Insurer warns landlords of scale of losses from tenant damage

An industry study suggests that landlords without insurance risk are losing as much as 45 per cent of their annual rental income through damage caused by tenants. 

Figures from Hamilton Fraser show that 85 per cent of buy to let landlords have opted for landlord insurance. However, 15 per cent have opted not to insure their portfolios, leaving them susceptible to losses should their property be damaged. 

The average annual cost of landlord insurance in England is £170 per property, which Hamilton Fraser says it some 1.5 per cent of the average annual rental income of £11,228 per property.

While uninsured landlords do make a marginal saving by not taking out insurance, they risk spending substantially more than 1.5 per cent of their rental income if tenants cause damage to their property. 

The company claims a replacement kitchen would cost almost 50 per cent of a year’s rental income, as would a new bathroom. Even redecorating a one-bedroom flat could cost 10 per cent of an annual rental income.

Eddie Hooker, chief executive of the Hamilton Fraser Group, says: “Any rental property is likely to succumb to some level of damage during its lifetime and although this may often be accidental, it can also be the result of a malicious act by a disgruntled tenant, in which case it can be far more costly. 

“We’ve also seen an increase in adverse weather claims in recent years which in many cases cause a great deal of damage. 

“While the vast majority of landlords are insured against such damages, there is a small proportion who run the risk of remaining uninsured or, worse still, under-insured, which is quite astonishing given the relatively low cost of obtaining insurance in relation to the potential bill for damages caused. 

“Even minor damage to their properties is going to cost more than it does to take out an insurance policy and should a major disaster happen, rental incomes can be severely impacted.  A loss that many landlords would struggle to stomach given the challenges with profitability of a buy to let investment following recent and future government policies.” 

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