Do I need to take out Landlord insurance?

[bialystockandbloom]

I have had a horrible panic about this - I have been renting out a flat for 6 years, and don't have landlord insurance. The flat is in a small block, and the freehold is owned jointly by each flat owner (ie share of freehold). As part of this we have communal building insurance. When I started renting the flat out I spoke to the insurers who told me I didn't need to take out additional landlord insurance, but is this really the case?

The tenants have their own contents insurance (the flat is renting minimally furnished).

Does normal buildings insurance cover everything landlord insurance would do? The thing that worries me is if there is any personal injury to one of the tenants. Should I be really taking out LI?

Advice gratefully received!

Do you have a mortgage? Is it a BTL mortgage? What does it say about landlord's insurance?

What do the T&Cs of the communal building insurance say? Have you declared the fact that you are renting out?

You can't double-insure the same liability so if you take out LI it may be invalid depending on what other insurance you have.

Thanks for replying.

It's not a BTL, just an interest-only one (about to switch to repayment) - I also fear I'm breaking the law this with too?? I just never switched when I moved out (I used to live there, before DP and I bought current house). Our slightly dodgy financial adviser at the time said I could just leave it as it was.

Yes the building insurers know I'm renting it out, and they assured me my own property was covered for personal liability/damage etc in the same way as if it was individual buildings insurance, but I don't know if LI differs in that way?

Maybe I'll just ring round insurance companies and ask. Always easier to ask MN though isn't it

You're not breaking the law, but probably breaking the T&C's of your mortgage. They could be within their rights to cancel your mortgage immediately.

Are you declaring the income to HMRC through self-assessment?

You may not need any more building insurance but you might want to buy some additional protection. Ring a broker for advice (I use Alan Boswell).

you aren't breaking the law, but you could be up for repossession so sort this NOW.

you also need specialist insurance - standard policies don't usually cover anyone except the owner. You need cover for malicious damage and legal and rent guarantee cover if your tenants decide to stop paying the rent, because it then takes four months to remove them.

and yes, declare income on the tax return.

gas certificate? deposit protected? Those ARE legal issues.

You do need landlords insurance. You also need permission to rent. I have a normal repayment (not buy to let) mortgage on my rental property but I have to pay £200 a year for permission to let it out from my mortgage company.

Meant to say - legally you don't need landlords insurance - you do need it because it's a good idea!

Oh crikey

Have gas certificate and deposit in protection scheme.

I haven't declared the income as am SAHM, so no other income, and the amount of income from the rental would be only just above threshhold, and well under with the tax deductible items. But I guess legally I should do in any case shouldn't I.

Thanks for the info on insurance, I'll get LI tomorrow. And speak to mortgage company

The tax thing is a biggie OP, I don't mean to scare you but you are faced with a choice of lying to HMRC and getting found out or telling the truth and being fined.

It doesn't matter whether there's no tax to pay on the income, you still have to declare it. It affects your CGT as well when you come to sell.

Right. Will download self-assessment form.

Can I declare from just this tax year, or from first date it was rented out? I have been completely useless and not kept any receipts for work done etc.

Am now terrified of being fined or worse!

Even if you start paying tax now you will have to fib or fess up about previous years.

Do you already have a Gateway ID? It can take 7-10 days to get one and the deadline for SA is 31 January. You can only file online for the tax year 2012/2013, you can't go back any further.

You don't need to submit receipts, but you would need to show them if you were investigated.

There are online guides on allowable expenses.