Owning a rental property comes with a host of responsibilities, and one often overlooked risk for landlords is leaving a property unoccupied. NRLA landlord insurance partner Gallagher has some top tips on what to look out for to help prevent costly issues from arising.

An empty property can quickly transform from a valuable asset to a costly liability because of situations such as a gap between tenancies or renovation works.

A report by The Commons Library states that 676,304 homes in England were recorded as unoccupied in 2022, representing a 3.6% increase compared to the previous year's total.

Having suitable insurance can be crucial for landlords, including cover for periods in which the property is unoccupied. Many standard landlord insurance policies include specific clauses or limitations regarding the period a property can remain unoccupied between lets before coverage is affected. If the policy wording is left unchecked and an incident occurs, a landlord might face rejected claims and costly repairs. So, while it may seem harmless to leave a property vacant, ensuring that it is adequately protected during these periods is vital for any landlord.

According to a review of Government data by Bird and Co Solicitors, the disparity in unoccupied homes across regions  occurs as a result of homes in some areas being bought as investment properties or second homes. This can lead to higher vacancy rates in areas such as the City of London.

The table below shows the extent of the issue (for context, the average unoccupancy in each Local Authority in England is 4.89%).
 

Authorities in England with the Highest Percentage of Unoccupied Homes (2021)

Area	% of Unoccupied Properties
1	City of London	30.98%
2	Westminster	25.01%
3	Kensington and Chelsea	24.18%
4	South Hams	15.28%
5	North Norfolk	15.13%
6	South Lakeland	14.97%
7	Scarborough	14.53%
8	Richmondshire	13.77%
9	King's Lynn and West Norfolk	13.32%
10	Camden	12.93%

Source: Bird and Co Solicitors LLP

The risks of leaving a property unoccupied

An unoccupied property can quickly become vulnerable to various threats, primarily due to the lack of regular supervision. These risks can escalate into significant problems that may be costly to resolve.

1. Security risks

• Increased vulnerability to break-ins, theft, and vandalism: Unoccupied properties are prime targets for criminals. The absence of regular activity often signals easy access for opportunistic thieves and vandals.
• Lack of surveillance: Without someone living on the premises, keeping an eye on the property becomes more difficult. Neighbours may not notice irregularities, and any issues could go undetected for extended periods.
• Potential damage to the property's structure and belongings: Break-ins or vandalism can damage personal belongings or interior furnishings as well as the structure itself. Graffiti, broken windows, or tampered locks can add to the list of costly repairs.
• Fire and flood hazards: Unoccupied properties are more susceptible to undetected fires or floods resulting from faulty wiring, unattended leaks, or adverse weather conditions. These hazards can lead to extensive structural damage and costly repairs without regular checks.

2. Maintenance risks

• Lack of regular upkeep: Properties require constant maintenance, and unoccupied homes can easily fall into disrepair. Minor issues can escalate without someone regularly inspecting or maintaining the property, leading to significant damage.
• Increased chances of plumbing leaks, electrical issues, and pest infestations: Plumbing failures or electrical faults can occur without warning, and if left unnoticed in an empty home, these issues can cause widespread damage. Similarly, an unoccupied house can attract pests, leading to infestations that require professional extermination.
• Neglected landscaping and potential damage to the exterior: Without regular landscaping or garden maintenance, overgrown plants can cause structural issues, including clogged gutters and damage to walls or roofing.

The financial costs of leaving an unoccupied property unprotected

The consequences of neglecting an unoccupied property are not just physical; they often translate into significant financial burdens. If landlords fail to take preventative measures, the costs can escalate quickly.

1. Repair and restoration expenses

• Costs associated with repairing damages: The financial cost of repairing broken windows, doors, or damaged interiors can add up. Additionally, graffiti, much like property vandalism and fly-tipping, often signals higher crime rates and creates an anti-social or threatening atmosphere. This not only tarnishes the appearance of the property but can also lower its value, along with devaluing surrounding properties. Removing graffiti alone can cost between £7 and £16 per square metre, depending on the method used.
• Restoration expenses due to lack of maintenance: The longer a property remains unoccupied, the greater the risk of damage or decay. Minor issues, such as water leaks or damp, can cause structural damage over time, leading to restoration costs that may run into thousands of pounds.

2. Insurance costs

• Potential denial of claims: Many landlords may not realise that their insurance policy could be invalidated if the property is unoccupied between lets for longer than the stipulated period. Insurers often require landlords to notify them if a property is vacant beyond a specific time frame. Failure to comply with these terms can result in denied claims for damage or theft, so it’s important to check policy wordings to see what terms apply.
• Higher premiums: Due to increased risk factors, insurers often charge higher premiums for vacant properties. The policy may need to be changed to one for unoccupied property insurance instead of landlord insurance. Extended vacancies may lead insurers to refuse coverage altogether or impose stringent conditions.

How to mitigate the risks and costs

The risks associated with unoccupied properties are significant, but they can be managed with suitable precautions. Taking proactive steps can help landlords minimise potential issues and avoid many of the common financial pitfalls.

1. Property management services

• Hiring a professional property management company: Landlords can engage a property management firm to regularly inspect and maintain the property, even during vacant periods. These professionals can handle routine checks and minor repairs and ensure the property remains in good condition.
• Regular inspections, maintenance, and security measures: Regular inspections can help identify minor issues before they escalate into critical problems. Management firms can also oversee security measures, helping to keep the property secure. Regular inspections can also be required by your insurance policy.

2. Home security systems

• Physical security measures: Installing robust physical security systems, such as alarm systems, highly visible surveillance cameras, and motion-activated lighting, serves as a strong deterrent against potential intruders. These systems create a noticeable presence, discouraging break-ins or vandalism by making the property appear well-protected.
• Remote monitoring and response: In addition to physical measures, advanced security systems allow for remote monitoring via smartphones or computers. Landlords can receive real-time alerts for unusual activity, such as unauthorised entry or motion detected within the property, enabling them to take immediate action, regardless of their location.

3. Insurance coverage

• Researching and obtaining appropriate insurance coverage: Standard landlord insurance might not provide suitable coverage for vacant properties. Landlords should explore specialist unoccupied property insurance to protect them during vacancy periods.
• Understanding policy terms, exclusions and requirements: Landlords need to familiarise themselves with the details of their insurance policy. Key aspects to consider include the maximum duration of vacancy allowed, required maintenance levels and specific exclusions.
• Be aware unoccupied property insurance can cost more than regular landlord insurance due to extra risks: As unoccupied properties present a higher level of risk insurers typically charge more for coverage. The additional premiums reflect the greater potential for damage and loss.

Landlord Insurance from Gallagher

With vast experience handling insurance policies for a wide range of landlords, and with relationships with some of the leading insurers, Gallagher aims to simplify your insurance arrangements and help to protect your property, its contents, and your liabilities.

Or speak to our specialist team on 0800 612 0094.

 

The sole purpose of this article is to provide information on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited and National Residential Landlords Association, an Introducer Appointed Representative of Arthur J. Gallagher Insurance Brokers Limited, accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

National Residential Landlords Association is an Introducer Appointed Representative of Arthur J. Gallagher Insurance Brokers Limited, which is authorised and regulated by the Financial Conduct Authority. Registered Office: Spectrum Building, 55 Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909.

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