0:01 AM, 12th December 2012, About 10 years ago 6
The number of homeowners taking in lodgers (“live-in landlords”) has risen for the seventh consecutive year and rose by more than a quarter (25.4%) between 2011 and 2012, having risen by 18.4% between 2010 and 2011.
Worryingly, 37% of homeowners who take in lodgers may not be properly insured. A third (33%) of live-in landlords don’t realise that it could invalidate their home insurance, according to a new survey conducted by SpareRoom and Property118.com.
A further 4% say they have no insurance cover at all. And almost one in three (29%) live-in-landlords say their current home insurers don’t offer add-ons to their existing policies which would cover them for having lodgers.
In spite of encouragement by the Government in the form of the Rent A Room scheme –where homeowners taking in lodgers can benefit from tax-free annual earnings of £4,250 per year – and lodger figures being at a historic high, a whopping 60% of live-in-landlords say that finding appropriate lodger insurance is difficult.
More than one in four (27%) live-in landlords have been incorrectly offered landlord insurance – designed for buy-to-let landlords who rent out the whole property to tenants – instead. Meanwhile, 40% have struggled to extend their personal liability cover to include accidents to lodgers or to find cover that includes malicious damage to their possessions or property.
Fortunately, it’s not all doom and gloom. Where their existing insurer was able to cover having a lodger, 57% of landlords reported that this was provided as standard. However, for the rest, obtaining lodger insurance proved a costly business, with 30% reporting a small extra charge and 14% a significant extra charge.
Matt Hutchinson, director of SpareRoom.co.uk, comments: “With the economy still in a fragile state, it’s not surprising that earning some extra cash by renting out rooms in our homes is still proving extremely popular. It is easy money, but there are clearly issues where insurance is concerned. It seems insurers haven’t caught up with the trend for lodging as opposed to more formal tenancy contracts, with many offering wholly inadequate policies that make no provisions for the needs of the modern live-in landlord. It is rare for an insurer to provide even the most basic cover for legal liability for accidents to lodgers, loss of rental income, or damage to property. As well as being a headache to obtain, lodger insurance can often be very restrictive – most insurance companies who offer such policies often prohibit those in receipt of housing benefit or students. Live-in landlords should also be aware that in the case of theft, their case will only be considered if there is evidence of breaking and entering. The most important thing for homeowners to be aware of is that if they take in a lodger they may be in breach of their existing home insurance policy. If you are planning to take in a lodger, never underestimate the importance of doing your homework and finding an insurance policy which gives you the proper cover that you need.”
SpareRoom.co.uk offers three top tips for live-in-landlords looking to protect themselves and their property when taking in a lodger:
1) Avoid anything called “Landlord Insurance” – this is generally aimed at non-resident landlords and won’t suit your requirements as a live-in-landlord. You need specialist “lodger insurance” which is usually part of a home contents style insurance offering.
2) Make sure it includes liability cover – should a tenant injure themselves as a result of something dangerous in the property they can claim against you for damages.
3) A good policy will also cover you for malicious damage caused by your lodger or any guests they invite round.
Thinking of taking in a lodger? Look no further, SpareRoom.co.uk have created a 5 page guide for you to download, print out and keep and it’s totally free. Just fill in your details below and we will link you straight through to the download. Your contact details will also be sent over to SpareRoom.co.uk so that they can offer you further help and even some free advertising.
The guide includes:
To download your own free copy of the guide simply fill in your details below.
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