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What is a demised premises and how does it affect your home insurance?
Property contracts are often littered with legal jargon and unfamiliar terms which can make them confusing. Here, we take a look at what a demised premises is, why it’s important to understand what it means, and how it might affect your home insurance.
What is a demised premises?
Demised premises is the term given to property that has been transferred to another owner. It’s a description typically found in leasehold agreements but is also used in property deeds to describe the specific areas that you own or can use.
What am I responsible for in my demised premises?
Demised properties should come with a detailed lease agreement or contract which sets out exactly what parts of the property you’re responsible for (the ‘demised’ areas). Areas that the freeholder (or landlord) is responsible for are known as the ‘retained parts’ in your contract.
In the majority of cases, the demised premises will include the flat or space you own, as well as the internal walls, doors, floors and ceilings. In this instance, you’ll be responsible for your own repairs to these areas. This is unlike a typical landlord/tenant agreement where the landlord is responsible for structural maintenance (most of the time).
That said, contracts and lease agreements do vary so it’s absolutely crucial to familiarise yourself with the terms of your demised premises agreement and be clear on exactly which areas you’re responsible for. Bear in mind that demised areas can also include gardens, attic or cellar space.
Can I make alterations in a demised premises?
What you can and can’t do will be set out within the terms of your contract so you should check what this says in the first instance.
While you might be free to make whatever alterations you want, you may be expected to revert back to any original features or layouts if you decide to leave.
What does a demised premises mean for home insurance?
Home insurance can be made up of two parts which you can buy together or separately:
- Buildings insurance which covers damage to the structure of the property, including permanent fixtures and fittings like walls, floors, kitchens and bathrooms.
- Contents insurance which covers your belongings such as furniture, electrical goods and kitchen equipment.
Usually, landlords and freeholders would be responsible for buildings insurance which would include all structural maintenance (such as floors, pipes and even bathroom suites). In the meantime, tenants are only responsible for their belongings and would only need contents insurance.
On the other hand, freehold homeowners usually need both buildings and contents insurance as they are responsible for both the structure of the property and their possessions.
In demised premises, the distinction between who insures what isn’t so clear. That’s because in a demised premises, specific areas have been transferred to the leaseholder (or owner) and these could also include structural elements such as internal walls, plasterwork, floors, doors and ceilings. As a result, it can be tricky to compare home insurance.
What home insurance do I need for my demised premises?
In a demised premises, you’ll need to consider contents cover for the items you own as well as insurance for the specific demised areas you’re responsible for.
To make sure you get what you need, it’s worth speaking to an insurance broker. Doing this means you’ll be able to clearly set out what you need cover for so that your broker can arrange a tailored policy.
In the majority of cases, it’s likely that you’ll be recommend an extended contents policy which would expand cover to any specific structural elements and fixtures and fittings.
Don’t forget to always check the terms of your contract or lease agreement so you know what you’re responsible for insuring.
How much does home insurance for a demised premises cost?
Cost really depends on what it is you need. The amount you agree (the sum insured) has to be enough to cover the cost of replacing all your contents, as well as the cost of repairing or rebuilding the demised areas you’re in charge of.
A broker will also be able to offer advice about other insurance products; for example, emergency home cover in case your boiler breaks down. They’ll also be able to discuss the pros and cons of particular insurance features such as new for old cover for contents.
Search for home insurance you can rely on
If your home is classed as a demised premises, we strongly recommend speaking with an insurance broker. Otherwise, you can search and compare home insurance from a wide range of leading providers right here; simply let us know what you’re looking for and we’ll take it from there.