How to protect your rental property against malicious damage How to protect your rental property against malicious damage

How to protect your rental property against malicious damage

How can you reduce the chance of tenants causing malicious damage to your property and what insurance should you have in place? Read our guide to find out.

While most tenants treat their rental property with respect, there’s always a rogue element. Unfortunately, the kind of damage they can cause – smashed windows, broken furniture, deliberate fires and more – can be expensive to fix. The average claim to repair damage caused by criminal activity is £1700. This is based on Direct Line for Business landlord claims from 2015 to 2019. So, what can you do to defend your property? And how can you recoup these losses?

What is malicious damage?

Malicious damage is an action that’s carried out intending to cause harm. This isn’t the same as fair wear and tear, which is rental property damage that inevitably occurs during the course of a tenancy. It’s also different from accidental damage, which can be as costly as malicious damage but is something that happens by chance and is not deliberately planned.

For example, dirty windows or threadbare curtains are considered to be fair wear and tear but a broken window is damage. It counts as malicious damage if your tenant shattered the glass on purpose, and it’s accidental damage if they kicked a football through it by mistake.

Who pays for malicious damage to a rental property?

As the landlord, you’re legally responsible for the repair and maintenance of a property. But if your tenants cause any damage – regardless of whether it’s accidental or malicious – you can deduct costs from their deposit. Malicious damage is also a crime. You could receive an additional pay-out of up to £2,500 if the courts find your tenant guilty.

Deposit scheme arbitration and legal cases can be time-consuming and expensive, and they don’t always lead to a pay-out. Plus, if the damage is so great that you can’t afford to fix it straight away, you might not be able to let your property until these repairs are made, which could leave you out of pocket. What’s worse, if the vandalism is on the outside of the building, it could attract people who might cause more damage. So having the right insurance is important.

Does landlord insurance cover malicious damage?

Most landlord policies include malicious damage caused by a burglar or vandals as standard under their buildings and contents cover. This generally excludes damage caused by your employees, tenants or other people lawfully on your premises.

Malicious damage by tenants may be available as an optional add-on. But there may be acceptance criteria, e.g. cover might only be available if the tenant has passed a full reference check, so check what’s included when you purchase a policy.

We offer Malicious Damage by Tenants Cover. This is an optional extra that can be added to our Landlord Insurance for an additional premium. It covers intentional damage by tenants, their family or anyone else lawfully on the property, but excludes properties with students as tenants. A £500 excess applies.

If you’ve taken out Landlord Buildings Insurance with us, Malicious Damage by Tenants will cover the cost, up to the sum insured, of repairing the structure of your building and fixed kitchen and bathroom units. If you’ve taken out Landlord Contents Insurance, Malicious Damage by Tenants will cover the cost, up to the sum insured, of repairing or replacing landlords’ contents, such as furniture and televisions.

Can you evict your tenant for causing malicious damage?

Yes. In England and Wales, rental property damage is recognised grounds for evicting a tenant under the Housing Act 1988. You have to give your tenant between two weeks’ and two months’ written notice. You’ll then need to apply to the court for a possession order if your tenants do not leave by the specified date.

In Scotland, the Private Residential Tenancy Act 2016 covers evictions. Property damage isn’t one of the law’s 18 grounds for eviction – but a breach of a tenancy agreement is. As above, you must then give the renter 28 days’ notice to leave the property.

How can you prevent malicious damage?

Of course, the best defence is a good offence. There are several steps you can take to reduce the chance of tenants causing malicious damage:

  • Getting a full reference check can sometimes highlight potential problems early. You can then either find different tenants or take action to make sure the tenant doesn’t cause a problem. For instance, asking for a friend or family member to be their guarantor.
  • Ask for a reasonably high security deposit - a tenant is less likely to cause damage if a significant sum of their money is being held. Deposits are capped at five weeks' rent for homes where the annual rent is below £50,000, and six weeks' rent where the annual rent is £50,000 or more.
  • Compile a detailed property inventory and ask your tenant to sign it when they move in. When they move out, you’ll be able to track whether the condition of the property and its contents have changed beyond fair wear and tear.
  • Inspect your property regularly so you can make sure it’s in good condition and there are no nasty surprises when your tenant moves out.
  • Invest in CCTV or security lights to deter vandals and burglars that might try and break into your rental property, especially when it’s unoccupied for a length of time.
  • Creating a good relationship with your tenants and resolving problems quickly, will mean they’re more likely to want to look after the property. Remember, your tenants are the guardians of your property while they’re living there.

What should you do if your tenant has damaged your property on purpose?

  • Notify the police and request a Crime Reference Number.
  • Take photographs of the scene/evidence of damage, so you can submit them as evidence to your insurer, deposit scheme arbitration and/or criminal trial.
  • Do not dispose of or repair any aspect of the damage until your insurer says it’s OK to do so, as they may want to inspect it.
  • If someone has broken a door or window, arrange reasonable emergency repairs to prevent further loss using your own contractor. Your insurer may cover this cost.

To safeguard your property against intentional damage by your tenants, get Malicious Damage by Tenants insurance from Direct Line for Business.

Landlord Insurance

Added: 19 Feb 2020