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Article > Riots – The Real Cost for Landlords and Tenants

Article kindly provided by Julie Ford

Hemel Landlord Property Network
07904 288188

With the recent, well publicised riots, London has seen the worst arson and looting attacks since 1985 in Tottenham, Walthamstow, Brixton, Hackney, Peckham, Ealing, Croydon and Clapham Junction, but the violence has not been confined to the capital, spreading to Birmingham, Liverpool, Nottingham and even Bristol. It is estimated the riots have caused over £200millions worth of damage in London and the targeted towns and cities across the country.

As the clean up starts, it is becoming more and more evident that both private landlords and their tenants have been equally effected by these mindless acts of destruction, with many landlords discovering that their tenants had to flee their homes in fear of masked, knife-wielding gangs, while others have watched as their homes and belongings burned to the ground leaving them with nothing but the clothes they stood in.

This is extremely traumatic for the tenants, who in some cases have lost everything including the place they called home, but the landlord is just as heavily effected, with loss of his property to fire or being left with a property so badly damaged it is currently an uninhabitable property, either way the private landlord has been hit from all angles. Not only has he got devastated tenants but the bigger picture for a landlord is being left with a property he can’t rent out, rent he is not receiving, mortgage payments he can’t meet, the cost of re-accommodating his now homeless tenants, plus the cost of putting all the damage right.

Although the Association of British Insurers (ABI) have reassured landlords with rental properties in riot-hit cities that their homes and businesses are protected, Hidden in the small print of some UK domestic insurance policies and some landlord Buy-To-Let buildings insurance policies is a “get out” clause for liability. Under what IS NOT covered, the phrase “ …riot, civil disturbance, violent disorder, strike or malicious acts”, will mean some UK home owners and landlords having to foot the bill for the repairs to property themselves. The ABI have advised that all landlords should check their landlord property insurance to see if they are covered for problems caused by civil disturbances.

In light of the expected number of claims, many insurance firms have 24-hour claims lines, and the ABI confirms most home insurance policies should cover riot victims for losses due to fire, looting or vandalism. Anyone who has lost or fled their home should also have cover for alternative accommodation.

But how do we move forward from this horrendous experience, a number of local councils are planning to evict tenants from their council houses who have been involved in rioting. Apparently this is possible under the terms of a council tenancy if the tenant or anyone living at the property is involved in criminality or anti-social behaviour. The council will need to get a court order to evict them, but what can private landlords do? If you have a clause in your tenancy agreement that states your tenants can not engage is illegal or anti-social behaviour and you have proof of their involvement in recent events then you may have grounds to evict your tenants, but, does anyone have an anti-riot clause in their tenancy agreement? This is doubtful, and is something that is being seriously considered by a number of landlord groups who have been inundated with concerned landlords who are counting the cost of the vigilante attacks, but for now the best advice that can be offered to landlords, is, if you know or suspect your tenant has been involved in the recent riots, then you must report them to the police.

When taking the daunting step to be a landlord, most know and understand the importance of the Building insurance, but most landlords are looking to cut corners and fail to get the right insurance to cover all eventualities that may befall a rental property.

Similarly with tenants, most don’t consider any form of contents insurance when moving into rental accommodation, with most relying on the myth that the landlords insurance will cover them and their possessions as occupants, it is very important that tenants take out their own contents insurance to cover their belongings should the worst happen.

Great value Landlords insurance

If you are not covered by your current insurance or if you have no insurance at all, all may not be lost, you may have a claim under The Riot (Damages) Act 1886, This Act permits insurers and insured to claim for the cost of making good riot damage against the relevant Police Authority. The relevant insurance policy might offer an indemnity in the first place, but there will then be the potential for the insurer to recover in turn from the Police Authority. However any claim must normally be lodged with that relevant Police Authority within 14 days of the damage, otherwise there is the risk of not being able to pursue any claim under the Act. Because of that requirement to lodge a claim within 14 days, most insurance policies require that insureds notify their insurers of the damage within 7 days. Failure to notify insurers of the damage within 7 days may result in the claim being rejected under the insurance policy. All claimants including those with uninsured losses all share a common interest therefore in notifying all claims in a timely way both to insurers and to the Police Authority.

What can be claimed under the Act?
It is possible to claim against the Police Authority for loss or damage to houses, shops or other buildings and also property within those houses, shops and buildings.

What is not covered by the Act?
Protection under the Act is restricted. There cannot be any claim for loss or damage to cars on the public highway nor for goods left in shops awaiting repair. Importantly there can be no claim for consequential losses, i.e. business interruption claims nor for personal injuries sustained in the riots.

Requirement to give notice
It is unlikely that most insurers and insureds will be able to quantify the losses sustained as a result of the riots within 14 days. In these circumstances, it is recommend that notice should be given to the relevant Police Authority, within 14 days of the damage occurring, providing them with as much information as possible, including the time and location of the riot, the type of losses sustained and, if possible, an estimate of those losses and requesting an extension of time in which to provide the quantified claims. The Police Authority is not obliged to agree to an extension.

Where it is considered that there may be uninsured losses, insured’s should notify the relevant Police Authority of those particular losses within 14 days. That notification is quite separate to, and in addition, to any notification given by insurers in respect of the insured losses.
Restrictions under insurance policies

Insurers need to carefully consider their policies particularly with regard to business interruption claims submitted following denial of access to commercial properties and loss of attraction where there has been no physical damage to those properties and/or no strict denial of access. Policy wordings and so the scope of cover will vary but particular care is needed in the absence of immediate, causative physical damage.

At the date of going to press- The Prime Minister has announced that the time limit in which to submit claims to the relevant Police Authority under the Riot (Damages) Act 1886 will be increased from 14 days to 42 days and the Secretary of State for Business, Innovation and Skills has confirmed this in a written Ministerial statement. We continue to monitor the situation and will provide updates as and when developments occur.



About the Author

Julie Ford runs the Hemel Landlord & Property Network

The network is predominatly designed for landlords and property investors, we offer advice and guidance on all aspects of buying, selling, renting and managing your property, whether you are a 1st time landlord or a seasoned investor The Hemel Property Network has all the tools you need to help you make the most of your investment.

We meet Last Thursday of the Month, at 19:00 and encourage our guests to arrive early so that you can get to know your fellow property networkers.

Next HLPN Meeting : 29th September 2011 - 19:00

Venue : Holiday Inn Express - Apsley Lock - Stationers Place, Hemel Hempstead, Hertfordshire HP3 9RH




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