Letting out your home is potentially a very considerable risk.
It’s a huge investment, your home is most likely the most valued thing you will ever own and yet when you rent out your home you basically agree to put it in the care of complete strangers for an uncertain period.
Landlords can go some way towards reassuring themselves by taking out the right buy to let insurance. This sort of protection, often referred to as landlords insurance, covers landlords for all the added risks that come with renting out a house. Besides the usual buildings cover that comes with standard home insurance, a good buy to let insurance policy will cover things like loss of rent, legal expenses and alternative accommodation so that, should the worst happen, you won’t face massive bills or a massive shortfall in your income.
Buy to let insurance is certainly the first thing any new landlord should contemplate, but it’s really only there if the worst should happen. So what can you do to make sure that you don’t need to make an insurance claim? First of all, you can ask for references and do background checks on your proposed new tenants but that will only tell you so much. There is ultimately no way of knowing what sort of tenants you are getting, what type of lifestyle they have and what kind of friends they have. There is no way of knowing what state your house will be in when you return to it in a years time.
Your tenancy contract is typically the place where you state the ground rules for your new tenants. A good contract should cover all the likely nasty eventualities.
1. Pets. It’s up to you as a landlord. Many pet owners are reasonable, responsible people but some are not and there could be an extra risk of damage from that lively puppy or horde of kittens. Also, if you have a dog in your house for a year, your house will smell of dog. That’s not a problem for many people but it will put some off when you come to rent the house out again.
2. No smoking. We’d say this is non-negotiable, but again it’s your choice. The smell will hang around for years after your smoking tenants leave and there is an additional risk of damage from carpet burns and of course a risk of fire. If you are going to rent to smokers it’s worth telling your insurer just to be certain that your buy to let insurance policy covers the additional risk.
3. No subletting or paying guests. This is a standard clause in a tenancy agreement, keep it there. You don’t want your tenant having tenants of his own as he won’t be doing background checks and due diligence.
4. No alterations or additions. At least not without authorisation. Knocking down a wall to make room for his train set is out of the question but if your tenant wants to add thirty grand to the value of your building with the addition of a Swedish log-cabin sauna, why not let him?
5. Keep in good repair. This is the catch all. It’s also where you will have the most difficulty at the end of the tenancy and you enter the discussion over what is damage and what is natural wear and tear. For furnishings and contents there has to be some leeway as things do break and wear but with the structure of the building you need to be clear. If there are any structural problems you need to be informed right away, a gutter leaking for twelve months can be a serious problem.
There are a few ways you can lower the risks connected with renting out your home. A well crafted tenancy contract is one of them, meticulous background checking is another. Should the worst happen though, you need to be sure that you are insured so a comprehensive buy to let insurance policy will help to give you peace of mind.

Doug Walker Dip CII is General Manager of Academy Insurance Services Ltd. Academy is an independent insurance broker specialising in niche insurance markets such as buy to let property insurance and unoccupied property insurance.