Water Damage – Who Pays?
The risks of a leak in an apartment block
To date I have bought two apartments in residential blocks. I have largely avoided these types of property because of the high service charges charged by exploitative freeholders and their residential management companies. There are several types of potential water damage and costs for a landlord.
- A leak in an adjoining apartment that affects your buy-to-let property in the apartment block
- A leak in your rental property caused by the tenants
- A flood in the area affecting a landlords rental property
Landlord Insurance – professional rates
Apartment block leaks
One of the problems of apartment blocks are that as the landlord of a buy-to-let apartment in one you have neighbours above and below you as well adjoining your property unless your are lucky enough to have invested in the penthouse. This can cause massive problems should you have a leak in your rental property. Lets face it landlords constantly face issues with leaking boilers, showers and baths where the seal has gone between the tray and the wall. Water has an uncanny knack of finding the gap, fissure, hole and gravity does the rest. This means that your leak or problem very rapidly becomes your neighbours problem too. You also should be aware of a landlords water responsibilities.
How to spot a water leak?
Water leaks can be difficult to spot. Where you have a poorly fitting plumbing joint. Plastic plumbing pipes and joints have revolutionised the plumbing industry in the speed and ease of fitting and avoiding the need to solder joints but they have a terrible habit of the screw joint to ‘thread’ if not screwed together correctly. The result is a small leak which can go undetected for years. Over a period of time this small amount of water can cause damp and the rotting of timber or damage to plasterwork. In an apartment block this damage from a faulty plumbing joint can cause damage a distance below the actual leak. This all makes the detection process of spotting a leak much more difficult.
Where there is a significant leak it will be much more obvious. A landlord is likely to hear the sound of running water, there will be standing areas of water, water pressure in your system may fall. Where there is a leak in your gas central heating system then you will find that the water pressure will be constantly fall resulting in a landlord having to keep repressurizing the system.
A landlords experience of water leaks
One of our landlord readers recently wrote in about a problem they had with their residential investment which had suffered a major water leak. The buy-to-let property in question was a top floor flat. The result was that damage had not only been caused to the carpet in their flat but also to the carpet of the tenanted flat below. In addition to the carpet, the ceiling in the flat below had also been damaged resulting in the plaster bubbling up and falling off.
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After discussing the situation with the property investor who owned the downstairs flat, the landlord was told by him that the structural damage to the flat below was covered by their buildings insurance but meeting the cost of a new carpet would be the upstairs landlord’s responsibility.
Our reader wanted to know who actually was responsible for the repairs and which insurance policy should be claimed against?
The Legal responsibilities of a landlord
Firstly, before getting into the details of the insurance policy a landlord should be clear about their responsibility for maintenance of their buy-to-let property under the terms of any tenancy.
One of the most important pieces of legislation governing repairs is that contained within Section 11 of the Landlord & Tenant Act 1985 and which applies to leases or tenancy agreement granted on or after 24th October 1961 for less than seven years.
The vast majority of Assured Shorthold Tenancy Agreements are periodic or for terms of less than seven years and therefore Section 11 applies to these tenancy agreements.
The landlords implied obligations under Section 11 are:
- To keep in repair the structure and exterior of the dwelling (including drains, gutters and external pipes) to fulfil the tenancy agreement.
- To keep in repair and proper working order the installations in the dwelling for the supply of water, gas, electricity and sanitation (including basins, sinks, baths and sanitary conveniences) to fulfil the tenancy agreement.
- To keep in repair and proper working order the installations in the dwelling for room and water heating to fulfil the tenancy agreement.
In the example given above the landlord would be responsible for the repair of the ceiling as it is part of the structure of the building. The reality is that the ultimate responsibility may not lie with the owner of the leasehold flat. This is because the landlord themselves may only be a leaseholder and it could well be that it is their landlord, the freeholder or any appointed management company that will ultimately be responsible for carrying out the repair work.
Under s.11(2) of the Landlord & Tenant Act 1985 the landlord is not responsible for works or repairs for things which the tenant has a duty to use in a tenant-like manner such as carpets or decoration. However, the exact responsibilities may be set out in any explicit terms contained within the Assured Shorthold Tenancy Agreement. Therefore, unless otherwise stated in the Tenancy Agreement; if the water damage resulted in the carpet or decoration becoming shabby it is the tenant who is responsible for the repair. The reality though is that when faced with a shabby property and an uncooperative landlord most tenants will ultimately give notice and leave.
Who pays for water damage?
The next step for the landlord is to establish who pays for the repairs in both flats.
For a start any insurance on the (upstairs flat) will only cover damage to the landlords flat unless there is block insurance scheme in place. This is likely to be the case where a freeholder and a management company exist who arrange the building insurance for the entire residential block and then recharge each leaseholder for their share of the insurance costs.
Contents insurance is the responsibility of the individual flat owner or leaseholder. Therefore, providing the landlord has contents cover they will be able to claim against the damage caused to the carpet in their top floor flat. The landlord is likely to have liability cover included in their buy-to-let insurance policy, but this is only if it can be proved that they were legally negligent. This means that under the scenario under discussion, the only way the landlord of the upstairs flat would have been legally negligent is if the downstairs flat owner “officially” warned the top floor landlord that they had a leak (or something that may cause a potential leak) that could damage the downstairs flat. Then, following this, the top floor landlord ignored this warning and then the leak occurred. In practice, there is almost no chance of this happening as by the time a leak is discovered, the likelihood is that the damage has already been caused. This is therefore classed as an accident as far as the buy-to-let insurer is concerned and therefore would not be the top floor landlord’s fault.
Therefore, the property investor who owns the downstairs flat has several options. Firstly, depending on the terms of the tenancy they could insist on their tenant paying for the repair. The tenant if insured could claim on their contents insurance. It may well be that the insurance company that provides the buildings cover also includes cover for floor coverings such as carpets within the policy. This is the case under the policy provided by Alan Boswell’s Insurance.
Therefore, where a residential block insurance policy is in place the costs of both carpets could be claimed for together along with the costs of repair to the ceiling. This would have the benefit for both landlords of not having to get into an argument with the tenant about who is responsible for the costs and then for one of the parties to have to make a separate claim. Where this extent of cover is not in place then the property investor may decide to claim off their own buy-to-let insurance. In this case the property investor and owner of the downstairs flat is not likely to be happy, but it is down to them to pursue their insurer for further advice. Their insurer could ultimately pursue the top floor landlord’s buy-to-let insurer under the negligence clause. The reality is unless the amounts are large and the case clear cut that it is very unlikely to happen. Landlords should always remember that a conciliatory approach is likely to produce a more effective long-term solution than an aggressive confrontational one.
For further information about your specific landlord insurance requirement landlords can contact Alan Bosewell’s specialist landlord insurance department on 01603218000 asking for landlords and quoting the reference Property Hawk.
Who is responsible for fixing a water leak?
The responsibility for the water supply will largely fall to a landlord not the tenant. So given this where does a landlords responsibility start and that of the water company finish? All water companies have a code of practice and OFWAT has a households supply and standards of service which outlines levels of responsibility.
The general rule on responsibility for fixing a leak is if it occurs on your side of the meter, on the public footpath or the external stop valve it would be the landlord or property owners responsibility.
If there is a problem with the water meter then it’s the water companies responsibility. Leaks in the pipe work are more complex and will depend on a number of factors. Water companies are responsible for the water mains and usually the communication pipe (the service pipe running from the mains to the boundary of your property). Whilst outside stop valves are the property of the water company they can still charge you for the repair particularly if they are required to conduct an emergency repair to them.
A landlord is normally responsible for the maintenance of the supply pipe. That is the pipe from the road into their property and usually starts where the supply valve starts.
Tenants causing water damage
If the water damage caused by the tenant has resulted from alterations to pipework without first getting approval from you as the landlord then it may be possible for you to obtain some kind of compensation. This is because the tenant will have probably broken the terms of the tenancy agreement by carrying out works to the rental property without first obtaining the landlords consent.
However, we all know that so called accidents happen. So the case where the tenant leaves the tap on and overfills the bath can cause thousands of pounds of damage to your rental property as well as other adjoining owners as mentioned above. The problem for a landlord in this situation is that clearly the tenants are liable but getting them to admit to this and or proving this can be almost impossible. Just in the same way proving that a tenant might be smoking in the rental property without consent. The damage caused by a water leak clearly will go beyond what is considered to be ‘fair wear and tear’. So what are the options for a landlord? One clear bit of advice is that landlords should consider carefully their landlord insurance to make sure that it does cover them for accidental damage by the tenants. This will protect them to a degree and depending on the conditions of their excess should there be some kind of accidental flooding or water damage.
Water damage resulting from flooding
Thankfully this kind of problem in a rental property is relatively rare for most landlords however with climate change it is increasingly a worry for many landlords. The RIBA now estimate that there are 1.7 million homes at risk of river or coastal flooding.
If a property does properly flood rather than suffer a slight leak then a landlord’s property could be uninhabitable for months if not years. This is a completely different challenge for both landlord and tenant. In this situation the tenant will have to be completely rehoused for an extended period. Responsibility for rehousing during the repair work does not fall to the private landlord. They are responsible for the repair of the property and to make sure it is made habitable. If the landlord’s insurance does not cover the costs of temporary accommodation for the tenant then a tenant may have to seek help from the Council or a charity such as Shelter whilst the repair work from the flooding is carried out.
During the repairs to the property the tenant should continue to pay rent even if they are unable to live at the property. It may be that the tenant tries to negotiate a rent reduction or rent payment holiday with the landlord during the repair work. If this cannot be agreed between the parties it may be that the tenant goes to court to seek and order to reduce the rent during the repair period or award the tenant compensation.
There is no clear cut solution for either landlord or tenant in the case of flooding and both sides may need to seek expert advice to both establish responsibilities and what is the best legal course of action.
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