Archive for Landlord Insurance

Thinking of Letting Your Property? Things To Consider When Buying Landlord Insurance

If you are thinking of letting out your property, it’s important to familiarise yourself with your responsibilities as a landlord. These are clearly stated in the Landlord and Tenant Act 1985. Under common law, landlords have a duty to ensure the safety of their let property and its contents and that no injury or damage can be caused to the occupants, neighbours or the public.

Abiding by the Landlord and Tenant Act 1985

The act states who is legally responsible for repair and maintenance areas within the property, even down to the responsibility of a blocked sink. And, abiding by this act goes above and beyond your business insurance policy and lettings agreement. This would also include regular maintenance checks; ensuring all electrical systems are in a safe condition and meeting IEE wiring certificate regulations, as well as the annual servicing of the boiler.

Finding tenants

Finding suitable tenants to occupy your property is obviously a priority to get cash flowing in. This is also particularly important as many insurers will not provide cover unless you have a tenant in the property. The type of tenant could also effect your insurance; some providers won’t insure your property if it is let to students for example. It is also advisable to check references from previous landlords, and credit check new tenants.

Whilst you can advertise your property in local newspapers or even shop windows, there are a number of benefits of using a lettings agent. Not only can they make the process quicker and easier, they will also advise you on the terms of the contract, financial aspects of the letting process and other legal issues. This does come at a price though (usually a percentage of your monthly rental income).

Getting the right insurance

Once you have found your tenants, you’ll need to make sure your investment is protected through an insurance policy that covers your needs. It’s important to understand the cover that comes as standard and the benefits of optional extras that can be added so that the policy is tailored to your specific needs.

Generally speaking, material damage cover is included in most policies and covers loss or damage to your property from a number of hazards such as fire, lightning, flood, water damage from a burst tank or pipe and even accidental damage.
Property owner’s liability also comes as standard within most policies and covers costs that you may be legally liable to pay if anyone suffers an accidental injury or their belongings are damaged in connection with your ownership of the property.
If rain leaked through the ceiling and damaged the tenant’s television for example, and you were found liable for not maintaining the property, then the property owners liability aspect of the policy may cover a claim made to repair or replace your tenant’s television.

Of course, accidents can happen which are out of your control. But to provide you with peace of mind, accidental damage cover within your insurance policy could help protect your asset. More unusual benefits are offered by some insurers too, helping to cover your investment in a range of situations. Cover against theft or accidental damage to the property by the tenant(s) is one example.

Finally, if there are any changes to the property such as new tenants, or an upgrade to your fixtures and fittings, you will need to tell your insurer. If you fail to keep your policy up to date, the cover may become invalid.

Specialist Home Insurance is often Cheaper!

It’s that time of year again when frost and ice damages your property and your home is at higher risk to fire and pre Christmas theft!

Home Insurance has really suffered during the recession of the last two years as homeowners have cut out what are often mistakenly seen as marginal expenses. Consequently the potential market is larger now which explains the plethora of Home Insurance ads you see on TV all day long at the moment!

Wherever you live, you should have protection for your buildings and contents and this is of particular importance if you have invested a lot of time and money in your home. In this case you may be much better off if you visited an online specialist home insurer, who can provide you with a range of quality policies to choose from, which will protect ALL of your property.

Specialist Home Insurance is often cheaper if you have own a non-standard construction property which includes a range of covers for buildings of thatched and stone construction through to blocks of let flats. You should also consider going to a specialist home insurance broker or provider if you own a large multi bedroomed house or have specialist contents insurance requirements.

For home owners in the UK, purchasing the best insurance cover is of the most significance. Lots of people individuals, even so, usually do not take the time to examine the terms and conditions proposed by the home insurance policy they buy from a price comparison website. These same persons often realise too late, that their cover is not enough. This is most often the case for those who are in possession of high value homes.  Below is some detailed information about ways to provide proper coverage for a high value home with specialist home insurance.

Specifically What is a High Value Home?

High value homes are buildings which, for a variety causes, retain a worth superior to a typical home. Your property is apt to be though of as high value when the price of rebuilding it should surpass £200,000 or if the contents of your house are assessed for over £40,000. Before acquiring coverage, it’s always a good idea to have your house and contents valued by a skilled appraiser. Only then can you be positive that your cover is sufficient.

The problem with Standard Home or Household Insurance

Most house insurance insurance policies are designed with an average policy holder in mind. The cover assumes a typical family size of 2 to 4 that owns a 3 bedroom residence. While this variety of cover may possibly appear to be relatively inexpensive, there is certainly a reason. These kinds of policies usually have a range of restrictions and exclusions that can prove disastrous if you have a significant loss or claim. …..

Usual Exclusions Established in Standard Home Contents Cover

The upper limits of a standard contents coverage can be too low, meaning that you’re considerably under-insured. In addition, the single object limit on this sort of policy not likely to denote the worth of things in your home, such as jewellery, antiques or paintings. In numerous insurance policies, the single merchandise restriction is as little as £1500, a sum that may possibly not be ample for many high value products. Even when you are able to obtain cover, the Insurance company may possibly enforce severe (and costly) protection conditions, for example mounting new window and door locks, or even an entire alarm system. If you don’t follow these terms, the insurer may repudiate any claim.

What to look for in High Value Home Contents Cover

Lots of high value cover policies offer a set of additional benefits that can be really attractive. For example, your policy may contain legal protection for both you and your family. Yet another quality to seek is “agreed value” cover for high value objects. In this sort of cover, you and the insurer are in agreement on a particular amount of coverage for certain sole items, usually jewellery, fine art or antiques. Then there is “new for old” cover in which the value of articles misplaced or spoiled isn’t reduced, which means that you get the complete value of an insured item and not a proportional amount of it’s current value.

Finally ensure that you read carefully and understand your specialist home insurance policy conditions for high value articles, both in blanket coverage and single article cover.

UK Housing Market Home Insurance Mini Boom

Wthether it’s a sign of Spring or the green shoots of recovery, recent activity in the UK housing market has seen an appropriate response from the major UK home insurance companies, with a multi million pound spend on prime time TV advertising.

The home insurance market had gone quiet in recent months but recent positive indicators in the housing market have led to this bombardment on every TV and commercial Radio station. Home Insurance is definitely the flavour of the month with the market under capacity due to many people cutting levels of cover or dropping covers completely because of the recession.

So what’s been happening in the UK housing market recently to have caused this big budget spend?

Well in April house prices had risen by 8.5 % since January which is a startling recovery in itself, and the figures for the number of valuations carried out in May confirm the trend with Valuation activity in May up by over a quarter compared to May 2009, according to the latest research by Connells Estates Survey team.

This confirms that both the supply side of housing and the demand side from potential buyers appear on the face of it bouyant. It remains to be seen if the Bank Assurers are prepared to underwite this economic activity with the supply of mortgages necessary to complete all these potential deals.

The most up-to-date figures currently available from the Land Registry show that during February 2010, the number of completed house sales in England and Wales rose by 49 per cent to 40,502 from 27,190 in February 2009. It will be interesting to see if there were as many sales during the period since February of rising house prices.

The new Government are also sending out mixed messages about the housing market.

On the one hand they have scrapped the regional development of 600,000 houses for low paid workers around the country, presumably to let the vacuum be filed by property developers.
Then on the the hand they intend to hit the private landlords and developers hard in the pocket with large increases in Capital Gains Tax.

Some commentators are saying that 30% of the housing demand is from private investors and forcing a CGT tax-hike on property investors will drive many from the housing market at a time when its recovery is still perilously fragile.
What utter tosh – these are the same people that have seen the values of their properties increase by 400 percent plus over the last ten years. Some of these so called investors, whose greed initially generated the demand that created the massive price rises and forced ‘joe public’ out of the market, own portfolios of 10 20 30 or even 500 properties!
Either way the home insurers are not bothered, because where they once sold a specialist home insurance product to a Landlord they can now sell a standard home insurance policy to a home owner.

Were they all bankers at Monopoly when they were kids?

These people are just as much to blame for the current recession as the Banks that made credit readily available for them to play their easy money games. The toxic debts were only toxic because house prices were artificially inflated by these pariahs and normal people looking for a home were tricked into buying into negative equity without even realising it!

Personally Insurance Blogger thinks CGT should be raised even higher! Those who made all the profits that caused this recession should be made to pay now!

As for the detrimental effect on the housing market and possible falling prices leading to new negative equity….
Well that’s market economics for you and you can only temporarily stop the deflationary pressures that must happen in order to bring new entrants to the market. A market that sorely needs affordable housing where the profits are not going into the hands of a few un-entrepreneurial feudal landlords!

Tenants at risk as Landlords are repossessed

Questions have been asked in the House of Commons regarding tenants who have been paying their rent and fulfilling all their other obligations but who nonetheless find they are at risk of losing their home. What protection do they have?

We sympathise with tenants who find themselves in this position. So, what can lenders with the charge on the property do in cases where the tenant is paying their rent, but the landlord is not using this money to meet their mortgage commitments?

It seems it all depends upon what type of mortgage the landlord has and the protection for tenants falls into two distinct groups, and are affected in quite different ways.

The first are those whose landlord has a buy-to-let mortgage, and these tenants are generally in a much stronger position.

The second group comprises those whose landlord has a residential mortgage. A borrower with this type of loan should seek the permission of the lender before renting out the property. Where the lender agrees, it will be bound by the tenancy agreement. That provides protection for the tenant, should the mortgage lender need to take possession of the property or appoint a receiver because the borrower stops paying the mortgage.

In some cases, however, a borrower with a residential mortgage decides to rent out the property without telling the mortgage lender, in contravention of the mortgage agreement and perhaps even fraudulently. These tenants have been disadvantaged and their tenancies put at risk through no fault of their own.
Likewise the mortgage lender. It is quite likely that neither the lender nor the tenant will even be aware of each other’s interest in the property. Both have been put in a difficult position because of the irresponsible behaviour of the borrower.

But while mortgage lenders may sympathise with tenants in this position, it is important to understand that their legal responsibility – reinforced by regulatory requirements – is to the landlord, and not to the tenant.

The lender has an obligation to minimise arrears and get the best price possible for the property. This is likely to lead the lender to seek possession of the property quickly. In this situation, the tenant has few rights.

So how common is this problem? Recent television coverage of the issue reported it against the backdrop of 75,000 mortgage possessions this year.

The reality is, however, that only a much smaller proportion of total possessions – perhaps 4,000 this year, or around 5% of the total, according to the Department for Communities and Local Government (DCLG) – will involve residential mortgages where the lender discovers the property is occupied by tenants.

Buy-to-let mortgages

If tenants are renting from a borrower with a buy-to-let mortgage, they are in a better position. Here, the tenancy is normally binding on the lender if it needs to take enforcement action against the borrower/landlord. The tenant will have the statutory right to notice under their assured shorthold tenancy.

Instead of seeking possession, the lender may choose to appoint a receiver, who will, as far as the tenant is concerned fulfill the role of the landlord, maintaining the property and collecting the rent.

Under an assured shorthold tenancy, a tenant is entitled to the remainder of their contractual period – which is typically six months but can be longer – as notice and to a minimum of two months at the end of that period. In practice, a lender or receiver will often allow the tenant to remain beyond the notice period until rent arrears are paid off or the tenant chooses to leave.

Sometimes, a property may be sold with a sitting tenant. This is rare, however, because the lender has a responsibility to the borrower to obtain the best price for the property, which usually implies sale with vacant possession.

New Advice agency campaign

A number of organisations, including Crisis, Citizens Advice, Shelter and the Chartered Institute of Housing have launched a campaign to help tenants when the mortgage lender takes enforcement action. The campaign calls for courts to be able to delay possession to allow tenants to find an alternative home.

But if there is a residential mortgage on the property, giving the tenant more time to find a new home could put the lender in conflict with the borrower, particularly if it means mortgage arrears build up and the property is eventually sold for less than would have been the case if it was marketed straight away. If the landlord had had adequate mortgage protection insurance for commercial premises the situation would not have arisen in the first place

The campaign also calls for notices to occupiers to be made more obvious and perhaps to carry a risk warning. Landlords Insurance is available to compare online.

Cannabis Underwriters and Claims Specialists Required

Insurance Blogger was astounded to read in Insurance Times, at the weekend, that Norwich Union have actually paid out over £1 million in claims to landlords who were ‘victims’ of so called cannabis farms.

According to the report Norwich Union (soon to re renamed AVIVA don’t forget!)shelled out one million quid and is now, rather belatedly, warning landlords to be on the lookout for suspicious tenants.

NU said it settled about 60 cannabis related claims two years ago and the trend in cannabis farming is on the increase. During the same year Police apparantely seized over five thousand plants which was 34% up on the previous year.

Insurance Blogger would love to know on what basis those claims were settled, and is perhaps more surprised to see that NU is so far behind the times.

Unless you’ve been living on Mars for the last ten years you would have seen Cannabis farms on the local news, and local and national press.

Suburbia has apparantely been overtaken by gangs of Vietnamese and more lately Russians, on their Dutch inspired gardening activites in two up-two down terraced houses with the curtains drawn all through the day and night.
Or as my Copper mate in Southend ( who used to work for General Accident before they made him redundant and who now hunts and sniffs out Cannabis Farms on his mountain bike patrols )says ‘The Ping Pong Pong’.

The gardening activities of the farmers causes particular damage to:
i) Walls and ceiling structures, which are often removed to maximise lighting space and for ventilation.
ii) Electrical wiring which is often in a highly dangerous condition due to bypassing meters and the risk has led to fire claims.
iii) Plumbing is often ripped up and expanded for hydroponic cultivation of Cannabis, often leading to flood claims.

Well there’s obviously going to be more of this type of activity as we sink into deep recession, and what concerns Insurance Blogger is that this type of ‘cover’ is open to abuse, and many an unscrupulous landlord may succumb to the financial pressures, and either be engaged in or have knowledge of the cannabis production and actively turn a blind eye or more likely make false claims to get the place ‘Done up’.

We are not currently aware of any Landlords Insurance policy that doesn’t include a ‘reasonable care’ clause, and this must mean regular site and inventory checks are the responsibility of the landlord, which would prevent premises being used in this way.
Furthermore landlords should be made aware that they could face criminal charges for allowing their premises to be used for the production of a class B drug, which carries a prison sentence and is regularly used against landlords suspected of complicity. It will be up to the Landlord to prove that they took reasonable care in preventing the premises from being used in such a way!