Landlords are failing to adequately disclose property and tenant details to insurers, creating potential coverage gaps that could prove costly when claims are made, according to Rana Ali from Paymentshield.
Underinsurance remains a significant issue, with landlords potentially left out of pocket if properties or contents are not insured for their true value. Ali noted that policies which do not accurately reflect how a property is being used, combined with missed compliance requirements or incomplete paperwork, can quickly escalate into expensive problems.
HMO classification and tenant profiles
Properties with multiple unrelated occupants may effectively be operating as houses in multiple occupation (HMOs) and should be insured accordingly. Ali warned that discrepancies between declared tenant profiles and actual circumstances could affect claim outcomes. For instance, if a landlord states a tenant is employed full-time despite failed referencing checks or irregular income, insurers may question subsequent rent protection claims.
The insurance specialist recommended regular policy reviews, accurate documentation, and specialist landlord insurance to reduce the likelihood of issues during the claims process.
Legislative changes increase financial exposure
The recent implementation of the Renters’ Rights Act has altered the risk landscape for landlords. With the abolition of Section 21 ‘no-fault’ evictions, landlords must now generally rely on Section 8 grounds when tenants fall into arrears, potentially exposing them to prolonged periods without rental income.
This change follows increased regulatory requirements for landlords across the UK, with rent protection insurance and legal expenses cover becoming more relevant for those relying on rental income to support mortgage payments or portfolio cash flow.
Compliance requirements expanding
Current regulatory focus centres on the Renters’ Rights reforms, energy efficiency standards, and strengthened compliance obligations around property standards and tenant safety. The reforms introduce several operational changes: rent increases will be limited to once per year, advance rent payments are capped at one month, and landlords must take a more flexible approach to pet ownership, requiring reasonable justification for refusals rather than blanket bans.
Proposed Energy Performance Certificate (EPC) changes continue to keep energy efficiency on the agenda, particularly for older housing stock where upgrade costs can be substantial. Local authorities are also taking a more proactive approach to enforcement around damp, mould, electrical safety, and overall property maintenance.
Ali noted that landlord insurance is becoming more detailed, with insurers paying closer attention to risk, property condition, and tenant type. Comprehensive policies should include buildings insurance, liability protection, loss of rent, and legal expenses. Paymentshield’s landlord insurance holds a 5-star rating from Defaqto.
Market implications
With ongoing discussions around rental market regulations and tightening margins due to tax changes, landlords face pressure on profitability. Ali emphasised that proper insurance coverage without overpaying, planning for future costs, and protecting cash flow against rental income disruption have become more critical.
The changes require landlords to adopt a proactive rather than reactive approach, with regular reviews of tenancy agreements, compliance processes, insurance arrangements, and property condition recommended to identify potential gaps early. Working with specialist insurance advisers can help landlords keep pace with regulatory change and ensure appropriate protection is in place.
