Tenant’s Illegal Activities and Landlord’s Exposure

Illegal activities and organised crime has recently become a contentious topic in the property industry. New challenges are in store for landlords, where they must report any suspected criminal activity within their let properties, as per the Bill passed in the Queen’s Speech, June 2014.

The new legislation puts a greater responsibility on landlords as they are considered to be running a business and therefore should not “turn a blind eye” to criminal activity. The new rules will also affect corrupt lawyers and other professionals who are involved but claim they are unaware of the illegal activities.

The increase in illegal activities in buy-to-let properties highlights how easy it is for prospective tenants to by-pass checks and move in. The lack of contact between the tenant and landlord is key to this growing trend.

How this affects landlords

Whether landlords are aware or unaware, any criminal activity is highly likely to result in major damage to the let property.

Criminals running drug laboratories, cultivating cannabis farms and trafficking activities are likely to choose properties where the landlords offer little in the way of communication and maintenance.

This allows tenants to make huge adjustments to the property to create environments suitable for drug cultivation or trafficking, while also increasing the risk of fire hazards and structural damage. The cost then lies with the landlord to get it back to liveable standards if their insurance does not offer cover for malicious damage caused by tenants.

The right cover for your landlords

Malicious and criminal damage by tenants is usually an exclusion clause in standard let property insurance. It is important that landlords are aware of this clause so that they can choose policies that cover malicious damage. Many policies also include an illegal activities clause which would remove cover if a property is used by the tenant for illegal purposes, such as cultivation of drugs.

Tips for landlords

  • Ensure potential tenants are comprehensively vetted
  • Choose landlord insurance with malicious damage cover
  • Check policies for any illegal activities clause
  • Rental payments on a monthly basis
  • Regular contact and maintenance checks
  • Monitor electricity bills for huge rises or falls

If you are concerned by any of the issues in the above article, call Clover Insurance Services on 020 8805 1121.