HMO landlord insurance is a specialist form of property insurance for landlords of Houses in Multiple Occupation (HMO).
Specialist insurance is necessary because of the particular nature of an HMO and the distinctive risks likely to be encountered by landlords of such properties. The safeguards and protection are offered by HMO landlords’ insurance.
An HMO differs from practically every other type of residential accommodation in so far as the property is occupied by separate households who agree to share some of the basic essential facilities such as a toilet, bathroom and kitchen.
The official definition of an HMO identifies a property in which at least three people are living as at least two separate households, and sharing facilities such as the toilet, bathroom and kitchen with each other as tenants.
If the property is taller than three storeys and has more than 5 tenants living in it, comprising more than one household, with shared facilities, it is known as a large HMO.
Licensing of HMOs
On the 20th of June 2018, the government’s Ministry of Housing, Communities and Local Government announced that from the 1st of October this year, any landlord letting an HMO to more than 5 people, living as more than one household, will need to be licensed to do so by their local authority.
To a great extent, this abolishes the distinction between regular and large HMOs – many smaller properties did not previously need to be licensed. From the 1st of October, therefore, an estimated 160,000 HMOs will be added to those requiring a licence to be let as such.
The government’s intention in introducing such legislation is to achieve an overall improvement in the standards of affordable accommodation of this nature.
HMO landlord’s insurance
Specialist HMO landlords insurance recognises the particular risks associated with a property that has shared facilities for a number of separate households and also takes into account the types of tenant who are perhaps more likely to seek such accommodation – those on low incomes, single parents, the unemployed, students or benefits claimants, for example.
Just as other forms of property insurance, HMO landlords insurance provides protection of the structure and fabric of the building against a wide range of risks, together with any contents owned by the landlord (room contents insurance remains the responsibility of individual tenants for the security of their own possessions).
Unusually, however – since many landlord insurance policies do not cover the risk – HMO landlords insurance may also offer protection for the landlord against malicious damage to the property or its contents caused by tenants or their visitors.
Landlords who own HMOs are also likely to welcome the scale of landlords liability insurance typically offered by this specialist form of cover. If a tenant, one of their visitors, a neighbour or even a passing member of the public is injured or has their property damaged, the landlord may be held liable and ordered to pay a substantial sum in compensation.
HMO landlords insurance therefore typically offers at least £1 million of indemnity against any such claims – whilst some of the leading policy providers include up to as much as £5 million of indemnity insurance.