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Insuring your buy to let property against criminal damage

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How did you choose your tenant?

With all the care in the world when checking credentials and taking up references of prospective tenants – whether you take a personal hand in it or employ the services of a letting agent – assigning a tenancy is something of a leap in the dark. You hope and pray that the tenants you choose treat your property with the care and respect it deserves, but there is little you might do to be certain and a rogue candidate might get through every once in a while.

Sadly, there are some individuals who might take a perverse pleasure in causing malicious damage to your let property or its contents. Malicious damage is a particular form of criminal activity, which continues to be defined by the Criminal Damage Act of 1861.

Insurance

As a defence against such actions, you might be tempted to rely on the landlord insurance you are likely to have arranged when setting up your buy to let business.

Although the majority of such insurance policies include the risk of vandalism or malicious damage caused by other people, damage caused by your tenants may not be covered. 

Most of the landlord insurance policies arranged by UKInsuranceNET, however, offer the specific option of including malicious damage caused by your tenants.

You might want to check your own policy, therefore, in order to ensure that this is a risk that is adequately covered. Most policies have an upper limit to claims that may be made – the limit is likely to vary from one insurer to another of course, but might be in a typical range of between £5,000 and £7,500. 

Do note, however, that the cost to put right some forms of malicious damage may well exceed the limit on your landlords insurance policy. One such example is the use of the property as a cannabis farm.

Cultivation of cannabis

A particular form of malicious damage, and one that has the potential for causing especially extensive damage to your property result from tenants using the accommodation in the cultivation of the drug cannabis.

A leaflet published by Crimestoppers warns that although the favoured site for cannabis farms might once have been larger commercial and industrial buildings, privately let homes are increasingly being used for this highly illegal activity. Indeed, more than a million cannabis plants have been seized by police forces around the country in the past few years.

If it is your own let property which is used for such activity, substantial structural changes might have been made by the criminals to accommodate the cannabis farm. Floors being ripped up, holes in walls being made to run additional electricity supplies, and a moist atmosphere to grow the plants can wreck your property.

Since these are likely to be regarded as unauthorised structural alterations, many insurance policies might not cover the cost of the extensive and costly repairs likely to be required.

And, as mentioned before, even if your insurer does agree to pay out for damage caused due to the property being turned in to a cannabis farm, there may typically be a cap on how much is paid out.

This recent news story shows a tenanted private property that actually had a huge £1m cannabis farm in there, unbeknown to the landlord.

Electricity

To meet the needs of any cannabis farm, significant alterations might also have been made to the electrical cabling in your home – and safety is unlikely to have been any concern of your tenants. This, together with the storage of flammable supplies for the cultivation of the crop significantly increases the risk of fire.

The cultivation of cannabis consumes a significant amount of energy. Those energy bills are unlikely to be paid by the criminals once they have been caught, of course, but as the landlord, you are still likely to be held liable to the payment.

The discovery of an illegal cannabis growing operation in your let property is likely to be the first of your worries. Dealing with criminal tenants is not only thoroughly unpleasant, of course, but might also be dangerous. In any event, you face the time and cost of arranging their eviction – and until they are gone and extensive repairs carried out to your home, you stand to lose the rental income you might otherwise have enjoyed.

Turning a blind eye to activities such as the cultivation of cannabis in your let property is simply not on. If you knowingly allow such operations to continue, you might be facing up to 14 years in prison and/or unlimited fines.

Read our guide: Cannabis farms and your property.

 

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