Landlords are being warned to carefully review their buy to let insurance policies as rents have risen by 2.5% last year to June to underline the growing popularity of buy to let as an investment.
The warning comes from Paymentshield who say that landlords, particularly those who are new to the sector, should take great care in finding the cover they need to protect their property and tenants.
Their call comes after the Office for National Statistics said that rents have steadily grown across the UK. The growth in buy to let is being fuelled largely by older investors looking for better returns on their savings.
Paymentshield’s commercial director, Lee Mooney, said that landlords should appreciate that as the requirements for buy to let mortgages are different to a normal one, so the level of insurance cover will be different too.
Indeed, in a property that is occupied by tenants, the insurance situation is more complex.
‘Landlords should invest in a comprehensive insurance policy’
Mr Mooney said: “It’s a major investment buying a buy to let property and it’s crucial that landlords also invest in a comprehensive insurance policy will help protect them from losses that may come with letting and from potential damage.”
Many landlords new to the rental sector will have discovered during their research that normal household insurance policies are not valid for a property with tenants.
This means that they will have to source a specialist insurance policy provider who will offer a greater level of protection.
Landlords should be looking to protect against any loss or damage in circumstances that are typically greater than those covered by a traditional home insurance.
With the rental sector in the UK going from strength to strength, underpinned by rising house prices which makes it difficult for people to either get onto the property ladder or move up it, which leaves more people with no option but to rent.
Good news for property investors
Mr Mooney added: “While this situation is good news for property investors, it also reinforces the importance of having the correct insurance cover not only to protect content and the property but also a landlord’s legal liabilities as the property owner.
“Landlords face financial ruin if a loss occurs and their insurers did not provide adequate cover which means they would have to fund their own repair or even rebuild.”
Many landlords will find that specialist landlord insurance brokers are in the best position to find the most suitable policies, said Mr Mooney.
Some Scots agents still charge fees
Meanwhile, it has been revealed that there are some Scottish letting agents who are charging fees to private tenants which was made illegal in 2012.
In Scotland, a tenant needs to pay only the rent and a refundable deposit and no other fees such as those for inventory and reference checks.
Now the charity Shelter Scotland has revealed that some agents are still charging – and in an investigation, BBC Scotland also found that tenants were being charged illegal fees.
The Association of Residential Letting Agents’ managing director, David Cox, said: “A small number of agents and landlords because it’s not being enforced properly and they know they can get away with it.”
