Q: To what extent do you think the recent High Court ruling against Foxtons will affect standards in the lettings industry?
A: The fallout from the case will certainly have a role to play in what is a positive ongoing evolution for the lettings sector. Month-onmonth, year-on-year, the industry is becoming more stringently monitored and regulated which, combined with burgeoning levels of competition in the marketplace, is putting increasing pressure on letting agents to raise their game.

The High Court ruled that some of the terms and conditions used by Foxtons in its agreements with landlords were unfair. As pointed out by Office of Fair Trading (OFT) Chief Executive John Fingleton, the judgement has sent out an unambiguous message that contracts need to be written in clear language and that businesses offering services need to ensure unexpected terms are not hidden away in small print. It wasn’t long ago that the Guild of Residential Landlords had also been taken to task by the OFT for a proscriptive clause in an Assured Shorthold Tenancy which obliged tenants to take out insurance on their own possessions. This case never reached the courts.

Earlier this year the Association of Residential Letting Agents (ARLA) introduced a licensing scheme for its UK members who must now abide by a strict code of practice. This move, combined with the recent High Court ruling, should make higher standards and greater levels of clarity inevitable.

Q: Are tenants giving sufficient consideration to insuring against accidental damage they cause to landlords properties?
A: Many tenants mistakenly assume that their landlord’s insurance will cover any damage that they cause to the landlords belongings, such as furniture or fixtures and fittings. As a result, tenants will frequently find themselves faced with prohibitive bills. Even small scale accidents, such as wine spilt on a landlord’s sofa, can result in significant costs which tenants’ deposits may not cover. Those insurance providers that offer cover for such incidents will normally insure to a limit of around £2,500.

The onus for ensuring a policy is in place to cover these unfortunate eventualities should not be laid solely at the door of tenants however. As part of their service, letting agents have a duty to advise them of the potential risks and be in a position to offer them appropriate insurance. Of even graver financial significance than damage to landlords’ property, can be the potential legal liability on tenants for injuries that arise out of their occupation of the properties they let. If someone were to fall down stairs after tripping over a fan or heater cable belonging to the tenant, for example, a resulting claim for damages can be enormous. Typical legal liability cover will insure a tenant up to £2 million.

All too frequently there is a temptation to save money (in the short term) by underinsuring especially in these difficult times, but it is a temptation to be resisted. The financial consequence of underinsuring can be disastrous.

Q: What types of insurance provision should agents be advising tenants to consider in order to adequately protect themselves?
A: Agents should be aware that not all tenants’ contents policies are the same and that many products on the market do not satisfactorily cater for tenants’ needs. A standard owneroccupier’s contents policy won’t cover the aforementioned tenants’ liability for accidental damage to landlords’ property.

Standard contents policies will insure tenants against fire, theft, water damage, malicious damage etc, but some tenants may wish to consider extending this cover to insure against accidental damage to their own possessions.

By offering specialist insurance cover from a specialist provider however, agents can differentiate themselves from their competitors, steal an important march and open the door to additional revenue streams. LetSense is a specialist provider of residential lettings insurance and tenant referencing services for letting agents.

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