Holiday let properties offer smart investors the opportunity to grow their wealth, and entrepreneurs the ability to be their own bosses. But becoming a successful holiday property investor can come with a steep learning curve.
Away from the property design and development aspects of the business that so often entice owners into the market, there are the slightly more mundane administrative tasks to consider. One of which (the one that can be rather daunting if you think too hard about it) is the potential legal ramifications of renting out your property to tenants that you don’t know.
Chances are, you may not have even considered the need for legal expenses protection when you purchase your holiday let insurance. But before renewing your policy, it’s wise to weigh up the risks versus the benefits of having this feature included.
Here we explain this for you in simple terms so you can make the best decision for the future of your business. You may just decide that legal expenses cover becomes an essential part of your next policy.
Legal expenses cover – what does it protect against?
Legal expenses cover empowers you to defend your legal rights in regards to your holiday home. Legal costs can typically arise from:
- Disputes with tenants such as damage to your property, refusing to vacate or disagreements over security deposits
- Disputes with your neighbour such as nuisance or trespass claims
- Disputes that arise from letting out your property and buying goods and services for it.
- A formal or informal enquiry into your personal tax affairs
Often charged as an optional extra, legal expenses cover can protect you against litigation costs should such a dispute arise. It covers you for unexpected fees arising from claims against you or claims made by you against your tenants.
With the rise of no win, no fee solicitors, the chances of having a case brought against you today is higher than ever. Examples of cases won by hungry solicitors looking to get a piece of the action should be considered as potential risks to your business.
The good news is that you can easily protect yourself against them with the right holiday let insurance provider. Legal expenses cover can protect your legal costs and Public Liability cover protects you against successful claims that a third party brings against you.
You should look for legal expenses cover that covers all of the disputes above and applies to solicitors’ and barristers’ fees, court costs and your opponent’s court costs if the court awards against you.
How much cover do I require?
An insurer will typically pay up to £50,000 of your legal expenses to defend your rights, including the cost of appeals.
What legal expenses may not cover
Insurance companies may exclude the following from their cover:
- Any excess on your policy terms, that your provider should clearly state on your policy documentation
- Buildings or land other than your holiday home
- Agreements to rent out your holiday home for a term longer than 6 months.
- Tax enquiries relating to assets outside of the UK, or where holiday let income is not disclosed and you have been found to give negligent misstatements
- Allegations including drugs, violence, dishonesty, hen and stag parties and other antisocial behaviours
Legal expenses cover from Policy Powerhouse
At Policy Powerhouse, our Holiday Lets insurance offers the addition of optional legal expenses cover, allowing you to claim for the following situations:
- Contract disputes, about:
- Buying or renting out your holiday home for leisure purposes
- Buying or hiring goods or services
- Your tenancy or a lease or where you are a tenant or lessee
- Property disputes against another party who causes damage to your property, nuisance or trespass
- Tax investigations – Help from an accountant if HMRC investigates your personal tax affairs
- Legal defence – For the cost of legal representation when investigated for or charged with any incident arising from letting out your holiday home