Protect your buy-to-let property investment

Friday, May 30. 2014
With interest rates remaining low and house prices soaring, more and more people are choosing to buy and then let second, even third homes. It’s a major investment, so it makes financial – and common – sense to ensure that any rental property is covered by insurance specifically designed for landlords. This is known as a Property Owners’ or Buy-to-Let policy.

Naturally, a standard Property Owners’ policy should insure against building ‘perils’ (fire, flood, lightning, riot, theft – see previous Shops and Offices blog). The premium will be determined by factors such as postcode, claims history and, significantly, who is actually living in the property. Tenants are usually rated according to type – for example, employed professionals, students or someone receiving income support – and this will affect the final figure to be paid. Do also remember to keep your insurer up to date with any changes of tenant and any ‘void’ periods when the property is left empty.

Comprehensive Contents insurance is an absolute must if you are letting a furnished property. However, even if the accommodation is unfurnished we would advise taking out cover for basic fixtures and fittings, such as kitchen appliances (fridge, washing machine, cooker etc), lights, carpets and curtains. Equally important is Property Owners’ liability, which will protect you if, for example, a slate was to fall from the roof and hit a passer-by.

A key feature of any Property Owners’ policy should be protection against loss of rent. So, if a fire or flood left the property unable to be occupied, the landlord’s income stream would be safeguarded. One important point: sometimes landlords think that loss of rent also means that they are insured if a tenant defaults on due payment. This is not necessarily the case – and it’s why we would always recommend taking out an extension that definitely does provide for this scenario. Equally, it’s well worth adding Legal Expenses to your package so that any costs are covered in the event of a contractual dispute with a tenant (this extension can also include debt recovery if a tenant refuses to pay what is legally owed).

Landlords with an extensive repeated portfolio who employ people to clean or carry out maintenance jobs at their properties will, of course, need statutory Employers’ Liability insurance and they might also consider Home Emergency cover which would give access to immediate assistance if, say, the boiler breaks down or a pipe bursts.

Many companies offer dedicated Property Owners’ insurance. The extent of the cover provided and the premiums vary considerably, so it’s essential to be able to compare policies carefully. The team at Haden Welbeck can ensure you negotiate an affordable, competitive policy that is suited to your individual needs. It’s the best way to stop simple mishaps from becoming major losses.