HMO Landlord Insurance

HMO stands for House of Multiple Occupancy. If you are a landlord who rents a property to several tenants with separate tenancy agreements, then you would usually fit into this category for insurance purposes.

In England and Wales, a HMO is usually defined as a property that is rented to at least three people who are not from a single household (such as a family), but who share essential facilities such as a kitchen or bathroom (or both).

Insurance policies for HMOs are a little different to those which cover single tenancy rental properties. Standard buy-to-let insurance policies usually only cover properties where Assured Shorthold Tenancy agreements are in place, whereas HMO insurance policies cover Multiple Tenancy agreements for licensed HMO properties.

If you own a HMO property, you will usually need to register the address and obtain a license, in accordance with the Housing Act 2004. Your insurance policy may be deemed null and void if you do not hold a valid license at the time of making a claim. However, there are a few exceptions, so it is best to double check with your particular council in the first instance.

All landlords who own a HMO in England and Wales are required to hold HMO Landlord insurance. This is to cover landlords for a range of risks associated with their property – from financial losses, to catastrophic events such as fire and flooding.

In England and Wales, commercial property refers to “buildings or land intended to generate a profit, either from capital gain or rental income”. Houses of multiple occupancy for which rent is being charged to tenants clearly falls into this category.

The price of your HMO insurance premium will depend on numerous variables, including the size and age of the property, the number of tenants living there, the occupation of the tenants, the region and area in which the property is located (assessed by postcode), whether cooking facilities are separate from bedrooms, and many more. 

Landlords who own multiple HMOs (for instance, blocks of flats) and experienced landlords who offer DSS rentals can often secure discounts, meaning their insurance rates can be preferential compared with those landlords who are just starting out with their first rental property. 

If you’re looking to cut costs, it’s usually more cost-efficient to choose a specialist HMO Landlord Insurance provider over a standard Buy-To-Let insurer, as the HMO insurance provider will have a deeper understanding of the specific risks associated with multiple occupancy, without adding expensive bolt-on extras that will significantly inflate your premium.

HMO Landlord insurance typically covers a wide range of risks, such as: buildings insurance for essential repairs; damage to property (including malicious damage by tenants); contents insurance for fixtures and fittings; any contents you own which are used by tenants; fire; flooding; theft; financial loss (rent guarantee); legal expenses (should you need to take a tenant to court, or vice versa); owner’s liability; and domestic emergency cover (burst water pipes, etc). 

The current market value of your property has no direct bearing on the sum for which you need to be insured. Rather, your HMO policy should reflect the amount it would cost to rebuild the property.

As part of the survey carried out by your valuer when you purchased the property, there should have been an indication of this rebuilding figure. If any conversions or improvements have been made to the property while converting it to HMO status, then you should acquire an updated valuation for the cost of rebuilding from a qualified, professional valuer. You will need to ensure that your insurance premium covers this sum as a minimum.

Finally, bear in mind that HMO can present considerably higher risks due to there being multiple occupants, so it’s always best to talk it through in some detail with an advisor who specialises in HMO Landlord Insurance, as they will not only think of things you hadn’t thought of, but they should know how to secure a better premium for you too.

If you are not sure what type of insurance or level of cover you need, then please call us on 0121 6797265 for advice and help with finding you the right cover for your property.

The answer to this question is easy! Simply contact our friendly, knowledgeable team here at Falcon Insurance, and we will be more than happy to assist you.