Insuring your HMO property

When you’re ready to insure your house in multiple occupation (HMO), you’ll find that it requires specialist insurance. HMOs are defined as properties inhabited by three or more unrelated tenants who share facilities, such as kitchens, bathrooms or toilets. As such, standard landlord insurance cover isn’t suitable as this applies to normal buy-to-let properties. These are defined as being inhabited by a single household.

HMOs are classed as being higher risk than standard buy-to-let accommodation due to their multiple occupants. The shared facilities also increase the risk of damage that can be caused. As such, HMO insurance has different terms to standard landlord insurance cover. Your property needs to be registered as an HMO to benefit from this cover. This type of insurance is tailored to offer the right protection for the specific types of risks associated with HMOs.

What does HMO insurance cover?

HMO insurance applies to different types of buildings, whether they’re purpose-built or conversions. These can include an entire house or flat, a building that’s been completely converted into flats (a third of which have short-term tenancies) or a house that’s been converted into bedsits. This type of cover is also available for different types of tenants. These include working professionals, students, those using housing benefit to pay their rent and asylum seekers.

As well as providing the basic cover you’d expect with an insurance policy, such as buildings insurance, there are additional options to consider too. These can include protection against loss of rent, legal protection, public and property owners’ liability cover as well as alternative accommodation cover.

HMO insurance options

• Buildings insurance: The prime consideration for HMO insurance is buildings insurance. This covers you for the costs needed to repair or rebuild your property in Bexley. Buildings insurance can cover many aspects, such as damage caused by flooding, fire, storm damage and theft. You may also want additional cover in case of damage caused by your tenants, whether malicious or accidental.
• Contents insurance: This covers the contents left in the property that belong to you in the event of damage or theft. This can include, for example, the furniture in each bedroom as well as any furniture and furnishings provided in the communal areas. Each tenant is responsible for insuring their own contents.
• Loss of rent: Should your property in Bexleyheath become uninhabitable – for example, if there’s a fire – this insurance reimburses you for any rental income you lose as a result of this.
• Alternative accommodation: Again, should your property become uninhabitable, this insurance covers the costs needed to rehouse your tenants.
• Rent guarantee insurance: If your tenants stop paying their rent, this insurance covers the rental income.
• Legal protection: This covers you for legal costs should a property or tenancy dispute arise. For example, you may discover that your tenants have caused serious damage to your property. Or you may be having difficulty getting them to leave.
• Public and property owners’ liability: This cover protects you against claims of injury to a tenant or damage to a tenant’s belongings that you’re responsible for as the owner of the property. For example, the stair carpet might not be fixed securely, causing a tenant to trip over it and fall down the stairs, suffering an injury.

Points to be aware of

When you’re applying for a Welling or Pimlico mortgage for your HMO property, you may find that your lender insists that the insurance cover is in place before agreeing to grant you a loan. Regarding the insurance, many insurers won’t cover a property that has been sublet. Therefore, be sure to check that your tenants aren’t planning to do this.

How much does HMO insurance cost?

HMOs vary greatly and insurance policies are tailored with costs that reflect this. The cost of your insurance cover will depend on numerous factors. These include the size of your property, the number of tenants, where the property is located and more. One aspect that can increase the premium you need to pay is if cooking is allowed in the bedrooms. To benefit from a cheaper rate, it’s better to reduce the risk and ensure that your property has suitable kitchen facilities that can be shared by all of the tenants.

Do you have more than one HMO property?

If you’re an experienced landlord with multiple HMO properties, you can arrange for them to be covered under the same insurance policy. By doing this, you should benefit from a better rate than if each property is insured separately.