14:55 PM, 20th March 2019, About 3 years ago
PROPERTY OWNERS who are considering rent to rent (sub-let) agreements need to make sure they have the right property insurance in place. Standard landlord insurance is worthless if you ever need to make a claim on a property that is sub-let.
Rent to rent is where the property owner lets the property to a primary tenant which is usually a management company, council, care business or individual who has no intention of occupying the property; the primary tenant then sub-lets the property to a tenant that will actually occupy the property.
Rent to rent or sub-letting, is increasingly popular. But there are some rules that need to be understood about rent to rent insurance:
1: The property owner is the only person who can buy the rent to rent insurance.
2: Management companies, care business, councils and individuals managing the property may define themselves as the “landlord’ but they are not the property owners and have no insurable interest. As above, to reiterate, only the property owner can buy the insurance.
3: Standard landlord insurance does not cover rent to rent or sub-let tenancies. The property owner needs to ensure sub-let is noted on the statement of fact and accepted by the insurer. If it is not explicitly noted and accepted, then it is probably not covered.
4: If you know the tenant residing in the property is going to be DSS or working, you need to tell your insurer. Working tenants will still cost less to insure than DSS recipients.
5: The cost of rent to rent insurance can be up to double that of standard landlord insurance. Take that cost into account when you are considering rent to rent arrangements.
6: You cannot buy rent guarantee insurance on a rent to rent property. The tenant occupying the property does not have a direct contract with the property owner so there is no insurance available.
At Property 118 we get a lot of enquiries from ‘landlords’ who want to sub-let property. Most of them turn out to be the managing agent and not the property owner, so we cannot help them with insurance, they cannot buy it.
So, property owners beware, if you have permitted a rent to rent tenancy without having the right insurance in place, ignorance will not be a defence if a claim occurs. This really could be financially ruinous in a major claim situation.
Property 118 can assist with any type of rent to rent insurance, just call and speak with Jason McClean on 01832-735388 or fill in the quick form here and he will contact you.
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