While the number of homes being leased by private landlords may have doubled to £4.5 million since 2005, there’s no doubt that the previously buoyant buy-to-let market is entering into a period of sustained decline.
This is largely due to the so-called “professionalisation” of the buy-to-let sector, which has involved the introduction of more stringent tax levies and stricter mortgage rules in recent times. This has forced some amateur or part-time landlords to become unprofitable, and this trend is likely to continue for the next three years at least.
Some landlords may also fail to adequately insure their properties, causing them to lose considerable sums of money on their investment. So, here are three types of insurance that can help landlords to protect their investment in the current market:
- Landlord Building Insurance
Overall, there are several different types of landlord insurance available to cover the main risks facing property owners in the current market, many of which are available through single service providers such as Homelet.
The first of these is landlord building insurance, which effectively covers the cost of repairing or rebuilding your property in instances where its structure is either damaged or destroyed.
This should be your first port of call as a private landlord, as this type of coverage helps to provide financial reassurance in the event of fire, flooding or vandalism.
This could also be combined with contents insurance when renting out a fully furnished property, although there are other policies that can provide similar protection for any fixtures, fittings and appliances that you provide to tenants.
- Tenants Liability Insurance
This leads us neatly onto tenants liability insurance, which landlords can write into a tenancy agreement to compel renters to insure all household goods within the property.
With this type of coverage, it’s the tenants themselves who are required to take out a policy that protects your goods in the event of fire, theft or acts of God.
This removes the burden from landlords and places it squarely on the shoulders of tenants, who are subsequently responsible for covering the cost of damage or loss.
The key is for landlords to make this a staple part of their tenancy agreements, as this removes any ambiguity while simultaneously that all of your possessions within the rental property are fully insured.
- Tenant Default Insurance
We close with tenant default insurance, which essentially covers your rent for a period of time in instances where your tenants refuse to pay.
So, if you’re locked in a dispute with tenants who have been unable to pay their rent, you can rely on insurance to fill this void while a longer-term solution is found.
Just note that this does not cover periods where the property sits idle, and only applies in instances where existing tenants are unable or unwilling to pay.
You should also combine this with property owners’ liability insurance, which covers compensation claims made by a tenant or third-party visitor who suffers an injury when visiting the home.
