With the current global financial situation appearing to get worse by the day, many UK citizens are seeking alternative means of providing an income to support their families. Whilst those without cash are on the lookout for low-budget start-up opportunities, people with cash in the bank are trying to find the best possible investments.
If you really don’t like the idea of entrusting your savings to a removed party, opting to join the buy-to-let property market could be right up your street (property pun intended). That said, there’s still a lot you need to consider when moving into this marketplace as many new landlords are now realising, and with that in mind i’ve written this article to help you out in the best way I can. Knowing which type of insurance you need to obtain should be a top priority in this situation.
So, have a quick read through and see if you can learn a thing or two.
What Exactly Is Landlord Insurance?
Though there is no standard legal requirement for UK portfolio holders to obtain landlord insurance, many banks will demand you take out a policy if the property is under a mortgage. This will usually cover the cost of any repairs and maintenance work you pay to have carried out at the property as well as all the usual cover you would expect from standard home insurance.
Why Can’t I Just Use Traditional Home Insurance?
Well in truth, if you’ve paid for the property outright and you don’t owe any money to mortgage lenders; you can, although it’s not advisable. This is because traditional home insurance will not cover you against third party liabilities or tenant default. So you will definitely end up paying for any repair work yourself, even when the property is rented out long term. As well as this, the none cover for tenancy default can create significant issues should your tenants lose their jobs or encounter financial problems.
You have to remember that tenants have rights too, so you may have issues with getting them out of the property, even if they fail to cough up the rent money.
So It’s Best For Me To Get Landlord Cover, Right?
Definitely! Although the premium will be higher than with traditional home insurance, at least you know you’re covered for any eventuality that could arise. Cash flow can sometimes be a real issue for landlords and those who own multiple properties, so doing everything you can to avoid unexpected fees should be your best option in this situation. Also, you’ll already be spending lots of cash ensuring your dwellings are equipped with gas safety and energy performance certificates – something you are legally obliged to do.
So there you have it my buy-to-let friends. I hope now you’ve got a much clearer idea about what having, and not having landlord insurance can mean to you. Though it’s true that some landlords avoid it like the plague, in the long run i’m certain you’ll agree that obtaining a policy now was certainly a good move.