HMO Landlord Insurance: A Specialist Policy for a Specialist Property

A House in Multiple Occupation (HMO) lets out is one of the common investment modes with rent yield maximising among the preferred interests of the landlord. Nevertheless, there is a differing exposure associated with HMOs compared to that of a normal buy-to-let property. In that case comes HMO landlord insurance, a specialist insurance product available to the landlord renting out a house with multiple tenants.

When you possess or intend to invest in an HMO, you need to learn about the relevance of customised insurance in protecting your asset as well as rental income.

What Is an HMO?

An HMO (House in Multiple Occupation) is a building in which a group of people of a minimum of three and who are not related to each other rent and share communal facilities (kitchens, bathrooms, or living rooms). These are student houses, shared flats and bedsits.

Due to both occupancy and common use of the property, HMOs can be subject to more wear and tear, a greater incidence of conflict, and a higher possibility of intentional or unintentional harm. All these points imply the lack of adequacy of standard landlord insurance in relation to HMOs and others, its inadmissibility.

What does HMO landlord insurance cover?

A good HMO landlord insurance cover will have the following:

Buildings Insurance: Cover of the building against such risks as fire, flood, storm damage, vandalism, and subsidence. It also has added features like built-in kitchens and bathrooms.

Landlord Contents Insurance: In the event that the property is provided on a furnished basis, this will cover beds, sofas, white goods and carpets. It does not insure the personal property of the tenants.

Liability of Owners of Property: This protects in the case of a visitor or tenant being injured on the property and holds you liable legally. This is important in the case of HMOs, especially due to an increase in footfall and communal areas.

Loss of Rent: This cover pays you rental income during the repair of the property when it becomes uninhabitable because of an insured event (such as a fire or a major act of water damage).

Tenants’ Malicious Damage: Cover self-inflicted damage by tenants- this is a welcome addition in multi-let properties where there is a possibility of conflict.

Legal Expenses (Voluntary): Aids in the need to pay the expenses of an eviction, rent collection, or lawsuits against tenants.

The Reasons You Should Have Specialist HMO Cover:

HMOs are regarded as risky to insurers compared to properties that are single or occupied by a family. The prime reasons are:

• Increased turnover of tenants.
• Risk of fire, since they share cooking places.
• Higher chances of destruction of common lands.
• Statutory regulatory requirements over licensing and health & safety requirements.

Therefore, several insurers do not include HMOs under common landlord insurance. Purchasing the right HMO-specific insurance will keep you covered, as well as in the good books of compliance in the event of claims.

Is a Licence Required?

Most HMOs need a licence from the local council, especially when there are five or more tenants living in a 3-story building or above. Certain local authorities have expanded licensing programs to the smaller HMOs. When it comes to insurers, they can request documentation of licenses during the process of issuing cover; therefore, it is pertinent to operate within the law.

Issues that Affect Your Premium:

The price of your landlord insurance imposed by HMO varies depending on some elements:

• The number of people renting depends on the tenants you have.
• Tenant type (e.g. students, professionals, DSS, etc.).
• The location and crime numbers.
• Protection options for security (locks, alarms, CCTV).
• You present claims, history and prior experience as a landlord.

Using an expert HMO insurance broking company can assist you in striking an acceptable balance between affordability and insurance cover.

Conclusion:

HMO properties may be an excellent investment, but they are associated with additional costs and risks. Basic landlord insurance is not always going to do it. You would make sure that not only your property is covered, but also your income and your liability, and you can do this but initiating a special insurance cover against HMO-oriented protection.

Don’t risk it. Having the right cover can be the difference between life and death when the worst occurs, and it can mean thousands less in legal or repair costs or cancelled rent.