properties or whether you prefer to maintain separate policies for each property. Which approach is appropriate will depend on your individual circumstances and the cover available.
Creating a portfolio risk management strategy
If you are a portfolio landlord, there may be distinct benefits in having a risk management strategy that embraces every one of your let properties.
Your portfolio is unlikely to remain static. Properties may be bought or sold, tenants come and go, repairs become necessary and individual properties may occasionally stand empty.
A practical approach might include:
- keeping a permanent, regularly updated record of every property in your portfolio and the insurance arrangements for each one;
- maintaining an inspection regime and schedule of maintenance, followed by prompt repairs where necessary;
- keeping records of recurring problems together with any relevant insurance claims;
- regularly reviewing the insurance arrangements for every property;
- notifying your insurer when relevant circumstances change and your policy requires you to do so; and
- planning for emergencies, voids and longer periods when any given property may become unoccupied.
Such a strategy may help reveal the risks that sit across your portfolio as a whole while also identifying specific vulnerabilities in individual properties.
A greater understanding of those risks can help you take practical measures to reduce the chance of costly events and losses. Regular reviews of your insurance arrangements can also help ensure that your cover keeps pace with changes to your properties and the way they are used.
Portfolio landlord insurance FAQs
What is a portfolio landlord?
There is no single definition used in every context. Generally, the term refers to someone who owns several rental properties, although lenders, insurers and other organisations may apply their own definitions.
For landlords, the practical difference is that looking after several properties can bring additional demands – from keeping on top of repairs and safety requirements to monitoring insurance and periods when individual properties are empty.
Can I insure several rental properties under one policy?
Yes, it may be possible to arrange portfolio insurance covering several rental properties under one policy.
Whether that approach is suitable will depend on the properties you own, your individual circumstances and the cover available. Alternatively, you may prefer or need to maintain separate policies for individual properties.
Do all the properties in my portfolio need the same insurance cover?
Not necessarily. One of the reasons for reviewing properties individually is that their risks can be quite different.
Construction, location, occupancy, tenant type and the way a property is used can all be relevant. You should give your insurer accurate information about each property and check the cover, exclusions, limits and conditions that apply.
What happens if one of my rental properties becomes unoccupied?
Check your insurance policy as soon as you know that a property is likely to remain empty.
Insurers set their own conditions relating to unoccupied properties. Depending on how long the property remains empty, cover may be restricted, additional conditions may apply or you may need specialist unoccupied property insurance.
When should I review my portfolio landlord insurance?
Renewal is an obvious opportunity, but it is not necessarily the only time to look at your insurance.
You may also need to review your arrangements when circumstances change, for example if you:
- buy or sell a property;
- change the way a property is used;
- have a significant change in occupancy;
- carry out major renovation or building work;
- expect a property to remain unoccupied for a prolonged period; or
- become aware of another change that may be relevant to your insurance.
Whether and when you need to tell your insurer about a particular change will depend on your policy terms.
If you would like to draw on the experience and expertise of the Cover4LetProperty team, please get in touch, ask your questions or request a quote for your property portfolio insurance.
