Landlord Insurance - To Pet or not to Pet, that is the question?!

Landlord Insurance - To Pet or not to Pet, that is the question?!

If you own a buy-to-let property, one of the most common dilemmas is whether you should allow tenants to keep pets.

Most standard shorthold tenancy agreements provided by Letting Agents will generally exclude Pet ownership, but could you be missing a trick?

As Landlords, we want to maximise rental return, and by accepting Pets, you could open the door to some excellent long-term tenants and minimise unoccupancy, which can not only impact your pocket, but also your insurance requirements.

Size Of The Rental Market With Pets

Accordingly to a 2013 study by PFMA, 13 million UK households own a pet, which represents 45% of the population and the pet population itself also increased by four million to 71 million against 2012 data.

If you then overlay this with information from registered charity Dogs Trust the rental opportunity is significant:

  • 78% of pet owners had experienced difficulties finding privately rented accommodation that allowed pets
  • 54% of pet owners were never able to find a suitable property that accepted pets
  • 8% of pet owners had to re-home their pet

Benefits of Allowing Pets

We’ve established that you can appeal to a broader range of tenants, but there are also some other potential upsides:-

  • Increased rental income – As tenants with pets find it more difficult to find a suitable Landlord, they will often pay increased rental to secure a property
  • Retention of Tenants – You are less likely to lose a good tenant as they will appreciate the flexibility and understand challenges in finding another property with pet provision
  • Security – A dog can reduce exposure to theft and break-in and avoid a costly Landlords Insurance claim

Don’t Forget The Obvious Disadvantages

Pets can bring a Landlord some significant headaches, and it’s essential to weigh up the pros and cons.  The potential negatives include:

Increased cleaning costs – Professional cleaning costs are likely to increase following a tenancy involving a dog or cat. Specifically for carpets, beds, sofas and any soft furnishings.

Hygiene – If a pet is not kept clean, they can generate an odour which can be difficult to shift without additional cleaning as above.  

While you can make provision for additional cleaning costs, there may still be an impact in terms of putting off other potential tenants who view the property before a rental transition.

Flea infestation – If not regularly treated, animals can develop fleas which can infest themselves in carpets, beds and furnishings.

Damage – Pets bring increase exposure to damage to both the property itself and any contents.  That cute puppy might not be quite so charming after they've chewed through all your skirting boards!

Landlord Insurance and Pets

Tenants ownership of pets will not directly impact the costs of your Landlord Insurance.

Still, it’s important to read your policy documents to ensure you understand your cover in a couple of key areas:

  • Damage by Pets exclusion – Standard Buy-to-let insurance policies will exclude damage caused by tenants animals
  • Security and Alarm warranties – In some areas, your insurer may have imposed a security condition or warranty. For example, window locks should be in place and operative, or an alarm needs to be operative when tenants leave the property.  If windows locks are not applied or the alarm not set, your insurer could reject a claim
  • Theft by forcible and violent entry – If windows or doors are left open to provide access for cats/dogs, and a theft claim occurs, you could also find yourself in breach of policy conditions. Many Landlord Insurance policies state that for a theft claim to be valid entry must have been gained to the property by forcible or violent entry, i.e. a break-in.

The best advice is to discuss your specific policy conditions with your insurance provider in advance of permitting pets so that you fully understand any additional risks involved.

Next Steps - Things to Do

If you’re interested in allowing Pets at your Let Property, there are several recommended steps to mitigate any potential problems and help you find a valuable tenant:

  • Check your own lease – If your property is a leasehold and you plan to sub-let your first stop should be to check your own lease agreement.  
  • You may find this precludes Pets, if so, at least you know exactly where you stand and have a valid reason for pet exclusion.
  • Pet Agreement – A formal legal contract which forms an addendum or part of the tenancy agreement with your tenant. This should include specific stipulations to protect your position, including:

o   Restrict pets to specific types (e.g. Dogs, cats, fish etc.)o   Any additional cleaning non-refundableo   Hygiene requirement for petso Particular reference to damage by pets

  • Suitable Deposit – Ensure the deposit payment makes allowance for potential increased damages
  • Meet the tenant and pet – It may sound obvious, but your own judgement counts.
  • References – Make sure any referencing process includes any prior experience with pets
  • Landlords Insurance – Check your policy and make sure you include any additional provisions within the Pet Agreement contract
  • Inventory – Best practice with any rental, but your inventory review needs even greater focus if Pets are involved. You should not only review to protect against breakages, but also consider if some items are suitable if the owner has a dog or cat to avoid problems further down the line.

Our view

Without wanting to sit on the fence, it really depends on the type of rental property you own and your individual circumstances.

If your property is an HMO, this may not be suitable for Pets, but in the case of a professional let house to a family could increase loyalty and income as long as you have protected yourself in terms of deposit and Pet agreement contract.  

You don’t want to lose a great long-term tenant by being too rigid, and it could be a great reason to increase your rental return on your investment!

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Whether you allow pets or not, you still need to understand the relevant exclusions and provisions under your policy to ensure that your current policy is suitable for your needs.