Why High Value Landlord Insurance is Even More Important for Properties over £1million

There are currently around 2.82 million landlords in the UK. Nearly a quarter (24%) had a portfolio they valued from £500,000 to £999,999, with the remaining 20% having rental property portfolios valued at £1 million or more.

Prime Central London rental values now sit at almost 30 per cent above pre-pandemic figures and Mayfair, Belgravia, St John’s Wood, Regent’s Park and Hampstead all feature among the best places to rent for the affluent. Areas such as Kensington and Chelsea make a whopping average rental of £3,459 a month, the City of Westminster £3,155 and Hammersmith & Fulham £2,619.

And with property prices soaring in the capital and beyond, landlords potentially stand to make a decent overall return on investments. In total english landlords have gained over £400 billion in property wealth as a result of rising house prices since 1990, making an average of £240,634 in capital gains per property. In London this figure is over £400,000 and much more of course for prime and super prime properties multiplying the potential gain further.

But the more the property is worth of course (both the home itself and its fixtures and fittings), the higher the risk when it comes to renting it out. And that’s where a comprehensive landlord insurance policy pays dividends.

 

So why is high net worth landlord insurance so important?

It’s estimated that around 41.4% landlords do not have specialist landlord coverage in place. In real terms, this means that more than one million landlords could be exposed in the event that something should happen to their home whilst it’s being rented out.

Prime and super prime properties are more likely to have extensive grounds, landscaped gardens, stables, out houses, home gyms, wine cellars, or even pool areas which need to be adequately insured. And if you’re letting the property with furniture, then making sure it’s appropriately covered is important too.

Whilst you might think a high-end property will attract a different calibre of tenant, intentional and malicious damage and theft, whilst rare, still occurs. Redecorating or restoring the home in this event can be pricey. And of course, accidents do happen, even with the most respectful of tenants. In fact, accidental damage makes up 19% of all home insurance claims in the UK.

Additionally, 15% of home insurance claims are as a result of the escape of water and unfortunately 9% are from fire. If the property becomes uninhabitable as a result of fire, storm, or flood, consider how much rent you might lose when renovating the property to make it good again. If it’s badly damaged by flooding for example, it could take up to one year or longer for it to be restored and become habitable for tenants. That’s a long time to be without rental income.

 

What to look for when choosing a policy? 

Standard landlord insurance policies may be insufficient for premium properties as they often have upper limits on reinstatement values (the amount it would cost to rebuild your property from scratch). So, if the property is considered high-net-worth, a specialist policy which allows for higher coverage limits is likely going to be the best bet. Flexibility of cover is also key if your property has any unique features or fittings that require special consideration.

Make sure your policy includes a rent protection provision for loss of rental income and the costs associated with relocating any existing tenants, should the property become uninhabitable due to unforeseen events. Additionally, you may want to include liability protection in case your tenants are injured in the property, and legal protection for disputes stemming from renting the property out, such as late rental payment or property damage.
Consider if you need extras such as employers’ liability cover, for instance if you run a management company, or Home Emergency Assistance In the event of a property emergency, such as a boiler breakdown or burst water pipe.

Tailored landlord insurance coverage for high-net-worth properties is unlikely to be available on the high street, and this is where a reputable broker comes in. Enness Global have extensive experience working with prime and super prime landlords, and can help you arrange a bespoke policy to suit your requirements via our network, whether that’s for a single rental property or an extensive portfolio.

 

Contact [email protected] to find out more or to discuss your insurance requirements.