Many people think that holiday homes are easy to insure as they aren’t lived in as much. They are however considered very risky by insurers. A holiday home can be vacant for long periods of time which creates further issues. Theft is often more likely in an unoccupied house and visitors to a holiday home do not take as much care as the owners.
Therefore you will need an insurance cover specifically for second homes or holiday homes. A normal landlord insurance policy will not cover you and would not pay out in the event of a claim.
What does holiday home insurance cover?
Most holiday homes cover all risks from a standard policy but include periods where the home is vacant or family and friends are in the premises.
Cover for second homes or holiday homes can vary depending on the insurer. It is important from our point of view to know exactly the cover that you need. Instances that may be covered:-
The policy would include accidental damage by anyone occupying the property.
Home Emergency Cover
Some insurers will include a 24-hour emergency helpline if you need help in a domestic emergency such as a burst pipe.
Loss of Rental Income
If the property is uninhabitable after a flood or fire it is comforting to know that the insurer will cover your loss of income. Most insurers, however, will only look to cover the loss of pre-booked income. They cannot recover income if there were no bookings lost.
Insurers will cover the cost of placing your guests in alternative accommodation if the property is uninhabitable due to unforeseen circumstances.
What should I do with my holiday home to try and reduce the insurance premium?
- Make sure that your policy covers exactly what you want. Some quotes may be cheap but they don’t have the comprehensive coverage you need
- Improve the level of security. Make sure to kit the property with approved security standards such as alarms and window locks
- Look at the excesses. A voluntary excess could reduce the premium. That excess would have to be paid in the event of a claim so it needs to be set to an affordable amount
- Keep the home in good condition. Maintain the home so that it does not fall into disrepair. This will include the insulation of any pipes and tanks to prevent them from freezing in cold weather
- Make sure to have contents insurance to cover personal possessions at the property
A holiday home is more vulnerable than your own home. Mainly due to the risk of multiple vacant periods. It is not a standard risk so you should speak to us regarding what cover you need. Our policies will cover:
- Loss of rent and alternative accommodation
- Costs and expenses to trace and repair the source of damage following an accidental escape of water
- Your legal liability as owner of your home
- Damage to gardens following an insured loss
- Contents in garages and outbuildings if caused by theft
- Contents whilst temporarily removed
- Office equipment
- Property in the open within the boundaries of the home
- Replacement of locks following accidental loss or theft of keys
Request a call back if you would like a quote for your second home or holiday home.
Every landlord association is different but they will all be able to offer you benefits that you cannot get on your own
. For instance, the British Landlords Association offer a free advice line for members to speak directly to lawyers
. The BLA advice line is managed by consultants who have a wealth of experience in dealing with bad tenants
. The law relating to the letting industry can be extremely
complex. Over 126 new laws have passed within the last 5 years and many landlords feel overwhelmed with the compliance rules and regulations
. It is, therefore, a great benefit for landlords to have such advice. Further benefits that associations can provide are below.
Assured Shorthold Tenancy Agreements
You will find that a lot of associations have assured shorthold tenancy agreements that landlords can use. These are legal documents between a landlord and their tenants which set out a huge amount of legal terms and conditions for tenancies. It is so important that these documents are correct.
Courses for Landlords
Some associations offer you courses that you can go on to improve your own knowledge.
Often associations have case law to reference for their members. You can refer to these if you have a problem with a tenant.
A lot of associations provide a newsletter such as the British Landlord Association. They send theirs out daily and can provide you with interesting articles that you may not even know about.
Up to Date Law
Associations might communicate changes to the law in newsletters or on their websites. These are not always advertised immediately by the government and may be hidden in Acts that don’t necessarily relate to properties.
Often landlords associations have forums where you can talk to other landlords to ask for any advice or questions.
Many landlord associations have their own portals not only for potential sales but also rentals to help you market your property.
Legal Documentation (EPCs, gas safety’s etc)
Many associations will have details on what documentation you will need to provide to tenants. They will also explain how to provide the paperwork, what to do with it and the deadlines for when they are due.
Some associations offer discounts on anything from trade magazines to contractors.
Paying a fee to be part of a landlord association might seem hard to justify when trying to make a profit from your rental property. However, they do provide a great number of resources for landlords. Landlords associations can voice concerns on your behalf about issues affecting landlords. These associations represent all landlords on all kinds of issues. Local to national, tenant disputes to government acts.
Do landlord associations have accredited courses? Yes, many landlords associations provide certifications. These help landlords prove that their property and service meet certain standards. For this reason, accredited landlords are acknowledged as more trustworthy than non-accredited landlords. As a member of a landlords association, you will be able to become accredited by taking a recognised course through the association.
There are many benefits of joining a landlord association and for such a small fee it can save you a substantial amount of money in the future.
You may ask yourself, what is best, buying insurance through a comparison website or purchasing from a broker?
In recent years online comparison sites have become ever more popular. Likewise, the way we buy building insurance has changed dramatically. There are now many comparison websites that are becoming more popular. It means that consumers can easily compare the price of hundreds of insurance products from the comfort of their own home. But is it the best way to buy insurance? Do you get what you pay for?
Why have comparison sites become so popular and are they really the better option?
It may seem that comparison sites seem an easy option when looking for a better deal on insurance. It’s simple and easy to fill out the details and then have a wealth of quotes to choose from. They are usually ranked from cheapest to most expensive. It seems ideal for those of us that have a busy lifestyle who want the opportunity to shop around for the cheapest deal in the simplest way. However, cheap insurance is also likely to provide a very limited level of cover. The rise of comparison sites has brought about a rise in competition among insurers. They know they need to be at the top of any search results to be in with a chance of winning the sale. This has led to stripped down cover and high excesses.
You might feel that you have bagged yourself a bargain after using a comparison site. But you may run into further costs if you have to make a claim and find that you don’t have sufficient cover. Obviously, you take out insurance to make sure that you are actually covered when you need to claim. What you don’t want is to make a claim and suddenly find that your insurance doesn’t cover it.
You may also find that to keep prices low some insurers have now increased the excess or added a voluntary excess. This means that if you have a £1,000 claim you might end up paying for the first £750.00.
If you have ever used a comparison website, you may have seen that you are asked to state the amount of excess to pay on your policy. , this is usually the voluntary excess and, this is then added to any compulsory excess. So in the event of a claim, you could have to pay a much higher sum than first thought.
Did you know that insurers pay to be at the top of the list on any comparison site? Insurance companies choose to pay for preferential comparison site listings instead of advertising by other means. For them, it is a better use of their money. For the end user though it can result in a confusing and misleading sales journey. The quote at the top of the listing may not be the highest level of cover.
Why use a Broker?
Brokers such as us will work with a panel of insurers and so will have access to the whole market. Often brokers have access to insurance products that cannot be bought on a comparison website. Buying your building insurance from a broker can give you access to expert advice and help you gain the most suitable insurance.
We will, for instance, talk to you over the phone and go through what cover you actually need. Also, discuss the property in detail and your personal circumstances. We can check what cover you already have on your current policy and then match it or increase it. You may not appreciate that a lot of insurance companies offer insurance products with low levels of cover on comparison sites. Yet brokers have policies that cover a substantial amount of items such as:-
Property owner’s liabilities in case tenants injure themselves
Loss of rent cover and alternative accommodation when the property is uninhabitable.
Theft by the tenant (often excluded by many insurers)
Trace and access for damage to the property when finding a cause of a leak
No reduction in cover for up to 30 days when vacant
Eviction of squatters
We would be able to provide you with fantastic personal service and you won’t just be another number in a computer. We can identify what you need in relation to any specialist cover.
One of the major benefits in purchasing through a broker is to ensure that we are able to help you when you have a claim on your policy. You will often find that claims can be quite arduous and difficult to deal with.
What to do next?
If you decide to purchase from a comparable website it may be an idea to check the policy wording. This is to ensure that your property and possessions are adequately covered and you are aware of what is not covered should you make a claim.
We will be able to provide you with added benefits and look at the small print.
Please do not hesitate to contact us in this regard.
There is more choice for Buy to Let mortgages now than there has been for the twelve previous years. Figures from moneyfacts.co.uk show that Buy to Let mortgage products have reached their highest level in twelve years. The total number of products has increased to over 397 within the last twelve months and products in this area amount to more than 2000.
This is despite the ongoing uncertainty of the property market. Providers are not yet shying away from offering landlords a greater choice of products.
Many property owners have found over the past couple of years with Brexit looming that it has been very difficult to sell their properties. They have therefore turned to try to let their property out. However, they have in some cases failed to change their mortgage over. They have also fallen into the trap of thinking that their standard home insurance will cover the property even though it’s rented out.
When you rent a property out having the correct insurance is absolutely critical for any landlord. A standard home insurance policy will not cover damage created by tenants. Letting out the property could even invalidate the home insurance altogether.
There are so many additional items included in a landlord insurance policy in comparison to home insurance. It can be quite scary for landlords so it is always best to look into having correct insurance.
If you accidentally become a landlord you need to look at the market to ensure that you are letting your property correctly.
Our tips for renting out property are below:-
1. Thoroughly research the rental market in your area to ensure that you are charging the right level of rent.
2. Marketing the property is always very important as you do not wish to leave it empty for a period of time known. This is known as a void period.
3. We recommend you use a letting agent or somebody who has professional qualifications to rent out your property. Did you know that the rental market has had over 127 different types of law within the last 5 years?
4. Always communicate with your tenant if there are any problems with the property.
5. You should always carry out proper checks at the property roughly every three months.
8. Make sure you draw up an inventory at the beginning of every tenancy so you know exactly what the state of the property is before you let it out.
If you have become an accidental landlord and you haven’t changed your mortgage you may wish to consider this. With the withdrawal of the relief on tax you may find that shopping around gives you a better mortgage rate than what you are currently paying. When changing the mortgage it is always best to contact your financial advisor or bank to look for the best rate possible.
You can also look to join a Landlord Association. We deal with The BLA who may be able to help you and give special discounts on various services that may be of help to you.
What is the difference between a Leasehold and a Freehold?
Freeholds are where a person or organization owns the property outright including the land it sits on.
Leasehold is where somebody buys the right to live in the property for a certain period usually 99 or 125 years. The leaseholder can make arrangements to extend their lease, see our articles on enfranchisement. But ownership of the property returns to the freeholder at the end of the term.
If you are a leaseholder and you own a flat within a block of flats, you don’t own the land that it sits on. The freeholder owns the land the property sits on. Leaseholders usually pay some form of ground rent to the freeholder.
What is the difference between a landlord, a residential management company and a residential managing agent?
The landlord/ freeholder owns the building. They have certain responsibilities to the leaseholders. Many buildings also have a residential management company. They are party to the lease and have a legal obligation to the leaseholders to provide certain services.
You will also find in some cases that a landlord and a residential management company will not carry out any services or duties. Instead, they will appoint a residential managing agent to do so on their behalf.
What does a residential managing agent do?
A residential managing agent is a person or company appointed by the landlord or residential management company to manage the building. They are not responsible for the management and repair of a building in the lease. They are often hired to carry out these duties in the building on behalf of the landlord or residential management company. Their role is to ensure that the landlord, residential management company, and leaseholders follow the terms of the lease.
What are service charges and what is reasonable to pay?
These are charges set by landlords to pay for providing services to maintain your building in a block of flats. The services could be; cleaning communal areas, maintaining gardens, lifts and cleaning windows.
The service charge often includes building insurance. However, this does not include the cost of insuring the inside of individual leaseholders flats or homes. Contents Insurance will cover this. The cost of service charges will vary depending on the type of building they are being charged on. The Association of Residential Managing Agents (ARMA) estimates that the average flat owner in London pays between £1800.00 to £2000.00 a year in service charges. Yet, this can be higher or lower depending on the age of the building and how leaseholders divide the service charges.
Service charges are generally variable. This means that they will change from time to time in line with actual costs. In practice, a landlord or management company will set an estimate for the year ahead and charge accordingly. They will then calculate the difference between this and the actual cost when the financial year ends. The difference will be either charged or repaid to the leaseholders. They may set up a reserve fund and transfer any excess to the reserve fund.
Your service charge contributions will be a proportion of the service charge cost. The lease usually states that the leaseholder will pay a reasonable or fair proportion. This could be anything. For example, if there are ten flats in the building you would normally pay a tenth but it depends on the contents of the lease.
All service charges must be in accordance with the terms of the Lease and where reasonable in accordance with the law. The key legal requirement is that these costs must be reasonably incurred and that the service or works must be of a reasonable standard. You can challenge any reasonableness of service charges via a property tribunal.
It is important that you look at the costs of all the amounts charged by the freeholder. If you feel that you are being charged excessively for the building insurance please don’t hesitate to contact us. We will be more than happy to give you a quote for your building. You will need to find out if any claims have occurred within the last three years and what your sum insured will be. We often find that buildings are over-insured. We now have a special tool that will work out the correct amount to insure the building for. Please don’t hesitate to contact us on this.
Empty properties have previously been exempt from council tax or subject to a discount. Yet, many councils over the past few years have decided to scrap the exemptions and create another form of revenue for themselves. Councils can actually charge extra council tax for empty properties.
You may pay less council tax for a property you own or rent that is not your main home. Councils can give furnished second homes or holiday homes a discount of up to 50% if the property is empty at any one time. However, it all depends on your individual council.
You usually have to pay council tax on an empty home but the council can decide to give a discount. The discount amount is down to them. For instance, Brighton and Hove City Council have now withdrawn the discount meaning that the full council tax is due.
Your council can also charge up to 50% extra council tax if the home has been empty for a period of two years or more.
When don’t you have to pay council tax?
If you’re selling an empty property on behalf of an owner who has died, you only start paying council tax six months after you get the probate.
Second homes don’t get a council tax bill for as long as they stay empty. This covers homes that are vacant for the following reasons:-
The occupier is in prison (unless they are in prison for not paying council fine or council tax)
The occupier has moved into a care home or hospital
Repossession of the home
The home is unhabitable and declared so by law, for example, if they are derelict
The home has been compulsorily purchased for demolition
You may get a discount if your home is undergoing major repair work or structural changes, for example, if your walls are being rebuilt. However, all of these exemptions are totally adjudicated by your local authority.
Discounts for full-time students
Households, where everyone is a full time student, don’t have to pay council tax. However, if they do get a bill they do have to let the local authority know that they are in full-time employment. To count as a full-time student their course must be at least a year long and involve at least 21 hours of study per week.
If the tenants are studying for a qualification and are under 20 the course must be at least three months long and involve at least 12 hours per week. Again each individual council is different.
What happens if the property is derelict?
Your property is only considered derelict if it is:-
Impossible to live in, for example, due to weather, riot, rot or vandalism
Would need major structural work to be wind and water tight again
You can challenge your council tax band if you think a derelict property should be removed from the council tax valuation list.
If the property is being refurbished what happens?
When major home improvements have been ongoing the local council will inform you when you have to start paying council tax. You will get a “completion notice” that tells you the dates you must start paying your council tax.
If you have any queries regarding your council tax we would suggest that you speak to your local authority. Each individual council has the right to change the council tax rules within their district. It is important that you understand the applicable rules. Council tax can be a substantial amount and affect your investment.
Unfortunately not all insurance policies cover damage caused by the cultivation of illegal drugs. Something that is easy to overlook. The cultivation of drugs has become a hot topic over the last few years. A number of landlords have lost out when claiming as they have found they do not have sufficient cover in place. The nature of the damage can range. Below are examples of the types of damage or alterations caused by cultivating illegal drugs:
Extensive water damage and condensation from irrigation systems and strong lighting
Damage from the use of plastic and polythene linings of walls
Sealing of doors and windows
Installation of ducting and extractor fans
Damage to electricity supplies following tampering by the tenant to accommodate high power lighting
The cost of returning the property to a habitable and rentable condition can be horrendous.
Some surprising facts around drugs in the UK:
Police seized over 300,000 cannabis plants in England and Wales in 2017
A third of all investigations into the theft of electricity since 2016 relate to the cultivation of illegal drugs
Cannabis-related claims for landlords almost doubled since 2015 for landlords
Cannabis cultivation remains prolific across the country. A cause for concern for landlords as their properties may be being used for illegal activities. The last thing that a landlord wants is to find out that tenants were using their property to grow drugs. Landlords could face a potential police investigation. More likely though is that there will be significant damage to the property that will need fixing before letting the property out again. It can cost thousands to repair the damage caused by cannabis growers. Buildings are often riddled with damp and require extensive repairs.
It is important therefore that landlords carry out inspections every three months. The landlord doesn’t have to carry these out themselves, a letting or managing agent can do it for them. Letting agents often carry out inspections every three months on their properties.
What to look out for
When carrying out an inspection you may see signs of the property being used for cultivation of cannabis. Things to look out for are:
The smell – cannabis has a distinctive smell that is likely to be apparent when entering the property
Noise levels – growers are likely to install extractor fans to ventilate and you may hear this from outside or inspecting the property
Cabling – there may be cabling outside the property to illegally extract energy from street lights or neighbouring properties
Blackouts – windows may be obscured to prevent people from seeing in
Barriers – there may be bars installed to doors and windows
Heat – watch out for high levels of heat and condensation
It is the landlords’ responsibility to ensure that he has inspected the property on a regular basis with evidence of the inspections. The evidence is vital as it will be necessary to prove the inspections in the case of a claim including the dates and times of the inspections.
It is important to check your policy documents to ensure that the policy does cover damage from the illegal cultivation of drugs. Not every policy will cover this scenario. Please don’t hesitate to contact us for a quote. Our quote documents will state whether this cover is included.
There are various types of insurance needed when starting a business from home. I have outlined these below to give an idea of potential risks that home startups are exposed to.
Commercial buildings insurance
The standard insurance for a home may not cover a commercial business when its created. Its advised to contact the existing insurance company to find out. One consideration is that there could be items to insure under contents insurance. The potential risks being flood, fire, storm and burglary. It is now not just a home but it is now the headquarters for the business. So it is extremely important that the building insurance covers all parts of the business.
The contents insurance covers the possessions kept in the home. These normally include furniture, electronics, jewellery and money. Mainly against loss, damage or theft. Some policies may cover accidental damage. However, they will not cover items owned by the business. There needs to be a specific policy in place. It is unlikely that this can be taken out separately from the buildings insurance. It would, therefore, be best to find building insurance that includes contents.
Employers liability insurance
Employers liability insurance is for if an employee needs to claim from their employer. This could be if they were to be injured, ill or their property is damaged as a result of working for the business. Employers liability insurance covers this along with any legal costs incurred.
If a home startup has employees or plans to hire employees in the future then the answer is yes, the cover is needed. It is therefore important to check that this is in place.
Public liability insurance
This covers if a customer or client suffers an injury or damage to their person or property as a result of visiting the business.
This insurance can cover legal costs incurred if a customer or a client makes a claim and receives compensation.
If the nature of the business involves members of the public visiting the home or travelling to visit them this should be an essential policy.
For example, a customer may trip on a rug and break their ankle. The customer would have strong grounds to make a claim. It is therefore important to ask and check.
Professional Indemnity insurance
This is often referred to as PI insurance. This covers losses made from making mistakes or providing inadequate services or advice whilst working with a client. The types of claims covered by this insurance include libel and defamation, negligence and misrepresentation. As well as omissions, errors, breach of confidence and loss of information or money.
This is a must-have product for any business with employees. It covers the liability of the employer against employees that want to claim for their losses. This will cover the claimants’ costs and expenses that the employer is legally liable to pay. As well as their own legal costs and legal expenses and compensation for attending court if necessary. For example, if an employee trips over a wire and is unable to work due to their injury the employer could be liable for all of the above. Due to the sensitive nature of the cover and the high potential costs involved taking this type of policy is highly advisable.
Buy to let landlords will face a time when they have to make a claim on their landlord insurance. Any insurer will have their criteria applicable for a successful claim to be made. It is important for landlords to understand the expectations and what their obligations are. An explanation of the usual barriers faced are below.
Failing to give the insurer proper information or reporting the claim
Insurance companies aren’t going to pay out unless they have full details of the claim. It may be that there are a certain number of days in which to inform the insurance company of a claim. The usual time frame is within 30 days of the damage taking place. It is important therefore that as soon as a landlord is aware of a potential loss they notify the insurance company and complete a claim form. It is always important in relation to claims to give as much information as is possible to the Insurance company. For instance, there needs to be the correct insurance in place. Specifically, landlord insurance not just a home insurance policy. In this instance, they may not pay out.
Not knowing what the policy covers
If the property has tenants in a home insurance policy would not be sufficient. When taking out a policy be sure to read the terms and conditions and understand the cover levels.
Items to look out for are; malicious damage by tenants, subsidence, flood and accidental damage. Each policy will differ depending on the insurance company. Don’t hesitate to ask if you wish to have details of the policy.
It is essential to not under insure the property. For example, the cost of rebuilding the property is £70,000.00 but the rebuild cost used for insurance is £35,000.00. If there was to be a claim for water damage and the cost of repairs came to £6,000.00 after the excess it would be underinsured by 50%. The claim payout would, therefore, reduce by half to £3,000.00 rather than the full £6,000.00.
It is very important to get this right. It is also critical to not remove index linking at renewal as often this will leave the building underinsured and exposed on a claim.
Fair Wear and Tear
A landlord insurance policy will not cover damages that relate to fair wear and tear. If any damage is due to wear and tear landlords will have to cover this as part of their “landlord business”. Even though they may not consider themselves a business in the traditional sense.
Damage to Unoccupied properties
Most landlord insurance policies will only provide cover to an unoccupied building for a limited number of days. This ranges from 14 to 90 days. It is important to be aware of what the policy allows for.
If it is going to be unoccupied for longer than this then the insurance company will need to be informed. They may well limit the cover to fire, lightning, explosion and aircraft damage, commonly known as FLEE cover.
Failing to check the tenants and/or carry out inspections
For a house in multiple occupation (HMO), it is now law to ensure that properties are regularly checked if a licence is in place. Insurers also expect landlords to carry out regular inspections. It is important to check the property roughly every three months. Especially considering that there are a substantial amount of problems with tenants and cannabis farms. If regular inspections are not carried out the insurer is within their rights to not pay out. Inspections are now critical.
There could be many problems experienced by landlords when making a claim on their insurance. Yet most of these will be down to sloppy practice. It is the landlords’ responsibility to ensure they are covered correctly. So it is important to check the insurance documents when they arrive. Don’t hesitate to contact us if you wish to discuss the insurance with us.
Don’t let winter conditions force you to make a claim!
We have listed some tips on winter property management to ensure that your property is looked after by your tenants. Therefore ensuring that there are no unnecessary claims resulting in increased premiums:-
1) Make sure that the pipes and roof have insulation and the loft storage tank, if there is any, has insulation foam ensuring that they don’t freeze.
2) Ask your tenants to make sure that they are heating and maintaining the property correctly, even when they are not there. Tenants often don’t necessarily turn the heating on sometimes because of the cost. They do though need to ensure that it is properly heated so there are no problems with the pipes freezing.
3) Make sure that your stopcock is working and that your tenants know where it is.
4) Do you have a condensing boiler? If so, make sure to lag the outlet pipe to ensure that it doesn’t freeze during the winter. If they are not the boiler can freeze and consequently need replacing.
5) Make sure that your tenants have bled the radiators to release any trapped air. If the radiator isn’t warming up due to trapped air then it won’t keep the house warm.
6) Make sure that there are no loose guttering or overhanging trees or broken tiles at the property as these could cause damage during a storm.
7) Make sure that you have adequate insurance in place including having enough contents cover
8) Check the central heating is working properly. It may be time to have a service of the boiler to make sure that it is as efficient as possible?
9) Drain any outside pipes. Burst pipes can be a nightmare and often the outside pipe or water systems are overlooked.
10) Does your property have a working chimney? If so, make sure that it is swept on a yearly basis.
11) Ask your tenants to make sure if there is any build-up of snow on the roof to keep an eye on it. Often this can melt quickly and consequently cause more damage
12) Make sure that the roof is in good repair. Get a roofer round to ensure that there are no leaks in the roof and there are no loose tiles to cause any damage.
13) Get them to check all the outside gates to make sure that they are secure and not likely to come off in a storm.
14) If your property is empty be sure to drain down the water and keep the heating on a low temperature.
15) Make sure to complete any small works such as draughty doors and flimsy pipes before the winter.
The above property management tips are to help you to ensure that your home is protected and you don’t make unnecessary claims you don’t need to.
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