If You're A Buy-to-let Investor, Your Choice Of Tenant or Property Can Significantly Impact Your Insurance.
As specialist digital Landlord Insurance advisor an area of constant confusion and questioning from our clients, be it a first property investor, or someone expanding their portfolio, is the differing views of insurers around tenancy arrangements and types of property.
Property Insurers view the type of tenancy almost as important as the property itself when assessing risk, and in turn premium levels.
Risk calculations are based on their historical experience, or as they call it in insurance jargon, actuarial data, as such prices can differ from insurer-to-insurer and we would always recommend speaking to a specialist Landlord Insurance broker for advice.
Assured Shorthold Tenancy Agreements are the backbone of the letting industry and form the majority of private landlord rentals.
Usually, a 6 or 12-month agreement, as AST can be a condition of many Landlord Insurers before they consider offering a quotation.
Non-AST rentals where tenants are changing constantly expose more potential to unoccupancy and can lead to higher claims volumes.
That being said, there is usually a story behind the position, and your Insurance advisor can speak to specialist property insurers to tailor a quotation accordingly. If you do operate short term rentals, you should read your policy wording carefully to ensure you have the correct cover in place.
HMO (House in Multiple Occupation)
A House in Multiple Occupation is a property which is let out or rented to at least 3 people, who are not from one “household” or “family”, with shared facilities or common areas such as a kitchen or bathroom.
Specialist licensing is required for HMO properties from the local authority.
HMO Insurance usually is only available from Buy-to-let insurance experts who understand the market. More details on HMO Properties, licencing and insurance are available in our previous blog article.
A Professional Let is an agreement whereby property is let to a private individual, couple or family; to avoid any confusion, this bears no reference to the tenant's occupation – just more insurance jargon I’m afraid!
A professional let property is generally rented to under a Shorthold Tenancy Agreement it is widely viewed as target business by most Landlord Insurance providers.
Where the tenancy agreement is with an individual, be it on an AST or short-term basis, but the rent is partly paid by the DSS and is referred to as a Subsidised Let.
Again, no problem for a specialist Landlord Insurer, but some more mainstream companies may impose more restrictive terms.
If the tenancy agreement is directly between the Landlord and the DSS or Housing Association, it is referred to as a DSS Let.
As the Landlord has no control over the end tenants, arranging a Landlords Insurance policy can be more challenging.
Still, many DSS Let Property Insurance policies are available via specialist insurance advisors.
Non-UK Residents or Asylum Seekers
Asylum seekers or non-UK residents can also be supported by the DSS who arrange tenancy agreements directly with Landlords.
This is viewed by insurers as a specialist area of DSS Letting, and bespoke products are available via Landlord Insurance experts.
Properties which are let to several students as a houseshare can fall under HMO (House Multiple Occupancy) regulations.
Those of us old enough to remember “The Young Ones” might have a slightly warped view, but in reality, the risk management and exposure to buy-to-let insurers from student lets have improved dramatically.
As the property is ordinarily unoccupied during educational holiday periods, specialist cover must be purchased to ensure that the property remains adequately protected.
Commercial property comes in all shapes and sizes, from retail units, office blocks to warehouses and business parks.
A risk assessment will take into account the location, trade of the tenant, as well as the construction of the property itself.
Generally, Commercial Property Insurance is target business for most commercial insurers, although appetite can depend on capacity as some will prefer smaller to more significant risks and vice-versa.
Commercial Property can be insured individually or as part of a mixed property portfolio with residential or other commercial properties.