When Do Landlords Insure - on Exchange or Completion?

Landlords buying new homes to rent out are making substantial investments - especially as the average UK home is worth £230,000, according to Office for National Statistics figures (2019). 

But many are unaware of when they should start insuring the property. 

Most mistakenly believe the responsibility starts when the estate agent or previous owner hands over the keys on the day contracts are completed. 

But seasoned and experienced buy to let investors know that they are liable for buildings and contents - if there are any - insurance from when they penned and exchanged contracts. 

Many overlook this point because they think they don’t need to put a landlord insurance policy in place until they own the property. 

The buyer and seller have a legally binding agreement once contracts are exchanged. In most home sales, the contracts are drafted from the Law Society Standard Conditions of Sale. These will clearly explain that the buyer risks any damage to the property after the exchange. 

So, it is worth checking this clause out with your lawyer or conveyancer to ensure you have the necessary cover. 

Buildings insurance to cover the home’s reinstatement value is the minimum required. 

The reinstatement value is the cost of demolishing the home, clearing the site and rebuilding. This comes to less than the cost of the property as the price of the land is left out of the calculation. The figure is usually found in any surveyor’s report. 

Other points to consider about landlord buildings insurance are the time the property will stand empty, especially if a refurbishment is taking place straight after completion. 

Many mainstream landlord insurers will offer cover if the home stays empty for 30 to 90 days and will have clauses in the policy about security during building works. 

The Guild has a link to buildings insurance.

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Buildings insurance covers the risk of damage to the structure and permanent fixtures and fittings of a building, for example, due to a fire. If the property is leasehold, the freeholder will typically arrange the building's insurance and re-charge the cost to lessees.