Types of Tenants - A Landlord's Guide

As a landlord you can rent your property to many different types of tenants - from professionals, students, DSS tenants, family members and more. This video looks at these different types and how they may affect your landlord insurance.

What is the difference between landlord and lodger?

The main difference between being a landlord and having a lodger is the greater freedom you have to end an agreement.  If you have someone in your home and the relationship doesn’t work out, or your personal situation changes the landlord retains more rights to end the tenancy agreement. There are still deficiencies in the type of agreement though.  These depend on whether there is shared space within the property or the tenant has private use of at least one room. The exact legal rights of each party depend on these arrangements.

One of the first things to check before you take a lodger is whether you’re allowed by the owner or lender. If you are a Leaseholder, you may have conditions to the lease which prevent or dictate the type of renting you can do within the property.

If you rent a property privately, you’ll need express permission from the landlord before taking a lodger. But if the tenancy is with your council you may be automatically allowed to rent out a room to a lodger.

If you own your property with a mortgage you will need to advise your lender about the change in circumstance.

Council tax

Don’t forget that if you lived alone before taking on a lodger you may have been benefiting from a single person discount on your council tax.  This will no longer be applicable and you will have to inform your council of the change in occupancy.

Landlord Insurance

Most standard home insurance policies will not automatically cover lodgers. This means your contents insurance, or even your buildings insurance could be made invalid from a claim. Although it is not likely to incur an increase in your premium via a specialist insurer it is vital that it is noted on your policy. 

People today rent for many different reasons:

They may be saving for a deposit on a mortgage or could be new to the area. They could be a student or renting a second property and some people simply don’t want the commitment of buying.

Whatever the reasons tenants fall into different categories stipulated in your landlord insurance and it’s important you understand who your policy covers to rent to and why these groups pose different risks.

Landlord insurance for professionals

This is the umbrella term for anyone you rent to who is in employment. In terms of risk these are the people who have a regular income and are therefore considered to be low risk in falling behind with rent payments.

Landlord insurance for students

Whilst no two students’ situations are the same the general assumption is that young students who have low wages and only part-time employment may have more difficulty in making rent payments consistently.  Some policies will automatically cover landlord insurance for students.

Landlord insurance for DSS tenants

Tenants who are on housing benefits, meaning they claim benefit money to pay their rent face a similar discrimination as students.  Some insurers will not cover you to rent to these two groups which means you may have to shop around for the best landlord insurance for DSS tenants. Make sure you’re aware what your policy permits as a mistake could invalidate your policy.

Landlord insurance for Lodgers

Lodger are tenants who live in your house with you - in a spare room for example.  In some cases, having lodgers does not class you as a landlord and can be covered by having the arrangement noted on your standard home insurance, rather than taking out specific landlord insurance. But make sure you speak with your insurer before you assume you’re covered.

Landlord insurance for family members

A common question from new landlords is “Do I need landlord insurance if renting to a family member?”. Renting to a family member doesn’t always make you a landlord in terms of your insurance. If they stay, without a rental agreement a standard home policy may be sufficient.  This can differ between landlord insurance policies though so make sure you check with your provider.

Towergate’s landlord insurance policies allow you to dictate who you rent to whether they be family, students or professionals and can remain flexible should that tenant group change but in order to remain protected it’s important you understand what you are covered for at any one time.

For more information on landlord insurance browse our site or give us a call.

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