If you own a block of flats, chances are that you are now looking for tenants to fill the beautiful space you now have. Whether you own just one building, or multiple buildings in other cities, block of flats insurance is a must. But did you know that the tenants you have in your building or buildings could influence your insurance policy?
There are a few categories that tenants usually fall into. Each category can affect your insurance policy differently and it is good to be aware of them before filling your building.
Working professionals can be some of the easiest people to rent to and are the lowest risk tenant in terms of landlord insurance. This is due to the face that working professionals are employed and are able to pay their own rent, without any assistance from others. They are easy to manage and are seen to be the “best” type to rent to.
However because other landlords like renting to working professionals, competition can be fierce when trying to secure them as your tenant over someone else’s. Also, it is important that a working professional tenant alerts you if they become unemployed, as this can have an effect on your insurance policy.
If own a property in a town with a university, the chances are very high that you will have students looking to rent. Insurance providers can deem students to be “high risk”, as they might not have much income or experience with renting, and there could be a higher risk of damage to the property.
While students can be high risk tenants, they can be unfussy, which could be a lucrative option for a landlord, especially if there are a lot of students looking to rent in your area.
People on Benefits
Tenants on benefits, commonly referred to as DSS tenants despite the Department of Social Security no longer being in existence, are those tenants that receive Housing Benefit, officially known as Local Housing Allowance (LHA).
Tenants on benefits are obviously high-risk candidates for renting, as their precarious job positions put them at a higher risk of defaulting on their rent payments. There could also be a shortfall between the amount they received in benefits and the amount owed for rent at times, their benefits may change, or they may have unexpected costs come up that make them unable to afford rent. All of these aspects can make them unpopular tenants to rent to.
Insurance policies are generally unwilling to cover tenants on benefits, because they are such a high risk, and are seen as much riskier than working professional tenants. Some insurers do cover DSS tenants, however, so please make sure to let your broker know about your requirements when looking for an insurance policy.
If you do choose to rent to people on benefits, it is also important to familiarise yourself with the procedures specifics to renting to people on benefits.
Family and Friends
If you own a building (or buildings) and have family and friends who are looking to rent a new flat, we’re pretty sure that you will be one of their first phone calls. If you do rent to family or friends, which is a very common situation, a few things will need to be in place for your insurance policy.
Firstly, even though renting to family and friends is usually more informal than the standard landlord/tenant agreement, it is still important to have a written and signed tenancy agreement in place.
Secondly, any family or friends that you rent to will not be able to claim housing benefits while renting from you, so it is important to make sure that they are financially stable and that you receive their rent payments on time so that you do not end up in a sticky situation.
Asylum seekers can be particularly risky to rent to, as their situations are generally much more complex than the average renter. Asylum seekers are categorised as people who have moved to a country and applied for asylum but are still waiting for the decision of whether they are officially a refugee or not. Getting refugee status means that they are then protected by the government.
However, due to these issues, many insurance companies do not provide landlord insurance for asylum seekers. They are viewed as high risk, due to the fact that their asylum application could be denied and sent back to their home country.
If you rent to asylum seekers, it is important to speak with your insurance provider and see what they do or do not cover.
At the end of the day, some tenants could be the best renter you’ve ever had, and some could very much not be, regardless of their employment status. We cannot stress enough the importance of speaking with your insurance provider to make sure that you are properly covered for the tenants in your building or buildings.