Buy to let insurance – getting it right
Buy to let is a growing market sector as less people have the wherewithal to buy their own homes. It is an investment in time and money for the property owner. Having the right insurance in place is essential.
The property itself:
Our recommendation is a specialist landlord’s policy. These are available from a significant number of insurance companies. The sum insured for the buildings must be the rebuilding cost in the event of a total disaster, including debris removal and any fees. This may be very different from the market value. Advice from a local surveyor is vital. We also recommend that any such policy should include accidental damage cover. It is essential – as with any insurance policy – to be absolutely honest with the insurer. There are some types of tenant – asylum seekers, students, some types of benefits recipients – that are less attractive to insurers than others.
Even if let unfurnished, there are often items belonging to the landlord in the property – carpets, curtains, maybe kitchen white goods. These can be added to the policy. The sum insured should reflect the cost to replace everything with new equivalent items.
This can be confusing. There are two types of rent insurance.
- The simplest attaches to the basic policy and covers rent not being paid if the property cannot be lived in due to a fire, flood or some other insured event. It does not cover unpaid rent if your tenant does a runner. Some insurers include this as standard; other charge a small premium. For an average property with rent up to £2,000 a month, the annual premium for this is usually a relatively small £20-£30.
- There is also rent guarantee insurance, which does provide cover in the event of rent being unpaid and/or your tenant doing a runner. This generally attaches to a specialist landlord’s legal expenses policy which covers matters such as eviction, property disputes. However, being able to claim for unpaid rent does depend on tenants being referenced before taking up residency. The extent to which such referencing is required varies between insurers. Some can arrange to carry this out for a small fee.
Rent cover is beneficial to the property owner. If the property is unfit to be lived in, the income will still be there and, after all, owning a buy to let property is about having an income. Virtually all policies include cover for alternative accommodation, which provides for your tenants to be housed whilst repairs are carried out. Obviously, this benefits them as they won’t be homeless and ultimately benefits the landlord because they can just pick up where they left off once the property repairs have been completed.
If the heating breaks down; the electricity fails or there’s a leak, your tenant will be looking to you for help. Unless you are a general handyman, you will need to get someone in. The emergency cover provides for an approved person to attend and deal with the immediate problem. This is an option extra that we recommend.
We can also:
Through our membership of BNI, we can source electricians, plumbers, painters & decorators, gardeners, cleaners and all the trades people that you need to keep the property up and running, so earning you that important income.
Talk to us:
We have a great deal of expertise in this area of insurance so feel free to contact us for a no-obligation conversation.