Buy to Let Insurance
Accidental Landlords and Insurance
In today’s challenging housing market, more and more property owners are finding the idea of renting out their house or flat appealing. With home buyers becoming something of a rarity in some parts of the UK, renting out can often seem like the only way to assuage the financial problems that sometimes arise when a property is taking a while to be sold.
But there are a number of things that landlords new to the property market should bear in mind; it is not simply a case of finding a tenant, getting them to sign a contract and then waiting for the rent every month.
Depending on where you live in the UK, you will need to inform and be approved by the local authority. Additionally, if the property is going from being lived in by the landlord to being occupied by tenants, the insurer needs to be informed. Those who do not tell their insurance provider and then suffer a problem such as a flood, can find that their insurance policy is invalid because they did not switch to buy to let insurance.
It is also worth noting that mortgage lenders insist that buildings insurance is in place to help pay for any damage caused by such perils as fire or flooding. While buy to let policies may be more costly, in the long run they are the only real option for landlords planning to rent their property out.
Buy to let market grows
Landlord insurance clients will be interested to see that the buy to let mortgage market grew by 7% in 2010 according to the Council of Mortgage Lenders. They estimate that at the year end there were 1.3m buy to let mortgages outstanding worth £152bn. The value of buy to let lending in 2010 was around £10.4bn which is an increase of 22% on 2009. The number of loans advanced in the year was 102,000, 10% higher than in 2009. There is also evidence of a reduction in the number of but to let mortgages in arrears.
Council of Mortgage Lenders director general Michael Coogan commented:
“ Funding remains a key constraint on growth in buy to let lending but demand seems resilient and loan performance has improved.
Looking ahead, loan performance could potentially be adversely affected by rising rent arrears or interest rate rises but at present there is no indication of these pressures materializing in practice.”
A great deal depends on house prices; there is little point in having a healthy buy to let business if your capital asset is going down in value. What do you think? We would love to hear from you.
If you need a landlord insurance quotation visit www.click4quote.com
Cold weather causes claims to rise
Unoccupied property insurance is proving its worth this winter as the cold weather causes burst pipes and snow and ice take their toll on houses up and down the country.
RSA says that its weather related claims were £142m higher than normal in November and December. Last year the insurer received:
• 8,000 burst pipe claims
• 5,500 snow claims
• 5,700 other weather related claims
• 19,000 home emergency claims
In some parts of the UK flooding is a major worry each winter. Taking out a specialist policy is essential to protect your investment and it also makes sense to check the terms of your policy to make sure you will not have any problems if you need to make a claim. Keep an eye on your property and take common sense precautions to keep it safe. If you have arranged a good quality unoccupied property insurance policy you will have a little extra peace of mind.
£2m in unclaimed deposits sitting in DPS account
Landlord insurance clients might be surprised to learn that many tenants fail to ask for the return of their deposits at the end of the tenancy. In 2010 the Deposit protection Service returned £3m of unclaimed deposits but it is still holding £2m on behalf of tenants who have failed to contact them. It has even introduced a text messaging service to remind tenants.
The DPS protects 670,000 deposits in the UK. The service is free of charge, being funded by the interest on the deposits it holds. Experienced landlords will be well aware of the need to protect their tenants’ deposits in an accredited scheme but newcomers to the business should check up on the rules to avoid breaking the law. Gone are the days when landlords could hold on to the funds and drag their heels about repaying them.
There is some useful information about deposit protection on the DPS website www.depositprotection.com Our landlord insurance clients might find it well worth a look.
Rents on the increase
The Royal Institution of Chartered Surveyors published its latest Residential Lettings Survey on 1st December and it makes encouraging reading for buy to let property landlords with a rental property seeking a tenant. The RICS reckon that rents have been rising for the three months to the end of October.
39% more surveyors say rents are increasing compared to 27% who say they are falling. There seems to be a shortage of rental property on the market and demand is being driven by the difficulty people are facing in finding a mortgage to buy their own house. London was the area showing the greatest increase in rents.
As for the future; 34% more surveyors expect rents to go up rather than down.
Does this tally with the experience of actual property landlords? Let us know what the market is doing in your area.
If you are a buy to let landlord and need buy to let insurance contact click4quote for a great quote.
Unoccupied property – don’t get sued if it snows
Like all property, an unoccupied house can be a source of legal action if a visitor is injured. Just because the building is empty does not mean that the postman and other visitors will not walk up the path. Every winter there are stories of injuries on icy and dangerous paths- what should the owners of unoccupied buildings do to protect themselves?
The government has published a Snow Code to help householders cope with heavy snowfall and it contains advice on how to clear your paths safely. People have been worried that if they clear up the snow and end up making a path more slippery you will be liable to anyone injured. The code aims to encourage people to take a commonsense approach and reassures people that they are unlikely to be sued if they are doing their best.
Owners of unoccupied property may live miles away and find it difficult to look after it with the care of an owner-occupier. It does make sense to have someone keeping an eye on it to report any problems; especially if visitors such as potential tenants or purchasers are expected. Your unoccupied property insurance policy will probably contain conditions about how the unoccupied property should be looked after- make sure you know what you have to do to keep the policy valid.
The Snow Code is at www.direct.gov.uk
New Universal Credit – Concerns For Landlords
The government is committed to replacing the complex system of benefits with one single payment – The Universal Credit. The housing element of the Universal Credit will be paid to tenants to cover their accommodation costs. The Residential Landlords Association is campaigning to have this element paid directly to landlords rather then to the tenants. The problem is that sometimes the tenant uses it to cover other outgoings or debts and does not pass it on, leaving the landlord out of pocket and possibly unable to pay their bills such as landlord insurance.
According to the RLA many potential landlords are deterred from entering this sector of the market because of worries abut the security of rent payments and other costs such as landlord insurance. If potential landlords had a guarantee that their rents would come through regularly they would be far happier about it. Housing Associations are already in this position because they receive their income direct rather than from the tenant.
What are your thoughts on landlords receiving rent directly rather than via the tenant? If landlords received money direct would it lead them to provide a improved standard of accommodation as the rent is guaranteed or would taking the property choice away from tenants decrease competition and therefore the state of some property rented to benefit tenants?
Letting Agent Jailed For 21 Months
A Norwich letting agent has been sentenced to 21 months for stealing £137,000 from his landlord clients and their tenants. He had been receiving rents on behalf of landlords and not paying them over. In addition when he received deposits from tenants he failed to pay them to an appropriate protection scheme.
Something like 65 people have lost out as a result of this breach of trust but most of the money has disappeared and so any recovery is likely to be minimal.
Whoever manages your let property for you it makes sense to keep a careful eye on the finances. Are rents finding their way through to your bank account promptly for example? Are let property insurance payments being made if arranged for you? Your contract with the agent will set out how much should be deducted (and for what) and if the tenant is paying on time there is no reason why you should not see a steady flow of rents into your own account. If not, find out what is gong wrong before the problem escalates.
Make sure your let property insurance is in force and you are covered as if you are left uninsured you run the risk of losing your whole investment rather than just one or two months rent. If you require insurance contact Click4quote.com or get a quote online.
Gaining Posessions – About to Get Harder?
Many landlords are frustrated by the problems they can face if tenants breach their agreements and have to be removed. The process that must be followed is complex and must be strictly adhered to. Landlords have commented that most suppliers do not have to keep providing a service if the customer stops paying but landlords sometimes have to put up with tenants who “work the system” and stay in occupation for as long as possible, rent free.
A campaign called “Rebalancing the Law” is being mounted by landlords’ organisations to push for the procedures to be simplified and speeded up. They say that if there is a clear case of tenants refusing to pay or committing anti-social behaviour they should be evicted quickly; apparently it can take several months at the moment.
Check out the campaign on www.landlordaction.co.uk
The Ministry of Justice is planning to close many County Courts. These Courts are the backbone of the legal system for landlord and tenant disputes. The Ministry of Justice website will show whether your local Court faces closure. Will this make it harder for you to gain access to justice?
If you have rented property then you should purchase landlord insurance to protect your investment. You can often purchase landlord building insurance with additional options such a legal cover which includes some protection to reclaim your property.
Landlords face £5,000 fines for poor insulation?
The government is determined to improve the energy efficiency of the housing stock and is planning to force local authorities to put pressure on landlords of let property to insulate them. Local authorities already have power to require landlords to carry out work on their properties or face fines of up to £5,000. These fines would not be covered by your landlord insurance and although landlords legal insurance can protect you for some specified legal action fines imposed on you would not be covered.
Further laws are planned so that if tenants request energy efficiency work at a let property the landlord cannot refuse without a very good reason. The government is hoping to introduce this new right for tenants by 2015.
The English House Condition Survey in 2008 found that private rented houses were among the worst performing properties in terms of energy efficiency. 68% of private rentals had no cavity wall insulation and 45% had poor loft insulation.
Landlords have responded by arguing that the private rented sector includes many older houses that are difficult to bring up to modern insulation standards. Despite this it seems that landlords will have to develop a plan to bring their properties up to scratch or risk intervention from the authorities.