How to insure with no company let tenancy agreement?

by Readers Question

10:00 AM, 3rd December 2020
About 2 months ago

How to insure with no company let tenancy agreement?

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How to insure with no company let tenancy agreement?

I am reaching out for some advice from the wise members of this forum. A property I own is a residential property let to a company. The tenancy agreement is up for renewal imminently, but the tenant won’t sign another one until AFTER the imminent renewal date.

It’s probably not necessary here to have to explain here why that is an unacceptable position. So the tenant will receive notice to vacate the property.

The employee residing at the property and the company tenant have a history of not adhering to the previous agreements (that could be thread in itself), so I expect them not to vacate when notice is given.

Question 1 > if they don’t vacate, how would I arrange insurance on the property with no tenancy agreement?

Question 2 > if they don’t vacate, is it possible to jack the rent up on a non-existent tenancy agreement to pressure them to do so?

Many thanks

Paul


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Comments

Jason McClean

10:37 AM, 3rd December 2020
About 2 months ago

Hi Paul

Landlord insurance will ask that an AST is in place. If it is not, then you can advise the insurer the nature of the arrangement and see if they will quote you for the property.

Normally this is for sublet, Air BNB or rolling tenancies which are all acceptable. Having a tenant without any sort of agreement is likely not to be attractive to insurers though. If you are offered cover on this basis, it is likely to be expensive as well as risk is greatly increased due to tenancy type.

I cannot think of an insurer that would offer terms without some sort of agreement (or unoccupancy) in place I'm afraid.

TrevL

11:32 AM, 3rd December 2020
About 2 months ago

Please educate me if I'm wrong, but by law don't AST's simply revert to a periodic tenancy, therefore a renewal of the agreement is simply a negotiation issue, it should not affect any insurance since an AST is still in place (it's just the fixed term that has expired).

Graham Bowcock

11:38 AM, 3rd December 2020
About 2 months ago

Reply to the comment left by TrevL at 03/12/2020 - 11:32
Hi TrevL

The OP said it's a company tenancy agreement, not an AST, so the rules are different.

Personally, I don't see why he would have a problem with insurance. There's insurance for everything and every scenario, the key is to tell the insurers what's going on so that they don't reject a claim. A company tenancy is not unique so there will be cover available.

Jason McClean

11:43 AM, 3rd December 2020
About 2 months ago

Hi Graham

Company tenancies still require an AST in place or explanation of agreement that is in place.

A rolling agreement is fine, but my understanding here is there is no agreement in place at all. Without sight of tenant type, I don't think insurers will be interested, it's about as high a risk as possible in their eyes.

Smartermind

11:52 AM, 3rd December 2020
About 2 months ago

If the contract is with a company, then give the company notice and if they don't give back vacant possession of the property, take them to court. As the company is not an an individual, the protections afforded to people won't apply as it is a business. The tenant is the company's problem and you should be able to claim rent and compensation of your losses from the company. Don't treat the company like a human - it's a business. Insure the property and charge any reasonable increase in premiums to the company.

Considering the history of the company why would you want to renew their contract, unless it is to avoid a void.

Graham Bowcock

12:19 PM, 3rd December 2020
About 2 months ago

Reply to the comment left by Jason McClean at 03/12/2020 - 11:43
The company will most likely grant an AST, although it could be a service occupancy agreement. That is a matter for the head tenant, who must comply with the terms of the head tenancy.

Whether or not insurers are bothered in a tenancy (of any sort) holds over is something that the OP needs to resolve with his insurers. As long as there's still a tenant in place (i.e. it's not vacant) I don't see why they would have a problem. Personally I've never had an issue, but I always tell my broker what's going on.

Simon M

12:30 PM, 3rd December 2020
About 2 months ago

Given the previous difficulties you've indicated the key question is whether you want to retain them. Even if you want to keep the company, the directors often only act when they see it's an overwhelming interest. Check your contract, but I'd make it really clear all the extra costs they'll incur if they don't follow the contract.

Smartermind

12:39 PM, 3rd December 2020
About 2 months ago

Reply to the comment left by Graham Bowcock at 03/12/2020 - 12:19
"Personally I've never had an issue, but I always tell my broker what's going on."

That sounds great, but you won't have any issues, until you bung in a claim... that is when the pigeons come home to roost, as the underwriters start to dig out their "obscure get out and must reveal all 'material facts' clauses", no matter what you tell the broker.

Puzzler

15:33 PM, 3rd December 2020
About 2 months ago

What is their reason for delay in signing? Do you mean they will sign afterwards? If so how long afterwards?

Jason McClean

15:39 PM, 3rd December 2020
About 2 months ago

You can tell your insurer the situation. Then it is up to you to read the documents and ensure they are correct. Any claim will be upheld or repudiated on the paperwork.
So make sure your statement of fact notes there is no AST or agreement in place. As I said, I don't know of an insurer that will insurer those terms, you need to sort an agreement ASAP.

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