Insurance risks follow rise in lodger numbers

28/10/2009

An increase in the number of lodgers could cause money problems among the nation's homeowners, Halifax Home Insurance said today (October 28th).

The organisation pointed out that many people who have taken in a lodger in the recession are keeping the accommodation arrangements "unofficial" because they are worried that they will be charged more tax.

However, Halifax suggested that the group is taking on a considerable financial risk by not formalising the tenancy, which could lead to rising housing debt and bills.

Figures from the firm show that 27 per cent of landlords were affected by the behaviour of "rogue lodgers" last year, with the tenants collectively causing £136 million of damage to properties.

Three in four (74 per cent) of landlords also say that they do not carry out background checks for their lodgers before they allow them to move in.

Moreover, the unofficial nature of the tenancy arrangements often means that the homeowner has not alerted their home insurance provider of their changing circumstances, increasing the likelihood that claims for damage will be turned down.

This would leave the homeowner out of pocket and having to fund the cost of the damage themselves.

Martyn Foulds, senior claims manager at Halifax Home Insurance, said: "Getting a lodger in is a great way to earn some extra money to help with the household budget, but it's important to seek advice from your home insurer beforehand, as this can often impact on the terms of your cover."

He added: "It's also really important to seek reliable references for the person, and ensure that binding legal agreements are in place, so that all parties know where they stand."

Halifax Home Insurance also said that overall lodger numbers have risen by 23 per cent over the past three years, hitting 970,000 in 2009.

Estimates from the firm suggest that, due to unofficial arrangements, the actual number of lodgers is six times higher than the total shown on official data.

Tags; Housing Debt and Bills, Young Family Finances, Retirement Money Problems,

• Share
• 
• 
• Store
• 
• Follow
•