Landlord Insurance and the 5 weeks deposit cap


Landlords will now be aware that with effect from June 1st2019 all new tenancies will be applicable to the Tenant Fees Bill 2017-19 and one of the main impacts for landlords will be the reduction of the size of deposit taken for the property.

Insurance can help you manage risks you face as a residential landlord, and it is therefore important to review your current insurances to ensure that you are prepared should an incident arise. Even the current deposit levels could leave you with a shortfall in the event of an issue with a tenant.

Two important covers you should consider holding include:

  1. Malicious damage by tenant– some policies exclude or limit this important cover. Check your policy includes malicious damage and ensure that there is no exclusion for malicious damage caused by the tenants. A deposit of 5 weeks rent will often not be enough to cover your losses. Remember that you could be left with a financial shortfall should an incident arise if cover is not in place, or if cover has an ‘inner limit’ on your policy. 
  1. Rent arrears– you can insure against losses incurred due to rental defaults and associated legal costs. Your letting agent will select the best tenants, but even the best and most long standing tenants can fall into arrears due to a job loss or a relationship breakdown. Speak to your letting agent about how long it takes in your area to gain possession of a property in your area, and how much valuable income you could potentially lose. Many claims result in four or five month’s arrears, and even if there are no dilapidations at the property, five weeks rent may not even cover your legal fees.


The cap of five weeks will apply for all rentals of less than £50,000 per annum, and increases to the equivalent of six weeks rent for rentals above this limit.

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Perfect for Lettings is a trading name of Saffron Insurance Services Ltd. Registered in England 829892. Authorised and regulated by the Financial Conduct Authority.  Registered office: 22 High Street, Saffron Walden, Essex CB10 1AX

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