The importance of landlords taking out the right insurance has been highlighted in a recent report. According to the findings, 18% of UK landlords do not have the correct insurance, often relying on basic home insurance policies instead.
But most home insurance policies are unlikely to provide the cover needed by a landlord.
The report also found that the average cost of maintaining a rental property portfolio was £8,256, of which £2,848 was spent on repairs. The average portfolio size was 5.3 properties, and the average income stood at £94,344 per annum.
Estate agent and property management fees also accounted for a large portion of costs, amounting to a little over 20% of total outgoings. Estate agents collected 8.9% of all costs, while property management companies took 12.6%, according to the survey.
Insurance costs also accounted for a large percentage of outgoings, standing at £1,329 on average. In terms of total rental income, insurance amounted to 1.4% of this.
While overall insurance costs are notable, it appears that many landlords are paying for insurance that may not cover them in the event of a structural problem arising. Except in rare cases, a specialist landlord insurance policy would be required.
Such a policy can also have further cover options added to it, such as rent guarantee cover, which ensures that if a tenant defaults, the landlord will still get their money.