It’s every landlord’s worst nightmare. When Richard Meryon, a retired captain in the Royal Navy, and his wife, Rosalind, rented out their Devon home their tenants destroyed the house and everything in it.
When they finally managed to evict the couple and assess the damage, they were shocked to discover their insurer wouldn’t cover their losses which eventually reached £56,000.
This is because Saga had sold them a standard home insurance policy rather than specialist landlord cover, and it did not offer protection against damage by tenants.
Mr and Mrs Meryon have owned their £300,000 home in Ivybridge, Devon, for 36 years. In 2009 they decided to take up a post in Jerusalem as volunteers with a British Christian charity. They arranged to let out their home while they were away and in October 2009 rented it fully furnished to a local couple.
Two months later they reinsured the property with Saga, which sells Saga-branded policies that are underwritten by other insurers. It has supplied their home insurance for around 10 years. Mr Meryon phoned to say the property was now tenanted and Saga sold him a home and contents policy underwritten by Allianz.
Mr and Mrs Meryon moved to Jerusalem in January 2010. The tenancy ran smoothly for two years until the husband lost his job. The couple subsequently stopped paying rent in November 2011, despite receiving housing benefits from South Hams District Council.
Concerned, the Meryons arranged an inspection of the property and flew back to the UK. They arrived to find that the tenants had boarded themselves in and would not allow them to enter. They were horrified to see the garden strewn with their damaged furniture, rubbish and various other items.
The Meryons were forced to start proceedings to have the tenants forcibly evicted. This took five months and cost them £2,500. Eventually they took back their property at the end of May 2012.
They gave Saga and Allianz advance warning that a claim was likely and arranged for an assessor to visit the property on the day they gained access.
They discovered the tenants had stripped the property of the furniture and other fittings. There was extensive water damage to the walls, ceilings and floors caused by extremely high heat and humidity levels.
They gave Saga and Allianz advance warning that a claim was likely and arranged for an assessor to visit the property on the day they gained access.
They discovered the tenants had stripped the property of the furniture and other fittings. There was extensive water damage to the walls, ceilings and floors caused by extremely high heat and humidity levels.
“Our precious home had been completely trashed,” Mr Meryon said. “We discovered that the tenants had likely been growing cannabis in the house, which caused the severe condensation and damp problems. We contacted the local police who told us it was an issue for our insurers.”
But Allianz refused to uphold the Meryons’ claim. It pointed to small print in the policy that said any loss or damage caused by persons lawfully in the home was not covered, nor was malicious damage by tenants.
“I have paid home insurance on that house for 36 years, never had a claim, and now when I have one it has been denied,” Mr Meryon said. “Saga was aware that this property was being rented out and yet the policy it sold me was completely unsuitable for insuring a tenanted property.”
He complained to the financial ombudsman. In August 2013 an adjudicator said it was clear that the policy did not cover malicious damage by tenants.
“I find it extraordinary that I am found to be negligent because I did not read the small print, which was mailed to me after I had moved abroad,” he said. “Meanwhile Saga, to which I expressly stated that the property would be tenanted while I was working overseas, either knowingly sold me an inappropriate policy or itself did not read the fine print in the Allianz cover but has no blame attributed to it.”
Mr Meryon has appealed to the ombudsman.
He said: “I feel utterly let down at every stage of having had my home desecrated. The £56,000 it has cost to restore our property is more than I earned during the tenancy, not to mention 18 months worth of lost rent. We now wish we had bolted the house shut for two and a half years and never allowed anyone in.”
A Saga spokesman denied the policy was mis-sold. He said it covered the property for tenanted use, however did not include cover for malicious damage or theft by people invited into the home. He said these exclusions were listed in the policy documents and the Meryons should have read them carefully.
Saga did not offer landlord cover in 2009 but this year launched a specialist policy. It does cover malicious damage by tenants but the spokesman said in this case it wouldn’t have paid out either because the Meryons did not regularly check on the property throughout the tenancy.
“We completely understand the frustration that Mr Meryon felt coming back from Israel to find his tenants had vandalised his home,” he said. “But his policy simply didn’t cover him for this, as set out in the policy documents. The policy provided cover for one-off incidences such as fire, escape of water, subsidence, storm damage, flood, theft and damage following a break in.
“No Saga insurance would pay out in these circumstances. The lesson to be learned is that as a landlord you should visit your property at least a couple of times a year to check that your tenants and property are OK, which may nip events like this in the bud as the deterioration had been over some considerable period.”
Allianz declined to comment.
Martin Bridges, technical services manager at the British Insurance Brokers' Association, said: “If someone lets their property to tenants it is more appropriate to have specialist landlord cover, which is designed for this scenario,” he said. “Some specialist policies will cover owners for malicious damage to property or theft of furniture, fittings and fixtures.”
Kevin Pratt, of MoneySuperMarket.com, said each insurer takes a different approach to this.
“If cover under these headings is offered, it will usually be as an extension of the policy, so it may be an optional extra that costs more,” he said. “Landlords should check both their buildings and contents cover for these provisions because damage caused by someone kicking in a door for example would be viewed as a buildings claim whereas theft of property would be contents.”
Mr Pratt said malicious damage and theft clauses usually carry big excesses.
“As an example Allianz landlord cover has a £2,500 excess in respect of buildings and £1,000 in respect of contents for malicious damage caused by a tenant or others lawfully on the premises.
“The excess for theft caused by a tenant or others lawfully on the premises is £2,500 for both buildings and contents.”
Peter Chadborn, of financial advice firm Plan Money, said getting the wrong cover can be financially devastating if, like the Meryons, it doesn't pay out when needed.
“Don’t assume you’ll be covered for anything. Always check your policy carefully and shop around – the cheapest deals might not give you the level of cover you want.”
How to evict problem tenants
It’s not easy or cheap to force problem tenants out of your home, even if they have stopped paying rent or caused damage to the property.
John Muncey, head of property litigation at law firm Wedlake Bell, said landlords must first obtain a court order for possession. Trying to force out tenants without doing this can be a criminal offence.
A notice must then be served on the tenants seeking possession. This gives them no less than 14 days notice of your intention to force them out, together with details of the rental arrears or other grounds for eviction.
The timescale will vary in different county courts throughout the country, but it can take up to eight weeks to obtain a hearing date. If the tenant disputes the claim, there is a risk of the hearing being adjourned with further delay.
Once the hearing takes place, it is likely that any order for possession will allow the tenant further time, usually at least another 14 days, before having to vacate. Once this time expires, the county court bailiff can be instructed to evict the tenant, but there can be a delay of up to eight weeks to obtain an appointment at which the tenant can be evicted.
There is a faster procedure available, where the order is registered in the High Court and a private bailiff is used to evict the tenant, but the cost to the landlord is much higher. Private bailiff fees of £700 are not unusual, whereas there is a flat fee for the county court bailiff of £110. Any legal costs are added on top.
Mr Muncey said: “Even if the landlord obtains an order for costs against the tenant, it is unlikely to cover all of the expenses incurred and there is the practical difficulty in actually recovering payment from the tenant, who may be difficult to trace after the eviction.”
