A recent news story in the BBC caught our attention. It related to the new regulations in Wales that require landlords to register.
Now you may not have a property in Wales but the story was a timely reminder for all landlords and potential landlords that things are changing. The regulatory environment is becoming better defined and certainly more enthusiastically policed by the local authorities.
Whatever might have been the case 10 or 15 years ago, today areas which traditionally were largely unregulated are now controlled and those regulations and laws where an official ‘blind eye’ may have been the norm are now enforced.
This is recognised as sometimes being a nightmare for landlords. It’s made complicated not only by the fact that the ‘rules’ are becoming increasingly numerous and detailed but also by the fact they can vary by individual country in the UK and in England, even by local area.
In this specific case, there has apparently been confusion and allegations that the changes in regulations haven’t been well communicated. Whatever the truth or otherwise of that might be, the story does illustrate the need to stay abreast of the legal and administrative framework surrounding your business.
An insurance reminder
Similar things can also happen to the unwary or new landlord in the area of landlord insurance too.
Although we at GSI Insurance have blogged on this subject previously, please excuse us for issuing a brief reminder because this is critically important for any landlord.
If you are a landlord or have purchased a buy-to-let property, please remember that:
- your basic property insurance and any contents cover, must be written under a landlord insurance policy. An owner-occupier policy will typically not cover you;
- that applies if you are converting your own property from owner-occupied to let – be that in totality or part;
- if your property is left unoccupied for more than a specified number of consecutive days, your standard landlord cover may become invalid. You may require unoccupied property insurance (in fact, this condition may also apply even for owner-occupied property and policies). You can read mrfoe about this type of insurance with our in depth Guide to Unoccupied Property here.
There are fundamental differences between owner-occupier and landlord insurance protection and you need a policy that’s appropriate for your situation. There are three reasons why you should take this seriously:
- in parts of the country where landlords are regulated, a condition of your registration may be that you are able to demonstrate appropriate insurance cover;
- if you have a buy-to-let mortgage, it’s a fair bet that your loan agreement will require you to keep full property cover of the correct type in place. If you don’t or try and use the wrong type of policy, you may be in breach of contract in terms of your relationship with your mortgage provider;
- in the event of a serious problem resulting in a claim, it may be rejected if you’re found to have an owner-occupier policy in place in a situation where you were letting (all or part of) the property out. It is a fact that insurance providers will usually be able to see the reality and not only might your claim be rejected but technically you may be guilty of making a fraudulent claim declaration – something that may lead to prosecution.
We fully understand the volumes of administration involved in business today. However, this is one area that you won’t want to fall foul of. So do please call us for a discussion if you’re in any doubt about the suitability or otherwise of a given insurance policy for your landlord business.