Belt tightening means landlords reluctant to re-invest high rents in property upkeep

New data from Simply Business, the UK’s largest business and landlord insurance broker, suggests that tight budgets are hitting property maintenance by landlords, as the proportion of claims made for avoidable incidents such as leaks, burst pipes, frost damage and general wear and tear has increased by five per cent since 2008.

The data, taken from the claims of over 3,500 private landlords reveals that water damage is the biggest offender, with the number of claims increasing by 20 per cent since 2008. Water damage is also one of the most expensive problems to fix with the average cost of repair at £2,422 per incident.
Despite strong demand pushing rent rates to a record high*, the data suggests that increased overhead costs and fears about the ongoing stability of the UK financial market** mean landlords are scaling back on their short term costs and failing to pro actively re-invest in the upkeep of their rental properties.

But with 3.4 million households now living in privately rented accommodation, it is essential that landlords foster good relationships with tenants and encourage them to report instances of damp or water leaks early as timely maintenance work can save on bigger pay outs later.

Landlords will be happy to hear that incidences of other claims have decreased, including accidental damage (down by 3 per cent), storm damage (down by 17 per cent) and theft (down by two per cent), although these are still amongst the most frequent problems.

Jason Stockwood, CEO, Simply Business, commented

“While insurance is crucial for landlords to ensure they can repair any unanticipated damage to the property, they must still maintain the property to a reasonable standard. Damage due to poor maintenance will not only disrupt current tenants and discourage future tenants but maintenance related claims are frequently not covered by insurance policies.

“With winter approaching, we would encourage landlords to check their properties are water tight and secure so they can withstand any heavy rain and cold spells. Otherwise they could be left with a hefty bill.”

Simply Business has released guidance for landlords on claims that are generally excluded from their insurance policies:

1. Frost damage as this is seen as a maintenance issue. A water tight building in good condition, should not allow water to get into the pipes or brick work, where it can then freeze, expand and cause damage over time. To avoid this happening, a regular maintenance programme should be implemented during the dry months.

2. Malicious damage by tenants is usually not covered on standard policies so landlords need to ensure they request this. Not to be confused with ‘Accidental Damage’, ‘Malicious Damage’ is the intentional physical damage to the property and would be considered a crime. Examples include vandalism, deliberate fire or theft of building fixtures. When claiming for this type of damage, the police need to be notified and a crime reference number must be submitted to the insurer or broker.

3. Un-occupancy: Most Insurance policies try to accommodate the common situation of a property sitting unoccupied between tenants, allowing 30 days before the insurance company needs to be notified of the change. Beyond the 30 days, some insurers may apply additional terms and restrictions until the new tenants move in, whilst others will not want the cover to continue at all. If the insurer is not notified that the property is unoccupied after the 30 days then it is considered a material change to the policy and any claim is unlikely to be covered.

4. Wear & Tear is the gradual deterioration of an object that takes place over time and is not classed as an insurable risk or event. It is the policyholders responsibility to maintain the condition of the property and keep it in a good state of repair.

5. Loss of Rent – If the landlord has agreed that the tenant shouldn’t pay rent because of damage to the property, but the property isn’t deemed uninhabitable then landlords cannot assume this will be covered. In order to claim for this the property must not be liveable for the tenants.

Lift the lid on landlord claims:

Source: Simply Business

Claim type	Percentage of claims in 2010	Percentage change since 2008	Average cost of settled claims
Water damage	37%	+20%	£2,422.51
Accidental Damage	15%	-3%	£931.01
Storm	15%	-17%	£695.97
Theft (and attempted theft)	9%	-2%	£1,205.60
Malicious Damage	6%	No change	£1,249.81
Burst Pipes	4%	+5%	£4,740.86
Damage To Underground Services	3%	+2%	£980.28
Fire	3%	+1%	£11,807.27
Impact	1%	No change	£1,533.87
Subsidence/Landslip/Heave	1%	+0.5%	£2,048.25

About Simply Business

Simply Business is the UK’s largest business insurance broker.
Launched in 2005, the full service insurance specialist identified a need to improve insurance offerings for the UK’s millions of small businesses whose needs were neglected by established insurance and broking companies. Where the traditional broking model was slow-moving and inflexible, Simply Business developed an agile and online brokerage service which was able to deliver bespoke policies tailored to their individual and often very specific requirements. Its online offering is supported by a dedicated, UK based team of insurance specialists who provide a tailored and personal service more commonly associated with broker relationships.
Today, Simply Business insures over 170,000 small business customers, more than any other UK broker. It has been a Sunday Times Tech Track 100 company for the past three years, with offices in London and Northampton, and employs over 140 people. Simply Business revenues have grown 44% a year from £4.2 million in 2006, to £12.5 million in 2009.

Notes to editors
*Figures released by English Housing Survey in February 2011 reveal rents reached record levels during the second half of 2010
** Landlord Optimism Index, published in September 2011 by National Landlords Association (NLA), reveals that only 6 per cent of landlords rate the state of the UK financial market positively