Do I need landlords insurance if letting to family?

Shonatry

Hi,

I am moving in with my partner and letting my house to my daughter and boyfriend. It's an informal arrangement with no tenancy agreement. The question is do I need to get Landlords Insurance??

I do not need cover in case she doesn't pay the rent and am not worried about her making a claim against me if she falls down the stairs. What I am worried about is that I won't be covered under my existing buildings and contents policy, should anything happen and I need to make a claim.

Can anyone shed any light on this matter as I am trying to maximise my disposable income and obviously landlords insurance is more expensive.

Thanks

Benji

Landlord insurance would take the place of your existing buildings insurance.

You have a choice - be insured or not. Your current buildings cover will not be valid because it is residential cover.

Just as an aside - even though it is your daughter she will still have an assured shorthold tenancy. There is no requirement for this to be in writing, but it is sensible to do so in case of future disputes - for instance it can speed up the legal eviction process should things ever come to that.

You don't want to think daughter would 'do' you but there is plenty of evidence on forums like this that family are the absolute worst tenants because they demand so much more and yet feel it is acceptable to take liberties with Dad that they would never take with a landlord.

Don't forget that the income needs reporting to HMRC and that even though it is your daughter you need to comply with all your landlord obligations - do you have an EPC? Do you have a gas safety certificate? Do you have permission to let from your lender.

If your daughter is claiming benefits (obviously I have no idea), she will only be able to claim housing benefit if she can prove to the authorities that her tenancy is a genuine commercially viable one - ie if they think it is just a wa for dad to get the housing benefit, they won't pay. Google 'contrived tenancy'.

tbs624

Welcome as a newbie poster

You need to get your Lender's Consent to Let if you have a residential mortgage product in place or you will be in breach of your mortgage Ts and Cs. You do not have a choice about being insured correctly if you have a mortgage - the Lender will require that appropriate buildings insurance is in force.

Letting to family is no different to letting to anyone else - you become a LL and you have LL obligations. You also need to protect yourself & your property so have it all in writing from the start.

Have you researched what is involved in becoming a LL? Search G_M's posts on here for a guide for new LLs ( he may be good enoough to post the link if he arrives in the thread )

gordonbennet

The easiest way to find out for sure is to speak to your current insurance company. They just might say that a daughter is covered. But check as ultimately it is they who will pay or refuse any claim. And do get it in writing!

Take heed of the other advice given here re things such as landlords gas safety certificate. If (God forbid) there was a nasty accident with the gas, you could be held criminally liable if you hadn't had the necessary annual certification.

theartfullodger

You will have a tenancy agreement - just it's a verbal one.

You also need a gas safety certificate

HAMISH_MCTAVISH

Some insurance companies will cover immediate family to live in the house if you move out without requiring a change to landlords insurance. Speak to your insurer and find out.

tbs624

HAMISH_MCTAVISH wrote: »

Some insurance companies will cover immediate family to live in the house if you move out without requiring a change to landlords insurance.

Unlikely when there is a definite LL & T relationship involved

letting my house to my daughter and boyfriend.

dacouch

tbs624 wrote: »

Unlikely when there is a definite LL & T relationship involved[/FONT][/B]

There are a fair few companies that will allow it, Aviva often will if you are on their Homeplus Policy, if your on a different contract they may well need you to transfer.

As a previous poster mentioned, it's wise to speak to your Insurer to find out if they will, if they agree ask for it in writing to avoid any problems in the future

Werdnal

Without wishing to make judgements on your family arrangements, I would also suggest some form of formal tenancy agreement as you say its your "daughter and boyfriend". If that relationship turns sour, and they separate, you could end up with the "boyfriend" staying in the property, without any formal agreement to rely on to get him evicted. The "boyfriend" would not be your family, and may just become a thorn in your side, if he refused to pay rent or move out. What if he then moves a new Girlfriend or his best mates in - it happens - I have seen nightmare scenarios like this related here before!

Even with family arrangments, however OTT it sounds, I would get something in writing along the lines of a formal agreement, just to cover yourself if the worst happens.

Buildings insurance at a bare minimum would be advisable, plus as others say, declare you rental income to HMRC and get a gas safety cert if applicable. If you are leaving electrical items in the property, I would also recommend an annual PAT test.

Letting to friends is often a recipe for disaster and I think letting to family even more so. Get something in writing and do it properly for all concerned!

serious_saver

Family have recently done this and the gist is

You can let a family member live there and not have all the trappings that come with being a landlord provided you don't change.

BUT

If there is any form of payment then you need the cover

G_M

serious_saver wrote: »

Family have recently done this and the gist is

You can let a family member live there and not have all the trappings that come with being a landlord provided you don't change.

BUT

If there is any form of payment then you need the cover

I assume this means 'charge'.

and letting my house to my daughter and boyfriend. It's an informal arrangement with no tenancy agreement.

The key word here is 'letting'. I assume from this that rent / payment will be involved. Thus there IS a tenancy agreement, however informal.

So you are a landlord, with legal duties/responsibilities. The only way to avoid this is to take NO rent, and keep all the bills in your name. Even taking a few adhoc payments would constitute 'rent'.

Read this post to see what you are getting into.