Landlord insurance

JuzaMum

I am in the process of buying a leasehold flat to let to my son and his partner. I will be doing this with tenancy agreement and meeting all the landlord obligations (I have been reading the guides on here). Buildings insurance is included in the service charges and my son will be responsible for his contents insurance. I rang my insurance provider and they said the kitchen and fabric of the flat come under buildings insurance. I want to make sure the kitchen and fixtures are covered in case of fire or other damage. 
I am not worried about the rent payments being covered as if my son was renting elsewhere I would guarantor for him.
How do other landlords deal with this? Are fixtures and fittings usually covered by the freeholder insurance?  

user1977

Yes, fixtures and fittings are normally covered by buildings insurance, whether or not it's a let property or there's a common policy arranged by a freeholder or otherwise.

eddddy

Your insurance question is part of a bigger question. 

You need to check the lease to see what it says about sub-letting. Sometimes it's completely prohibited, and sometimes you require the freeholder's consent. (It's also possible that you can sub-let without freeholder's consent, but that would be unusual.)

• If the lease completely prohibits sub-letting, the freeholder's building insurance probably doesn't cover sub-letting either. (So that's very risky. If your tenant does something daft and burns the building down - the insurers might not pay-out, and you might be sued for the rebuilding cost.)

• If the lease allows sub-letting (with or without consent), the freeholder's building insurance policy should also cover sub-letting

Here are some other considerations...

• Kitchens, bathrooms and other fixtures should be covered by the freeholder's buildings insurance. But the freeholder will probably base the rebuild cost on the quality of kitchen, bathroom and other fixtures that were provided when the lease was first granted.

• So if you (or a previous owner) have replaced a basic kitchen and bathroom with luxury ones (or added expensive fixtures), the rebuild cost may not take account of that.

• There's an argument that if you got the freeholder's consent for the improvements, they should be aware and increase the rebuild cost accordingly. (But if no consent was obtained, then obviously the freeholder won't have increased the rebuild cost.)

• There is also 'Tenant's Improvement Insurance Cover' for leaseholders which is sometimes available standalone, or as part of contents insurance. That should cover your improved fixtures and fittings.

• Freeholder's buildings insurance often has a high excess - sometimes as much as £500. Also, it doesn't generally cover accidental damage. (So if a toaster fire does less than £500 damage to the kitchen or somebody accidentally drops a hammer on a shower tray - it's unlikely that you'll be able to make a claim.)

You'll probably get a copy of the freeholder's insurance policy during the conveyancing process - so you can check what it says.

theartfullodger

Also check any mortgage or insurance, they usually prohibit renting to a relative.

General advice on many landlord/tenant sites is to never rent to any friend or family: Usually quickest way to ruin a redlationship.

And it complicates matters should they ever need to claim a housing benefit.

JuzaMum

Thank you eddddy for your detailed response. Letting is allowed and the flat is currently tenanted as are others in the block.
Artful - There is no mortgage so no worries there. I know letting to family is not recommended however if he hit hard times I would support him and we will have a proper tenancy agreement so if he had a complete personality change I could evict.
I will have to look at the lease thoroughly. I hope my solicitor will point out any glaring issues.
I believe that tenants can get insurance which includes damage to landlord's property?

theartfullodger

theartfullodger said:

Also check any ********* or insurance, they usually prohibit renting to a relative.

Have you checked the insurance policy is OK with renting to relatives????

Highly unlikely tenant can insure all your risks.  

JuzaMum

theartfullodger said:

theartfullodger said:

Also check any ********* or insurance, they usually prohibit renting to a relative.

Have you checked the insurance policy is OK with renting to relatives????

Highly unlikely tenant can insure all your risks.  

No I will have to do that