Landlords cancelling buy-to-let insurance to cut costs

The buy to let property market continues to suffer as landlords find their rental income and cash flow are squeezed. But cancelling landlords insurance may not be a sensible move, even if it does appear to save money.

Landlords insuranceResearch from Direct Line for Business shows that landlords are very worried about the impact the recession is having on their buy to let properties.

With 30% worrying about whether they will receive the agreed rental income from tenants and over 20% losing sleep over their cash flow it’s a difficult time.

But cancelling landlords insurance policies to save money may not be a good move.

Worryingly nearly 10% of landlords are though doing exactly that, cancelling their buy to let insurance to save money.

Not only does this leave them in a risky position if something should go wrong, it equally affects their tenants.

Head of Direct Line for Business, Kate Syred, said ‘The Government’s recent recommendation to protect tenants in the event of their rental home being repossessed is a step in the right direction.

However with high numbers of landlords cancelling insurance policies to save money, if something were to go wrong, tenants may still find themselves without a roof over their heads.’

As a landlord, ensuring you have adequate landlords insurance, covering yourself as the landlord, the tenant and the property is crucial.

The bright spot in all this doom and gloom may be that rents are finally starting to rise after a period of falling rents. The Rentindex reports that rents have risen 2.2% over the last 6 months despite being 2% down over the year.

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New site for landlords letting a property

A new site for letting a property has been launched, lettingaproperty.com ( the clues in the title ), helps landlords to find tenants by uploading adverts to Rightmove and the other major letting portals.

Priced at £29.95 the site offers a simple solution to getting a rental advert in front of the maximum number of prospective tenants.

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One in three rent their home without landlord insurance

One in three rent their home without Landlord insurance

Home repair firm Homeserve says one landlord in three has not told their household insurer they are renting the property, the Express reports.

Mike Bowman, head of insurer More Than Business: “Standard home insurance policies aren’t designed for landlords and if you rent out your home your policy may become void, leaving you without cover.”

“You are responsible for the health and safety of your tenants, and they could claim compensation if anything happens to them in your property. Landlord insurance protects you by including liability cover. We also offer 24-hour helplines for advice on legal, health and safety matters,” Bowman says.

Advice on letting to student from landlord insurance broker

As many of the UK’s youngsters make plans to attend university, many Landlords will be planning to provide for the increase in demand in student accommodation this year.

However whilst this may seem like a great opportunity in the Buy-To-Let market, Landlords must be aware that renting to students can be more complex and involve more regulations than a standard Buy-To-Let.

Leaseguard Ltd, provider of Specialist Insurance Products and Services for the Buy-To-Let Industry, has provided some top tips to consider when entering the student accommodation market.

House of Multiple Occupancy (HMO)
If the property has three or more habitable storeys and is occupied by 5 or more students you will be required to obtain an HMO licence from your local authority. In order to obtain the licence you will be required to meet certain fire and accommodation standards that can be expensive to comply with.

Student Furnishings
If you are hoping to attract the student market to your property it is important that you provide them with student essentials. In addition to standard tenant essentials such as refrigerator and washing machine you may also want to consider creating a study space for student and providing an internet connection which could be a huge pull when advertising your property.

Referencing Student Tenants
As with every tenant you will need to ensure that they can pay the monthly rent. However it is not very likely that the student will have much work history or even an income other than student loans. Even so, it is still worth credit checking them to ensure that they have a good credit rating, have not had any CCJ’s made against them and to confirm their previous addresses.

The best option is to ask the student to provide a Guarantor, someone who will be responsible for the rent should the student not be able to pay. You must also ask the Guarantor to sign the Tenancy Agreement meaning they will be jointly and severally liable. You should consider referencing the Guarantor with a full credit check, and an employer’s or pension provider reference. This may enable you to purchase Rent Guarantee with Legal Expenses to protect you if rent is unpaid or you need to take legal action against the tenant or their guarantor.

Safety Checks & Certification
Landlords have a legal obligation to ensure that all gas appliances are inspected annually by a Gas Safe Register member and that a report is issued to tenant within 28 days of each check.

You are also obliged to check all electricity appliances and ensure that all furnishings are fire resistant.

From this year you are obliged to make available to new tenants Energy Performance Certificates for each property.

Protect your Tenants Deposits
You now also have a legal obligation to protect your tenants’ deposits under the terms of the Tenancy Deposit Scheme. To avoid incurring a fine, ensure that you inform your tenants of the following information:

∑ Which scheme you are using.
∑ How the tenant can apply to have their deposit returned at the end of the tenancy agreement.
∑ Explain the purpose of the deposit.
∑ Procedures if there is a dispute.

Insuring your Student Rental Property
Insurance can also become an issue. Finding the right Landlords Insurance is essential as not all Insurance Companies will provide cover where tenants are students, or may even impose a higher excess or premium for this type of rental. Chris Knight, General Manager at Leaseguard says “It is also vitally important to have Public Liability Cover which is usually included with the Buildings Insurance Policy. If you have included items such as beds, televisions or have standalone white goods for example refrigerators and cookers etc within the property it is worth considering adding Contents Insurance to your policy”.

Tenants Contents
First time students may not be aware that they are responsible for insuring their own personal belongings such as laptops, mobile ‘phones, clothes, books etc. Chris Knight says “Although some students may be covered under their parent’s Contents Insurance, it is always worthwhile to make your tenants aware that you do not protect their belongings. Some landlords insist on receiving a copy of the Insurance Schedule from each tenant, and in some instances landlords or their Letting Agents insist that the Tenants’ Insurance includes some cover for Tenant’s Liability that provides some protection if the tenant damages the landlords buildings or contents”.

Leaseguard’s Services & Products
Leaseguard Ltd provides a specialist Tenant and Guarantor Referencing Service as well as Landlord Insurance for Buildings, Contents and Rent Guarantee. We also provide Tenant’s Contents Insurance. All these policies provide cover in respect of students.