As a landlord, you will probably be well-versed in tenant types. Not only is it one of the biggest factors that contribute to the likelihood of a tenant being able to pay their rent on time, but landlords must also state what tenant type they are letting a property out to when buying insurance policies for residential properties.
What is a Professional Tenant?
Any tenant who is in paid, full-time employment is typically classed as a professional tenant (or a working tenant). Professional tenants are considered to be more low-risk for falling behind with their rent payments because of the regular flow of income from their job. This means that landlords typically enjoy a lower premium as a result of letting to professional tenants because most insurers deem them to be less of a risk.
The Risks of Renting to Professional Tenants
Working tenants are by far the most sought after tenant type for landlords looking to fill their buy-to-let property. However, rising rents and stagnant wages mean that simply having a job, even full-time, is no longer a guarantee that a professional tenant won’t struggle to pay the rent. Just as with every other tenant type, there are still always risks associated with renting to professional tenants.
Professional Tenants Can Lose their Job
Just because a professional is currently in full-time, paid employment, it doesn’t necessarily mean that they will always be. The current economic climate across the UK, due mostly to Brexit uncertainty, has seen many professionals having to face the prospect of losing their job.
Now with the added stress of the recent Coronavirus pandemic threatening to severely affect the global economy, the number of working people losing their jobs doesn’t look set to slow down any time soon.
Accidents Happen to Professionals Too
Putting aside the issue of professional tenants having a regular income, there is never any guarantee that other unfortunate events won’t occur. It could come in the form of accidental damage to the property, including fire and flood.
Not to mention all the other risks that are present regardless of if you are renting to a professional tenant, such as weather damage to the building.
Professional Tenants that Work from Home
Many professional tenants work from home with just a computer, including industries such as web design and development, marketing and consultancy and many other types of clerical type businesses. However, if the business is not computer-based, the risks of damage to your property may increase significantly.
It is completely legal for your tenant to run a business from their home. There are a few rules that they must follow, such as that the property should remain mostly (at least 60%) residential. They will also require the landlord’s permission in writing, however, a landlord cannot unreasonably withhold permission.
There are some instances to which a landlord can refuse permission for their tenant to run a business from their residential property, these include:
- If the tenants business would require the landlord to change their mortgage.
- If the tenants business would significantly increase wear and tear to the property.
- If the tenants business would cause a nuisance to the occupants of neighbouring properties.
Even in the event that a tenant does only intend to do clerical work from home, we would always suggest landlords take the appropriate steps to protect themselves from the risks.
Landlord Insurance for Professional Working Tenants
Landlord insurance is optional, however, it is strongly recommended because a standard home insurance policy will not cover a rental agreement and just because you have a hard-working, responsible, professional tenant does not mean that you are immune from everything else that could potentially go wrong in the future. A strong landlord insurance policy can protect you financially should the unforeseeable happen.
Flexible, comprehensive, and affordable landlord insurance for professional working tenants can be hard to come by, but with Ashburnham Insurance, you can choose the level of cover you require. CALL US FREE ON 0800 1696137 to find out more.