New research conducted by Total Landlord reveals that landlords who do not have insurance are treading on thin ice as possible tenant damage could be costly.

Up to 45% of a landlord’s annual rental income could be lost through tenant damage if they do not have insurance.

The cost of insurance in England

Hamilton Fraser, the parent company of Total Landlords, claims that 85 percent of buy-to-let landlords have landlord insurance. Yet the remaining 15% are not protected against damages as they do not have insurance.

Landlords in England can expect to pay £170 per property for insurance. With the average annual rental income being £11,228, landlords only pay 1.5 percent of income to remain protected.

Those who do not have insurance are likely to pay far more than 1.5% of their rental income if tenant damage does arise during the tenancy.

Potential costs for uninsured landlords

Uninsured landlords expose themselves to expensive costs that could be avoided. Total Landlord breaks down the potential costs of kitchen fires, bathroom flood, redecoration with approval, and replacement costs.

A kitchen fire would require a kitchen replacement. At an average of £5,250, this is equivalent to 46.8 percent of the average annual rental income. 

Replacing a bathroom after a flood could cost an estimated £5,000, or 44.5 percent of rental income. 

Redecorating a room could total £1250 reducing annual rental income by 10 percent. 

While broken windows are estimated to cost 4.5 percent of rental income and a carpet replacement in one room costs 2.2% of rental income. 

Eddie Hooker, CEO of the Hamilton Fraser Group says: “Any rental property is likely to succumb to some level of damage during its lifetime and although this may often be accidental, it can also be the result of a malicious act by a disgruntled tenant, in which case it can be far more costly. We’ve also seen an increase in adverse weather claims in recent years which in many cases cause a great deal of damage.”

“While the vast majority of landlords are insured against such damages, there is a small proportion who run the risk of remaining uninsured or, worse still, under-insured, which is quite astonishing given the relatively low cost of obtaining insurance in relation to the potential bill for damages caused.” 

“Even minor damage to their properties is going to cost more than it does to take out an insurance policy and should a major disaster happen, rental incomes can be severely impacted. A loss that many landlords would struggle to stomach given the challenges with profitability of a buy-to-let investment following recent and future government policies.”