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Buy to Let Insurance UK Update
In recent weeks there has been much speculation in the press and on Television
that property prices in the United Kingdom are about to come to a grinding halt.
Several rate increases in recent months, seems to have taken the sting out of
the market with some experts are now predicting that interest rates have peaked.
One sector of the market that remains healthy, is buy to let and smaller
properties at the lower end of the market remain fairly easy to sell up to the
asking price. Buyers believe that the long term out look for interest rates and
property price growth is healthy and various social, economic and lifestyle
issues in the United Kingdom point the way to a strong rental market in years to
come.
Sourcing a property to buy for rental purposes remains fairly straight forward,
once you have carried our due diligence to ensure that it has good rental yield
potential and obtaining a
buy to
let mortgage has become fairly easy, however, the recent crisis in the
international money markets may lead to buy to let mortgages becoming a little
harder to obtain but at least there are a large number of outlets that you can
obtain quotations from.
Obtaining buy
to let insurance uk can be a little more tricky as may of the large mortgage
providers do not provide building and contents insurance for buy to let or
landlords property. Often when completing your mortgage deal, you will be
informed by the lender to go and arrange your own buy to let insurance uk.
Thankfully this is now fairly easy as there are a large number of product
providers on the market.
A variety of covers are available and ultimately what you decide to take is a
matter of personal choice. Your buy to let mortgage provider will have two
conditions. It should be pointed out at this stage that the term buy to let
insurance is only a phrase that has been applied to a form of home insurance,
similar to what you expect to buy for your own home, except that the insurance
company are aware, the property is going to be used for rental purposes.
1- Their interest is noted on the schedule of insurance, they may want to see a
copy of this schedule and be prepared for exchange of contracts to b delayed if
you cannot produce this document in good time .
2- Any landlord insurance you buy will have to satisfy the insurance conditions
laid down by the Council of Mortgage lenders handbook. This is fairly easy to
comply with as most landlord insurance providers know that a wide range of
perils has to be covered including such things as Fire, Storms, Floods,
Subsidence and Property owners Liability Insurance. The policy that you buy will
also have to be index linked to help guard against the effects of inflation.
Each year the sum insured under the policy will increase in line with inflation.
As well as building insurance, many people opt to purchase
landlords Contents
Insurance, in most cases , several thousand pounds is the maximum amount of
contents provided by the landlord and this is usually restricted to such things
as bed, sofas, tables, chairs, cutlery, etc. Many people fall in to the trap of
insuring items which should be covered as part of the building under the
contents section of the policy. These include the bathroom suite and a fully
fitted kitchen, its a common enough mistake to make, most consider these to be
contents as houses are often renovated to prepare for buy to let rental and a
new bathroom and kitchen are top on the items that are renewed.
One of the attractions of insuring Landlords contents is that you should receive
the liability insurance that attached itself to the supply of the contents.
However it is important to check this as recently we spotted one insurer that
did not offer this option on its contents cover. Certainly one thing you won't
need to worry about is your tenants contents, you have no legal interest in
these items and your tenant will have to insure them for themselves. Its
probably best if you outline at the start of the contract exactly who is
insuring what and any excess applicable under the contract. Clarity is
recommended in all tenant dealings as this can help prevent disputes from
starting
Without doubt the above are the main or core landlord insurance uk covers that
are purchased by landlords. Some landlords, particularly those using letting
agent are sold Rent Guarantee cover, this will provide an indemnity if the
tenant disappears and you are unable to collect owed rent. Cover for this can be
quite expensive and there is always an excess that has to be paid ( one months
rent is fairly typical.)
Home Energy cover for buy to let landlords is becoming more popular and a number
of new contracts have recently entered the market. Traditionally one of the
problems with this type of cover was that there were just too many exclusions
and sometimes it was difficult to know exactly what you were getting for your
money. The latest covers available do seem to be printed in plain English but
its still best to read the policy document and Key facts leaflet carefully
before you part with your money.
Legal Expenses insurance for landlords who have buy to let properties is now
fast becoming considered essential. It is hard to imagine that nowadays anyone
would consider buying a property for investment, letting it to tenants then not
taking out a Legal expenses policy to cover what is in effect their business.
Letting property is now fraught with legislation and complaints from tenants
against landlords are fairly common. It is not unusual for courts to side with
tenants over disputes and with cover for this type of policy starting from
around £1.00 per week, its fast becoming a must buy contract.
Landlord Property Insurance News Update...
One of the largest growth areas in insurance
in the United Kingdom in the last few years, relates to the purchase of
property as " Buy to Let" and the insurance of the landlord property. Any
person buying property to let, will have to furnish the tenant with a
assured short hold tenancy agreement and this will outline each parties
responsibilities including who is responsible for insurance.
The extent to which the landlord must insure
his property, depends on what is actually supplied to the tenant. If the
property is finished, then the landlord should also include insurance for
landlord contents . However, the landlord has no interest in property
owned by the tenant and it should be made clear to the tenant that they
will be responsible for their own insurance arrangements.
A landlord property insurance policy will include a number of sections.
The most important will of course be covering the fabric of the building
and this will be covered against a wide range of perils and will have to
satisfy the council for mortgage lenders handbook. As well as the usual
perils quoted, the policy should be extended to include cover against loss
of rent. Under a landlord property insurance policy, loss of rent is
covered up to a percentage of the sum insured. The usual amount is 20%,
thus a building with a sum insured of £100,000. will provide £20,000 in
respect of loss of rent. It must be remembered , that this loss of rent
cover is only in respect of loss of rent by an insurance peril, thus if
damage is caused to the property by an insured event, then the landlord
will have his rent paid until such time as the tenant can move back in to
the building.
As well as actual damage to property, a third section of the landlord
property policy will cover in respect of property owners liability. This
will cover the landlord against claims for loss or damage or bodily
injury arising out of the ownership of the building. Before a landlord is
able to let a property, he must insure that it comes up to scratch with
regard to all current legislation. Most letting agents, will not even
advertise property unless the landlord can confirm that all the
requirements have been carried out, Letting agents will usually offer a
service to help provide the necessary checks.
In particular, landlords must pay attention to the Gas Safety
(installation and use) Regulations 1994.
The Gas Safety (Installation and Use Regulations) 1998 place a duty of
care on Landlords to ensure that all gas fittings, appliances and flues
supplied with the accommodation to be let are maintained in a safe
condition. It is not enough just to ensure they have been checked, all
operational guides must be included for the tenant to study. A copy of the
gas safety certificate must also be supplied.
Typical gas appliances
include boilers for central heating, room heaters, water heaters, cookers
etc. Many people make the mistake of thinking that only the gas boiler has
to be inspected. Inspections have to be carried out by a CORGI registered
gas installer, if any problems are located, they must be rectified within
28 days.
Another important piece of
legislation to effect landlords is the Electrical Equipment (safety)
Regulations 1994, this can often be over looked as
there is no statutory
obligation to have professional checks carried out on the electrical
system or appliances. However, this does not remove the obligation from
landlords to ensure that all equipment provided is safe for the tenant to
use.
Many landlords feel that it
is not worth obtaining insurance for contents as it has to be replaced on
a regular basis, however, landlord property insurance polices differ
between insurance companies and close attention much be paid to the
liability sections of the policy
In some cases, if you do not insure the contents, you will not be provided
with the liability cover that attaches to the ownership and supply of the
items in the property. If your tenant injures themselves on the contents
provided. you may find yourself without adequate insurance protection
being in force.
Any furniture and furnishings
provided by you in the property must satisfy the conditions of the.
Furniture and Furnishings (Fire) (Safety) (Amendment) Regulations 1993.The
regulations cover all upholstery and upholstered furniture supplied in a
rented property but do need close examination as some items such as
duvets, loose mattress covers and carpets are not covered. These
regulations were enacted to how improve safety in the home.
When requesting your
quotation for landlord property insurance, the insurance company will
request a certain amount of information from you. As well as the
rebuilding cost and postcode, they may ask for details on the type of
tenant you have placed in the building. Different rates apply for
different occupation classes and you may have to tell the insurance
company, if you re rent the building to a another tenant group. Often a
landlord will need insurance for his property before a tenant moves in,
this sometimes happens with property that has been recently acquired. The
insurance company, will need to be told about the un occupancy and the
length of time it is likely to last.
