This article was first published on the Total Landlord Insurance website.
Demand for let home insurance among people in or about to enter retirement could increase as buy-to-let becomes an increasingly attractive investment proposition.
According to the Daily Telegraph, rising rental yields coupled with low interest rates on traditional savings and investment products means that a growing number of older people are investing in buy-to-let.
It cites recent figures from the Council of Mortgage Lenders which show buy-to-let loans increased by 21 per cent between April and July this year, with much of that increase due to older owner-occupiers remortgaging their homes to invest in rental property.
“Renting is becoming increasingly popular, or necessary, across all types of household,” Samantha Baden of Findaproperty told the newspaper.
“The result is that rental yields are generating better returns than many cash or equity investments, making it an increasingly attractive prospect for those who can afford to invest.”
With demand for rented property at an all-time high due to many would-be homebuyers being priced out of the housing market, those who invest in buy-to-let could make considerably more than they would through a conventional savings account.
David Wright, a retired train driver, paid £67,500 for a one-bedroom house at Ilkeston, Yorkshire after calculating that the £4,500-plus income he would get each year by letting the property out was far more than alternative investments could offer.
“The interest in a savings account doesn’t compare to the seven per cent yield that I’m getting as a landlord. The decision was a no-brainer from the word go,” he said.
However, amateur landlords entering the business for the first-time must make sure they are aware of all the legal requirements and processes they must go through as well as what insurance products they should take out.
For example, they may need to take out household liability insurance to ensure they are financially protected should a tenant suffer an injury on their property.
