Property Insurance

Credit rating on tenants

A new referencing service can include rent payment history on credit reports. This means that tenants who have been reliable rent payers could see their credit history strengthen. Mortgage payments have always been included on credit reports, meaning that a good record of paying off a mortgage has always helped a home owner’s credit score. Unfortunately for tenants the same has not usually applied to rent payments.

Credit referencing agency Experian has now launched Rental Exchange and they say that millions of private tenants could find their credit ratings improved because rent payment history can be included in reports. This could be very interesting to a number of our landlord insurance clients. It might also make it easier for first time buyers to obtain mortgages because a good history of rent payments will help the credit report seen by the lender.

Many organisations use electronic identity checks based on credit reports and stronger reports will help to speed these up for tenants. Renting a property is now such a common option that it seems strange that rent payments have not traditionally been taken into account.

The new service has been welcomed by the National Forum for Financial Inclusion who believe it could help tenants in private accommodation to access a range of services where a good credit report is required. Of course, those tenants who do not build up a good pattern of regular rent payment will suffer.

Private rented sector up 42 percent in five years

A new report from Savills and Rightmove shows the recent strength of the private rented sector. The up-market agency and the property website have teamed up to produce a comprehensive review of this important part of the British property market.

The findings confirm what people have been suspecting for some time – that private landlords have seen something of a boom in the last few years. Property insurance clients will note that the total value of properties in the private rented sector is £840 billion, an increase of 42% in the past 5 years. These properties commanded a total rental income of £48 billion in 2011. The authors of the report expect this figure to rise to £70billion in 2016.

Savills and Rightmove say that the biggest challenge is supplying the rising demand from potential tenants. Supply shortage is therefore driving growth in asking rents. The rises of around 5% across Britain in 2011 mean that affordability is becoming an issue for some prospective tenants in some areas. At one end of the scale, the report cites a rent of £48,230 pa for a two bedroom property in Kensington and Chelsea and at the other end of the scale £4,560 for a two bed in Blaenau, Gwent.

Average gross yields vary from 5.3% in the South West to 6.3% in the North West, but there are significant variations within regions.

The report suggests that renting is very much here to stay and is not just a short term fix for people who need a tenancy for a year or two while they save for a deposit on their own home. For full details go to www.savills.co.uk

Increasing yields means keeping all costs down related to your business so obtaining a cheap landlord insurance quote is essential. If you need cover and are looking to save money contact Click4quote.com Insurance

Shelter criticise ‘out of control’ London rental markets

Anti-homelessness charity Shelter has called upon the next Mayor of London to rectify what it calls the ‘out of control’ rental market in the capital. The organisation says that a great many families struggle to pay the rent on their homes.

The charity argued that an income of 60,000 GBP would be required by a couple with two children to meet rental payments for a typical two bedroom house or flat in London. This figure was applied to eight boroughs, including both Tower Hamlets and Islington.

With the typical London household salary standing at £34,236, many families, say the charity, are paying up to half their income.

They also point out that one in four families rent from a private landlord, which has increased by 70% in the last two years.

Changing the way the London property market works will arguably be a challenge for whoever wins the Mayoral election. Landlords may argue that costs associated with maintaining properties, such as repairs and insurance policies like buy to let insurance – not to mention mortgage repayments – mean rents have to be high.

Despite this, pressure on whoever will become mayor is unlikely to abate, in what is sure to be a key election issue. Previous mayors, arguably, have not managed to address the issue too well.

Both landlords and tenants will no doubt be watching developments with interest.

Insurers won’t pay for collapsing floor

A couple had just moved in to their new house when the kitchen floor gave way. It turned out that it had not been reinforced properly and needed repairs costing over £20,000. The insurers pointed out that it was an inherent structural defect and therefore beyond the scope of insurance. Furthermore, the pre-purchase survey had pointed out a problem with the floor.

The story is covered in detail on the thisismoney.co.uk website. The site points out quite rightly that if you have a survey that identifies problems with the house you are buying you should notify the insurers as part of the process of taking out buildings cover. Insurers need to know about any structural issues and pre-existing damage. The proposal form needs to be checked very carefully alongside the survey report. As well as affecting owner-occupiers this is also an issue for our landlord insurance clients who might be buying older properties in need of renovation before letting them to tenants. The point is that buildings insurance is not a repair contract- it exists to cover unexpected events like floods and fires.

If you are buying a property that may have some structural issues you need to clear about what needs to be done to satisfy your insurers. In this case the policyholders were looking at a repair bill of over £20,000 but just imagine how much worse it could have been if someone had been badly injured. You need to know where you stand before an accident happens so make sure the insurers are fully in the picture before the policy starts. People often leave the question of insurance cover to the last minute when they are buying a property but this can be a mistake if there needs to be discussion with them about structural issues.

If you are a property owner looking for cheap landlords insurance contact click4quote insurance.

What is landlord portfolio insurance?

For property owners who have only recently become landlords, there are a number of notions and terms that may not be familiar. One of those terms might be landlord portfolio insurance.

In basic terms, insurance policies sold under this – or other similar terms – relate to insurance that covers a number of properties owned by a single individual, company or other entity. While such policies differ to some degree – depending on the company providing the insurance – they usually offer advantages such as discounted premiums, and the possibility of having a range of different property types and tenant types covered under a single insurance product.

Clearly, this can make organising insurance much easier to accomplish. As well as facilitiating what can be a stressful job, this policy type can save landlords money, and that most precious commodity, time.

To receive a quote for landlord portfolio insurance from click4Quote.com insurance, or to find out more about how the policy type works, call 08450 89 90 91 Monday to Friday between 9am to 5.30pm. You can also fax your portfolio details over to 08450 89 90 92. If your insurance policies are not quite up for renewal, contact us with your details and we will provide you with a quote closer to the renewal date.

Energy Performance Certificates to change

Energy performance Certificates have been around for some time now and most people realise that they are needed as part of the house marketing process. Changes to the EPC are being introduced in April 2012 to make the certificates easier to understand and also to make them part of the government’s “Green Deal”. The Green Deal will offer interest free finance so that people can make energy efficiency improvements to their homes and the EPC will identify those areas that will qualify for the scheme. Typical works will include loft and cavity wall insulation.

Landlord insurance clients should note that it will be the occupier who will be responsible for repaying the loan. If a tenant obtains a Green Deal loan he or she will be responsible for the repayments and these will be added to the utility bill. Businesses as well as individuals can apply for funding.
If you are interested in finding out more about the Green Deal there is quite a bit of information on the web. The Department of Energy and Climate Change is a good place to start.

The other change to the EPC is that the main information will now be shown on the front page so it will be easier to understand.

Will a change in student demographics change the student accommodation market?

Students. They’ve long been a stable source of income for all manner of landlords, but has the government’s changes to how university education is financed change the type of student landlords are used to?

It is a difficult question to answer. The argument might be that a good deal of accommodation has been targeted towards the more hard-up section of student society. But since the financial pressures of going to university have increased (namely because each student will be lumbered by upwards of £27,000 of debt by the time they’ve finished), does that mean more middle class students will be attending?

Equally, will the gap left by any poorer students be filled with wealthier overseas students? One could argue that overseas and middle class tenants will be expecting a higher standard of accommodation than that which largely exists in the UK’s university towns.

Unfortunately, such an abandonment of lower-quality accommodation by tenants is not covered by the average buy to let insurance policy.

The other side of the argument might be that students will be keeping an even greater watch on spending throughout their educational careers, meaning cheaper accommodation will still be popular.

Time will tell if students will develop more accommodation expensive tastes.

New Buy scheme aims to help house buyers

Various mortgage lenders are now part of the Newbuy scheme that offers mortgages of up to 95% on new houses. The scheme aims to help buyers who find it impossible to save the large deposit now required by many lenders.. It should also increase the number of new houses being built because developers will be more confident that mortgage offers will be made to prospective purchasers.

The scheme only applies to new build property in England and the builder must be part of the Newbuy scheme. The price needs to be no more than £500,000 and the property must be a main home. Landlord insurance clients will find that it cannot be used to finance properties that will be let out. If you are a UK citizen or have indefinite leaven to remain in the UK you might find that the Newbuy scheme could help you buy a house with a deposit of between 5 and 10%.

The Government and some house builders have agreed to cover a limited amount of losses if borrowers default and the home is sold for less than the mortgage. This means that lenders are more willing to advance loans representing a larger percentage of the houses value.

Anyone thinking about taking out a mortgage should take proper advice and needs to understand that if their home is repossessed they will be responsible for the shortfall between the sale proceeds and the mortgage debt. This is the case with all mortgages but of course if the loan is a very high percentage of the value a small fall in house prices could put the owner into negative equity.

Cannabis farm threat to buy to let landlords

One of the best bits of advice you can give anyone starting out in the letting business is to keep a very careful eye on your properties. Even if you have employed a reputable agent it is worth keeping tabs on what is going on to be sure that your tenants are looking after the house properly.

One of the worst abuses that tenants might be committing is running a cannabis farm. Apparently, the drugs gangs believe they are less likely to be found out if they divide their operations between several locations rather than concentrate them at one industrial scale establishment. Some rental properties make ideal cannabis farms, especially if they are in locations where the neighbours are unlikely to work out what is going on. Property buy to let insurance clients need to be sure that appropriate checks are made on any potential tenants and that someone visits regularly.

In a recent case a landlord inspected his property after a humming noise was reported and he found a cannabis farm being tended by an illegal immigrant from Vietnam. The drugs gangs are said to bring people into the country illegally and then force them to work in the cannabis farms to pay off the debt for their transport. A typical farm in a suburban house might contain two to three hundred plants, being looked after by a couple of people.

Carpets that Attract Tenants and are Easily Cleaned

A good quality landlords building insurance policy might provide you with a lot of peace of mind, but there are some things that it can’t help you with. One of those is choosing fixtures and fittings that will help make your property attractive to tenants – and within this very wide area, choosing an appropriate carpet. This can be a very time-consuming decision.

For a landlord, there are three things a carpet must be: attractive to the largest number of people possible, durable and easy to clean. Of course, cost comes into it to a degree, but as many landlords have found, cutting corners on carpets can lead to far more expensive costs in the future, such as early onset wear and tear – and fading.

Magnolia, the landlord’s favourite. Used on walls and as a carpet colour choice right across the UK – and probably the developed world. But is it right for your property? True, magnolia tends to be an innocuous colour selection, but it does tend to show the dirt rather well. If you do choose a magnolia or light-coloured carpet, ensure it is of good quality and can be cleaned easily.

Alternatively, you may choose a more dirt-concealing shade, though the dirt will eventually be apparent here too.

If easily-cleaned, inoffensively coloured carpets aren’t your thing, then you can opt for the equally confusing world of tiles and wood flooring, the subject for a later blog.

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