The housing market is currently giving off confused messages, with some areas reporting increased prices, whilst others appear to be suffering from a surplus of properties and a relative dearth of prospective purchasers.
The two-year stamp duty holiday up to £250,000 for first time buyers appears not to be helping very much, because so many of what we might instinctively think of as “first timers” (because they have nothing to sell at the moment) are actually people who owned property previously in another partnership or marriage and do not therefore qualify.
The current situation can have two results: first that more people may be planning to rent; and secondly that current house prices could appeal to landlords in investment terms. The mortgage market certainly appears to have expanded for this type of property.
One of the last things you might consider when taking on a property that you intend to let, however, is ensuring that you get the right property owners’ insurance in place. The reason for this is that many people do not realise that insurance companies set their buildings insurance premiums on the basis that the property will be owner occupied. In their eyes, this means that the owner will be taking more care to ensure that no damage occurs, than might be the case when a tenant is in day-to-day control of the premises. This can mean that the insurance is more expensive; but it also means that the insurance company will be less likely to argue over a claim, on the grounds of non-disclosure.
It is not just the buildings insurance that matters. Other important issues relate to any contents that you may have in the buildings, either in the form of furnishings within residential areas or carpets and so on in the common portions of buildings occupied by flats. A suitable property owners’ insurance policy will provide cover that recognises the nature of the occupancy of your property and protects your interests.
Loss of rent as the result of a major fire or flood, for example, is also a threat to landlords; after all, if the premises become uninhabitable, who will provide your rental income, or even help cover costs such as a mortgage or other on-going expenditure? Suitable landlords insurance can protect your interests against such events.
Buy-to-let landlords have to be aware of the need for insurance to cover their legal liabilities not only to third parties, but also to tenants. This may, depending on circumstances, require more than the standard cover available under most buildings insurance policies.
What if a tenant were to default? Insurance is available that can not only cover some of your losses in this event, but also assist you in recovering access to – and control over – your property, as well as protecting you against the possibility of having to take – or defend – legal action against third parties in relation to your property.
Becoming a buy-to-let landlord – particularly for the first time – can be confusing in many ways. Insurance is something that can all too easily be missed. It is important to seek independent professional advice before making any decision about your property owners’ property and liability insurance. You should always ask your insurance advisers what experience they have of dealing with residential and/or commercial rental property insurance.
Adam Singleton writes for a digital marketing agency. This article has been commissioned by a client of said agency. This article is not designed to promote, but should be considered professional content.