HMO's - a warning to Landlords.

SuzieSue

G_M wrote: »

I don't really get it: Whenever you buy insurance, whether for your home, a BTL, your car, travel, whatever, you have to check that the insurance covers you properly.

You might as well advise people going to the USA on holiday not to take out European travel insurance (just because it's cheaper). Or a guy with a Ferarri not to take out car insurance for a Skoda.

Since you say you want to "offer the highest quality accommodation and service, no stone left unturned", get yourself some HMO insurance.....

I think that the OP intends to get HMO insurance - his problem is that he doesn't want to get an HMO mortgage and is concerned that the insurance company will tell his mortgage lender.

There is also a possibility that his HMO insurance will not be valid if he doesn't have an HMO mortgage just like someone who lets out their property without consent from their mortgage lender.

Lord_Baltimore

Conrad wrote: »

On the other hand if we instead buy 2 further ordinary buy to lets, the income is something like 40% less but it will be far less hassle. This is the trade off we are wrestling with.

This less lucrative option is the one that will let you sleep at night. Your business will continue to provide the income you need if a little more modestly.

The risk seems disproportionate to the gain. And sleep is important .

benjus

If the terms on HMO mortgages are different to standard BTL mortgage, it's for a reason - presumably a higher risk to the lender.

You say you want to do things properly, but also that you want to use an unsuitable mortgage and lie to the lender. Doesn't really add up to me.

Red-Squirrel_2

Conrad wrote: »

Imagine if a tenant had life long injury and the insurance was void, the LL could face a bill of millions.

Gosh yes, that would be really awful for the...landlord.

agrinnall

Conrad wrote: »

It's very much a warning to LL's that have non HMO insurance on an HMO property. They could find themselves liable for vast sums when the insurance fails to pay out (something serious like a fire).


I spoke with an old mate of mine who is an underwriter with Direct Line Landlord insurance about this. He says for serious claims they will investigate the property and easily find out if it was let as rooms, in which case the claim would be forfeited.


Imagine if a tenant had life long injury and the insurance was void, the LL could face a bill of millions.

G_M has provided the perfect answer to your point.

G_M wrote: »

I don't really get it: Whenever you buy insurance, whether for your home, a BTL, your car, travel, whatever, you have to check that the insurance covers you properly.

You might as well advise people going to the USA on holiday not to take out European travel insurance (just because it's cheaper). Or a guy with a Ferarri not to take out car insurance for a Skoda.

Since you say you want to "offer the highest quality accommodation and service, no stone left unturned", get yourself some HMO insurance.....

jjlandlord

Conrad wrote: »

Typically they used an ordinary buy to let or even a residential mortgage to purchase the property and then arrange an ordinary buy to let or resi insurance policy. The problem here is those policies WILL NOT pay out if the insurer finds out the property was let as a licensed or unlicensed HMO.

You're saying that they are paying for an insurance knowing that it won't pay out.

They are perhaps not the best people to take advice from...

theartfullodger

It's not a warning: It is a reminder that if you cheat & fiddle you can lose.

So you think it's OK for a landlord not to stick to the terms of his contract (eg insurance or mortgage..)? So is it OK for his tenants not to stick to the terms of their contract (eg not pay the rent??)

lemontart

pay up get the correct cover/mort etc or do something else. The consequences for yourself, the neighbours etc are not worth cutting corners for.