Unoccupied property insurance suddenly becomes relevant when talking about the bane of any landlord’s life – a void. Voids occur when it is difficult to find your first tenants if you are new to the buy to let business, but may also occur during the interval between your current tenants coming to the end of their tenancy and you identifying suitable replacements.
Tenancy voids may also occur is you are having work done on your buy to let property, by way of an extension, redecoration or major refurbishment.
Voids represent a challenge because of the disruption to the rental income stream on which your business relies – but sometimes there is no option but to leave the let property temporarily vacant and unoccupied.
Risks to unoccupied property
An empty property is more than usually vulnerable to loss or damage – for two principal reasons:
- if there is no one living there, there is no one to raise the alarm or call for help if the need for maintenance or repairs arises – something as simple as a dripping tap might develop into a full-blown flood; and
- the British Security Industry Association (BSIA) warns that empty property is at much greater risk from fire, deterioration and criminal activity, such as arson, vandalism, or invasion by squatters – Action Fraud also reported on the 11th of January 2017 that fraudsters are also targeting empty properties as a means of obtaining false documents and identity.
An insurer’s response
Recognising these heightened risks, practically any insurer takes the decision to restrict your landlord insurance cover or even remove it altogether, once the premises have been unoccupied by any tenants for between 30 and 60 consecutive days (the precise period varying from one insurer to another).
If you are a landlord, this clearly leaves your let property still more vulnerable, since you no longer have recourse to sufficient insurance to cover any losses or damage arising from the risks to which it is exposed.
Furthermore, if you have invested in buy to let property with the help of a mortgage, you might find yourself in breach of the lender’s important condition that you keep the building adequately insured at all times – and that means when it is unoccupied, too.
That is the time when you need a quite separate, standalone insurance policy to restore the protection your empty let property requires – and its name is unoccupied property insurance.
Our general guide to unoccupied property insurance may help your understanding of how it works, and its relevant to owners of buy to let property – facing the challenge of periodic voids – is especially important.
Unlike many other types of general insurance, purpose-designed unoccupied property insurance may be bought for as long as you need it – just three or six months, let’s say, rather than the whole 12 months.
It may also be sufficiently flexible to allow you to extend the protection given by this type of empty property insurance – if a void goes go longer than you originally anticipated, for example.
Once you manage to find tenants to fill the void and your let property is occupied once again, the landlord insurance on which you normally rely may be allowed to resume its normal function in keeping your property and your buy to let business safe.