Becoming a landlord: Preparing for risks

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Authored by Hiscox Experts.
4 min read
A person signing papers relating to a house
Landlords face various risks when letting out properties, from maintenance issues like leaks to tenant-related problems. Effective risk management can help you maintain your property's condition and minimise unexpected costs by identifying potential problems early before they escalate.

In this guide, we explore various risks that could impact landlords financially and offer insights for managing them.

Disclaimer: 
Managing rental properties is a complex business. At Hiscox, we want to see your investments thrive. Our articles offer insights into property management and landlord best practices. But these articles aren't professional advice. To find out more about a subject we cover here, please seek professional advice.

What are the common risks?

Being a landlord can come with various risks, including:

  • Leaks
  • Fire safety
  • Roof repairs and maintenance
  • Malicious damage
  • Subsidence.

Some of these risks involve legal requirements that landlords must follow to protect tenant safety and security. Additionally, addressing issues early, such as identifying a boiler problem before it breaks down, or renting to a reliable tenant who will care for your property, can help you save money.

Managing leaks

Leaks are a common issue that can arise in rental properties for various reasons, such as worn pipes, clogged drains, high water pressure or broken seals. To address this, many landlords conduct regular property inspections every three to six months of the tenancy. These inspections help monitor the property's condition and quickly identify any leaks or potential causes of leaks.

One area to inspect is the central heating system, as the pipes running throughout the property can be a primary source of leaks. According to the Gas Safety (Installation and Use) Regulations 1998, landlords must perform an annual gas safety check, which can help detect any potential issues.1

Additionally, it is good practice to regularly check the water mains supply to ensure there are no leaks. Under Section 11 of the Landlord and Tenant Act 1985, landlords are responsible for maintaining installations, including the water supply, to ensure they are in proper working order.2 

Fire safety precautions

Landlords are legally obligated to adhere to fire safety regulations in their rental properties. This includes installing smoke alarms on every storey and carbon monoxide alarms in rooms with solid fuel-burning appliances. Landlords must also ensure tenants have constant access to fire escape routes, provide furniture that meets fire safety standards, and equip houses in multiple occupation (HMOs) with fire alarms and extinguishers. 3

Many landlords conduct periodic fire risk assessments to identify potential hazards and ensure all fire safety equipment is functioning correctly. These assessments are legally required for landlords of HMOs under the Regulatory Reform (Fire Safety) Order 2005. Following amendments to the Fire Safety Order by Section 156 of the Building Safety Act 2022, landlords must promptly repair or replace any faulty smoke and carbon monoxide alarms.

Roof repairs and maintenance

One thing that many landlords keep an eye on is the condition of the roof on their rental properties. Common issues that can occur with roofs include:

  • Leaks (often due to damaged flashing)
  • Worn or missing shingles
  • Clogged gutters
  • Structural damage.

As the roof is considered part of a property’s structure and exterior, landlords are legally required to keep it in good condition under Section 11 of the Landlord and Tenant Act 1985. 

Malicious damage

Malicious damage is any damage deliberately caused to the rental property, either by a tenant, permitted occupier or anyone visiting the rental property. Examples include:

  • Deliberately breaking appliances or furniture provided by the landlord
  • Graffiti
  • Intentionally smashing windows
  • Creating holes in the walls or floor
  • Damaging door hinges.

Landlords insurance may cover malicious damage, but it's important to verify your policy details, as some policies only cover damage caused by unauthorised individuals. Landlords should also consider "fair wear and tear" – normal deterioration due to long-term occupancy – which is not malicious damage.

To minimise the risk of malicious damage, landlords can:

  • Screen potential tenants to identify those who are likely to care for the property
  • Maintain a good relationship with tenants during their stay
  • Conduct periodic inspections to ensure the property is being well-maintained. 

Understanding and managing subsidence

Subsidence occurs when a property's foundations begin to sink into the ground, potentially causing structural damage. This issue can arise for several reasons, including:

  • Cohesive soils: Properties built on clay or silt, which absorb more water, can be more susceptible.
  • Nearby trees: Trees such as oak, willow and ash which are close to your property can absorb significant amounts of water, contributing to subsidence.
  • Water leaks: Burst pipes, leaking drains or blocked gutters can lead to water leaks that cause subsidence.
  • Poor foundations: Older buildings with inadequate foundations can be prone to this problem.
  • Dry weather: Prolonged dry conditions can cause soil to contract and crack.

Signs of subsidence in a property include cracks in either interior and exterior walls, uneven floors and doors or windows that jam or stick.

Many landlords conduct regular inspections to detect early signs of subsidence, or tenants may report them. Since subsidence is a structural issue that can affect the habitability of a rental property, landlords are required to address it promptly under Section 9A of the Landlord and Tenant Act 1985.4

Your buildings insurance should cover subsidence, but it's important to review your policy to confirm this. 

Hiscox Experts

The Hiscox Experts are leaders valued for their experience within the insurance industry. Their specialisms include areas such as professional indemnity and public liability, across industries including media, technology, and broader professional services. All content authored by the Hiscox Experts is in line with our editorial guidelines.