Author : Maryanne Bowring
Why holiday lets could put block insurance in Jeopardy
It has become clear in the last 12 months that the proliferation of short-term lets in many parts of the country is having a major impact on the supply of long-term tenancies in the private rental market. Landlords, many of whom will have been worried that their tenants would end up in arrears during the worst of the pandemic, have spotted a chance to boost their incomes by offering holiday lets instead of an AST. You can’t blame people for wanting to make some extra cash. Unfortunately, the number of people with the same idea has had a massive negative impact on the rental market, especially in areas that are popular with holidaymakers and supply is now at an all-time low. Anyone thinking of letting out a flat on a short-term basis needs first to consider whether or not there are covenants in their lease to prevent them from doing so. If there are, flat owners could find themselves in court, or worse, facing forfeiture and the loss of their property. This week in Wales, the issue of insurance cover for blocks containing holiday lets has also been raised.
According to Swansea councilor Lynda James, people who rent out their flat as a holiday let could invalidate the insurance of their whole block. Cllr James told Wales Online last week that short-term lets invalidated flat owners' leases at a block she knew about and were not permitted under the terms of its insurance policy. This really doesn’t bear thinking about. Breaching the lease is bad enough but imagine the scenario where your holiday let catches fire and causes extensive damage; or water leaks into neighboring properties and you discover your insurance won’t cover the work required to put it right. The prospect of making some extra money is tempting for all of us but think before you let. Providing a long-term home for a tenant may not be as lucrative for flat owners as the staycation market – but ultimately it may prove less risky!
Mary-Anne Bowring FIRPM FRICS FARLA FCABE Founder/Head of Asset Management
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