What specialist insurance do landlords who invest in flats need?

When you invest in a flat, it’s a very different type of ownership than with a freehold property because the flat is only a part of a building. As such, the external structure and the land on which it sits are shared.

So, instead of owning the whole property outright, you will have either:

1. A lease, where you rent the property for a period of time from a third-party freeholder, or
2. A share of the freehold or ‘commonhold’, which is divided among all the owners of flats in the building.

In both cases, a management company (which might be formed by the flat owners) is likely to be responsible for maintaining the main fabric of the building, grounds, and communal areas. The company will have a building insurance policy.

The owners of each flat contribute their share of the maintenance and insurance through a service charge, which is commonly paid monthly or quarterly.

However, it’s important to check exactly what the buildings insurance covers, as it may not extend to things like:

• Damage to the fixtures and fittings in your flat.
• Third-party liability, where an incident in your property causes damage to your neighbours’, e.g. an overflowing bath in your flat causes damage to the ceiling of the flat below.

And you need to check things like where is the property’s stop cock – and does the flat actually have one? If it doesn’t leaks could cause a lot more damage than necessary.

The buildings insurance will also not cover either your contents or any of the risks specifically associated with being a non-resident landlord and having tenants living in your property.

So, in addition to paying your share of the buildings insurance arranged by the management company or freeholder, you should also consider taking out your own landlord insurance policy to make sure you and your investment are properly protected. This may also be required by your mortgage lender if you have a buy-to-let mortgage.

What should a comprehensive landlord insurance policy include?

• Cover against damage to the property from theft, fire and flood
• Damage to contents, including any furnishings
• Damage caused by tenants – both accidental and malicious
• Property owner’s liability, in case a tenant, visitor or contractor injures themselves in your property and makes a claim for damages
• Loss of rent or alternative accommodation for tenants following an insured event
• Contingency cover for tenants’ non-disclosure
• Legal expenses, e.g. to cover your costs in case you need to evict a tenant via the court

Our team of landlord insurance specialists are here to help you create a tailored policy for your leasehold property. You can or speak to an expert directly by calling 01903 890044 or emailing info@bodeinsurancesolutions.co.uk and requesting a callback, or you can get a quote online 24/7.

If you are a current landlord with any of the agencies in LRG, an insurance quote is ready and waiting for you in your online landlord account. No fuss or forms to fill out!

If you do invest in flats, there’s also good news about the recent and upcoming changes under the Leasehold and Freehold Reform Act. As of March this year, leaseholders have been given the right to take control of the management of their building. That means if there is an external freeholder who is not maintaining the property well enough, it will now be easier to take action and potentially improve the standard of accommodation and rental experience for your tenants.

As the other various measures in the Act come into force over the coming months and years, there will be many more positive changes to help leaseholders be treated more fairly. See our recent article for more details.

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