Being a landlord is an overwhelming job at times, with repairs, rent collection and multiple properties to juggle and spin like plates.
Being a first-time landlord is a little different, the likelihood is you only have one property in the first instance and therefore must approach things differently. The buy-to-let market has boomed in 2020, according to The Guardian, with many taking advantage of the lower stamp duty. Indeed, 15% of agreed property purchases in November 2020 were to buy-to-let landlords.
It may be that a first-time landlord has taken advantage of this boom, or it may be that two couples, both owning a home, have moved into one and let the other out. However you have become a landlord, you must consider how to protect yourself and your tenant as you progress on your journey as a landlord.
There is no legal requirement in the United Kingdom to have any specific insurance for your rental property, but it is likely a mortgage company will demand you have buildings cover. This is to protect them – they lend money against your property and if you do not pay the mortgage, they take the home as collateral. That is why they insist you have protection for the fabric of the building, so in the event of damage they know their potential asset is safe.
That is the attitude you should take with landlord’s insurance in the first instance. Whilst buildings insurance is a requirement, you may wish to investigate a policy which has been specifically designed for landlords. Most providers offer something and the key to protecting yourself properly is understanding the different aspects.
Do not be confused with landlord’s insurance and contents insurance. It is not your job to protect the belongings of your tenant. Unless you own an HMO, then this is solely the requirement of the tenant and will not be included in your policy.
Instead, you will likely be offered tenant liability protection as standard, as well as legal protection. This is covering you against injury and claims arising from incidents occurring on the property. If your tenant has a friend over, and they fall down the stairs because of a damaged carpet, then you may get protection against the inevitable claim. This will be offered to varying degrees and can be purchased separately, but should come as standard as part of a good landlord policy.
You can also protect your property against damage and repairs to its key services. Plumbing, heating, drainage and electrics can all go wrong and if they do, it is your obligation as a landlord to repair them. Some landlord policies will offer protection for these areas, other providers will tailor a repair package for landlords to suit the property and its individual needs. That may include one specific aspect of the home services, or a multitude. A HomeServe guide to landlord coverage demonstrates that you may also opt for plumbing protection, or even electrics. This type of cover is great for first-time landlords, especially those not in a trade who cannot competently carry out repairs on their own.
The other aspect to consider is tenant default cover. This is protection against a tenant defaulting on their rent. There are varying levels of cover and not all policies will offer this, but as a first-time landlord, it might be even more pertinent than for someone with 80 properties. If you suddenly have two mortgages to pay, but no income from the home as the tenant defaults, it could cause serious harm to you and your own home, as well as your second property.
The key to insuring your first buy-to-let property is to consider the risks associated with the purchase, think of the worst possible eventuality and plan accordingly. Could you afford to fit a new boiler if one went awry in your property? Could you survive financially if your tenant stopped paying rent? Answer those questions, and make sure any cover you have changes answers from ‘no’, to ‘yes’.
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