10 Expensive Risks to Avoid as a Landlord
Being a landlord can be a rewarding investment, but it’s not without its risks. Many of the most costly issues landlords may face can be preventable with the right knowledge, preparation and protection in place.
Gallagher, the NRLA’s Landlords Insurance partner, highlights ten common (and often costly) risks, and how to avoid them.
1. Letting to the Wrong Tenant
Choosing the wrong tenant can lead to:
- Rent arrears
- Property damage
- Costly eviction proceedings
Carrying out thorough referencing - including credit checks, affordability assessments and previous landlord references is essential.
Tip: Don’t rush to fill a void - long-term stability is more valuable than short-term occupancy.
2. Rent Arrears
Missed rent payments can quickly impact cash flow, particularly if you rely on rental income to cover mortgages or other costs.
Even reliable tenants can fall into difficulty unexpectedly.
How to mitigate:
- Carry out affordability checks
- Maintain open communication
- Consider rent guarantee insurance to help protect your income
3. Failing to Keep Up with Legal Requirements
The regulatory landscape for landlords continues to evolve. Missing key obligations such as:
- Right to Rent checks
- Deposit protection
- Gas and electrical safety compliance
can lead to fines, invalidated insurance, or difficulty regaining possession of the property.
Tip: Stay up to date with legislative changes and keep clear records of compliance.
4. Poor Property Maintenance
Delaying repairs can result in:
- More severe (and expensive) damage
- Tenant dissatisfaction
- Increased void periods
Regular inspections and proactive maintenance can save money in the long run and help retain tenants.
5. Inadequate Insurance Cover
Standard landlord insurance may not cover:
- Rent arrears
- Legal costs
- Tenant disputes
Without appropriate cover, landlords can face significant out-of-pocket expenses.
Consider:
- Legal Expenses Insurance
- Rent Guarantee Insurance
Reviewing policy terms regularly to ensure suitability
6. Void Periods
Empty properties mean lost income—while costs such as mortgages, insurance and maintenance still need to be paid.
Reduce the risk by:
- Pricing rent competitively
- Maintaining the property to a high standard
- Building strong relationships with existing tenants to encourage renewals
7. Unrealistic Rent Pricing
Setting rent too high can:
- Deter prospective tenants
- Extend void periods
- Increase the likelihood of arrears
While market conditions may justify increases, pricing must remain realistic and sustainable for tenants.
8. Poor Tenant Communication
Breakdowns in communication can escalate small issues into costly disputes.
Tenants expect:
- Prompt responses
- Clear communication
- Professional handling of concerns
Tip: Establish clear communication channels and respond quickly to issues wherever possible.
9. Ignoring Early Warning Signs
Minor issues such as late rent payments or maintenance concerns can be early indicators of bigger problems.
Addressing concerns early can:
- Prevent escalation
- Reduce financial impact
- Improve tenant relationships
10. Costly Legal Disputes
Regaining possession of a property or resolving disputes can be:
- Time-consuming
- Complex
- Expensive
Legal costs can quickly add up, particularly if processes are delayed or challenged.
Mitigation:
- Ensure full compliance with regulations
- Keep detailed records
- Consider legal expenses cover to support you if issues arise
Protecting Your Investment
Even the most experienced landlords can encounter challenges. Having suitable protection in place can help safeguard both your income and your property.
Legal Expenses and Rent Guarantee Insurance from Gallagher can provide:
- Protection against rent arrears
- Cover for legal costs
- Support through tenant disputes and possession proceedings
For more information, contact the specialist team on 0333 000 0169.
This article is intended as a general guide and does not constitute legal advice. Landlords should seek professional advice specific to their individual circumstances.
The sole purpose of this article is to provide information on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited and National Residential Landlords Association, an Introducer Appointed Representative of Arthur J. Gallagher Insurance Brokers Limited, accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.
National Residential Landlords Association is an Introducer Appointed Representative of Arthur J. Gallagher Insurance Brokers Limited, which is authorised and regulated by the Financial Conduct Authority. Registered Office: Spectrum Building, 55 Blythswood Street, Glasgow, G2 7AT. Registered in Scotland. Company Number: SC108909. Rentguard is a trading name of Arthur J. Gallagher Insurance Brokers Limited.
