Recent property news headlines have naturally taken their lead from the recent Chancellor’s Autumn statement and commentary on the prevailing economic climate.

The latter throws into starker relief some of the advantages of buying new-build homes, a look at the likely movement in average house prices in the coming two-year period, and a predicted surge in private sector rents soon into the New Year.

Let’s take a look behind some of those UK property news headlines.

Landlords hit by tax changes in Autumn Statement

While it might have gone relatively unnoticed on the day, changes to the Capital Gains Tax (CGT) regime will adversely impact those landlords wanting to move out of the buy to let market.

A story in the Mail Online recently revealed that the average landlord who sells a buy to let property once the full effect of the latest changes to CGT have come into effect stands to lose out some £2,600.

The newspaper noted that the current allowance before CGT needs to be paid upon the sale of a residential property is £12,300. But that this will be more than halved at the start of the new tax year in April 2023 to an allowance of just £6,000.

That allowance will again be halved to just the first £3,000 of profit on the sale of a property in April 2024.

Landlords who make a profit greater than these allowances will pay CGT at the current rate of 18% if they are basic-rate income taxpayers or 28% if they pay tax at the higher rate.

The changes are likely to result in the average landlord losing out on around £2,600 if and when a let property is sold says The Mail.

Green finance options to grow and incentivise new-build buyers

The government is backing plans to expand the availability of green finance options for homebuyers who purchase more energy-efficient new-build homes, reported the Buy Association on the 16^th of November.

The initiative will see government funding of up to £20 million to mortgage lenders who offer green finance products that will encourage buyers to reduce their carbon footprint and emissions, thereby also cutting back on their energy costs.

Incentives for the purchase of energy-efficient new-build homes will be targeted towards both owner-occupiers and buy to let property investors.

UK house prices forecast to fall for the next two years

Citing official figures from the Office for Budget Responsibility (OBR), the BBC on the 18^th of November, forecast a steady fall in average house prices during the coming two years – after which prices are expected to start rising again.

From now until sometime in late 2024, said the OBR, average house prices can be expected to fall by as much as 9%.

While the fall might be welcomed by first-time buyers who are struggling to get a first foot on the housing ladder, their earnings continue to be under severe pressure from the rising cost of living and the challenges of saving for a deposit.

Furthermore, increases in the mortgage lending rate have also made borrowing that much more expensive. Instead of the relatively manageable rates that have prevailed in the past ten years or so, two- and five-year fixed-rate mortgages currently carry an interest rate of a little over 6%.

Rents to rocket further in early 2023 warns industry figure

As landlords faced with the challenges of running a buy to let business sell up and leave the market and those that stay are faced with ever more expensive mortgage borrowing costs, there is a critical shortage of dwellings in the private rented sector.

A story in Landlord Today on the 21^st of November drew attention to the inevitable consequence of such a shortage of supply – escalating levels of rent.

With the supply of private rented property at a five-year low, rents are predicted to surge by as much as an extra 4% in January 2023 alone.

As the seasons change to winter, certain common problems faced by many landlords of buy to let property begin to raise their heads once again.

Citizens Advice claims that damp is a common problem. According to the housing charity Shelter on the 3^rd of May 2022, condensation is the most common form of damp in rented properties.

Housing Health & Safety Rating (HHSR)

The risk to landlords is not only the possibility of complaints by tenants but the action that might be taken by local authorities in response to those complaints. If your let property is a House in Multiple Occupation (HMO) or subject to the local council’s selective licensing regime, it is almost certainly going to be subject to an assessment under the Housing Health & Safety Rating (HHSR) system, which may also be used in respect of any property for which the tenant has asked the council to perform or one which the council itself considers necessary.

If you fail to take remedial action on problems raised by an HHSR, the council issue an enforcement notice to ensure that the repairs or alterations are made, warns Landlord Advice UK.

The cost of such remedial action and repairs and modifications made is not an item covered by your landlord insurance – even when provided by buy to let insurance specialists such as ourselves here at Cover4LetProperty.

Condensation and damp

Condensation occurs naturally and happens when warm, moist air, produced by the thoroughly normal business of cooking and bathing or showering, meets with cold surfaces such as exterior doors and windows.

Unless the space inside a building is properly and efficiently ventilated, that damp air finds its way to the nearest cold surface and condenses. When the temperature of the air cools because it has reached the cold surface of an outside window, wall, or door, it condenses in droplets of water. This is the point at which the moist air reaches what is called its dew point.

As the British weather reaches that time of the year once again and temperatures begin to fall, problems with condensation become more pronounced.

The reason for many complaints from tenants and the inclusion of condensation in any HHSR inspection is because of its potential health hazard. Condensation, and the frequently damp conditions it produces, encourages the growth of mould on the walls of infected buildings.

Mould is made up of minute spores which contain allergens (which can give you an allergic reaction), potentially toxic substances and irritants. So, when you breathe in or touch those spores, they can prompt an allergic reaction, leading to a runny nose, skin rashes and red eyes. The spores may also bring on asthma attacks in those suffering from the condition.

The National Health Service (NHS) is unequivocal in its view that mould and damp represent significant health risks, such as respiratory problems, respiratory infections and other breathing problems, asthma, and allergies – to which the young, elderly, those with existing respiratory conditions or asthma, and those with low immune defences may be especially vulnerable.

Dealing with condensation

So, how can you fight these allied enemies of condensation, damp, and mould?

Here are a few tips and suggestions:

• while condensation, damp, and mould may be responsible for fungal growth, mould and dust motes, the risks might quite easily be mitigated by making sure that the heating system is working efficiently, the installation of extractors fans and by ensuring that windows open properly for greater ventilation;
• a story in the Guardian newspaper on the 19^th of November 2022, suggested that recent amendments to the HHSR rules would place greater responsibility on tenants helping to curb condensation and the growth of mould in rented accommodation;
• tenants can be encouraged to recognise that bathing, washing, and cooking are some of the principal sources of water vapour in the air – which then condenses – so landlords might ask tenants to devise ways of reducing the volume of water vapour produced;
• encourage tenants to turn off the shower and taps once they’ve finished using them, for example, and to consider opening a window when they are taking their bath – and, of course, using any extractor fan you might have installed;
• the same goes for their use of the kitchen, when an open window or use of the extractor fan is going to help reduce the amount of steam inevitably generated in the process of cooking;
• after doing their washing, of course, your tenants are going to want to dry their clothes, but tell them not to do this by draping them over the radiator, since this produces a considerable volume of water vapour – if you install a vented tumble drier, therefore, you might not only be doing your tenants a favour but also helping to keep your let accommodation free of condensation;
• more serious problems with condensation – particularly in tracing its causes – may be something on which you need professional advice;
• depending on the principal causes of the problem, remedial measures might include an upgrade of your let property’s heating system, the replacement of windows and doors, or general improvements in the effectiveness of ventilation in the home;
• maintaining an even, ambient heat in the property might be especially important in cold weather since it reduces the sharp difference in temperature as air hits cold walls, doors, and windows – and maintaining this ambient temperature might be more important still when the occupants are out at work for most of the day;
• persuading your tenants to spend money on prohibitively expensive fuel costs may of course be difficult for you to do as their landlord, but the more efficient the heating system you install and the more sophisticated the control systems available to tenants, the more likely are they to play their part in helping to mitigate risks of condensation.

Condensation, damp, and the growth of unsightly and health-threatening mould pose a triple-pronged headache for landlords of buy to let property. But it is the health hazard of condensation and growth of mould that it encourages that is most likely to prompt complaints by your tenants to the local council. The latter, in turn, may then investigate the problem and impose measures you must take to remedy the problem.

Both the government and Citizens Advice stress a landlord’s responsibility for maintaining let property in a good state of repair. Not only is that your legal obligation as a landlord but a regular schedule of regular maintenance and repair is the key to avoiding the disruption and expense of tenancy voids.

Much better to avoid the risk of the let property having to be vacated because it has been allowed to fall into disrepair and a major restoration project is needed to fix it up again.

Since the cost of that maintenance schedule is typically one of the biggest overhead expenses which you are likely to face as a landlord, what might be done to manage and control essential repairs and maintenance?

Weather

Probably the number one enemy for the owner of any buy to let property comes from something as simple and inescapable as the great British weather. Blistering sunshine in summer, pouring rain, winter storms and the risk of flooding, ice, and snow, all take their toll on the condition of the building itself and even its contents.

If you want to manage and control your expenditure on repairs and maintenance, therefore, a major objective will be mitigating the punishing effects of the elements by weatherproofing your let accommodation.

This means maintaining your let property in a good state of repair the full year around.

Areas for particular consideration are:

• the roof, where any slipped or missing tiles or slates must be promptly replaced;
• all the rainwater goods – such as gutters and downpipes – which must be kept free of blockages and provide free-flowing drainage; and
• the external walls – where the brickwork must be checked to have been adequately pointed and remains free of cracks.

Maintaining your property in a good state of repair is also likely to be a condition of the landlords’ insurance you might have arranged through us here at Cover4LetProperty.

Seasons

Your maintenance schedule for weatherproofing the let property also needs to take into account the changing seasons – and the fact that winter conditions may be especially punishing.

This is the time of year when the focus is on the importance of striking the most appropriate balance between the cold and wet conditions outside to the moist and warm conditions that are likely to be present inside. Communication with your tenants on maintaining that balance may be critical.

So, weatherproofing your let property might involve just as much attention to the facilities you are providing your tenants inside the building as to anything you need to maintain and repair outside. This means ensuring that open chimney flues have been competently swept (preferably by a member of the National Association of Chimney Sweeps or the Guild of Master Chimney Sweeps) and that any hot water or central heating boiler has been professionally serviced.

Empty property

A properly weatherproofed property is all the more important when and if your let accommodation is left unoccupied – for example, during the period when former tenants have left, but whilst you are still waiting for new tenants to move in.

This is a time when your usual landlord’s insurance policy may impose severe restrictions that reflect the increased risks of an unoccupied property. Some insurers may even consider your insurance cover to have lapsed altogether after your property has been left empty for longer than 30-45 consecutive days (depending on the insurer in question).

The solution in those circumstances is likely to be purpose-designed, specialist unoccupied property insurance which we can help you arrange.

How often have you overlooked a fire door or grown used to it always being propped open? If you’re like a third of the British public, you’re unlikely to report it as a problem – and the National Fire Door Safety Week that ran from the 31^st of October until the 4^th of November 2022 aimed to set you straight.

Fire doors are an essential fire safety feature – they are often quite literally life-saving features, so let’s see why.

The importance of fire doors

So, what is a fire door designed to do? It’s meant to keep any blaze within the room where it started. They are potentially life-saving because they protect the occupants of those rooms and leave them an escape route so that others can exit the burning or unsafe building.

Various fire safety laws stress the requirement for well-maintained and properly functioning fire doors in all public buildings, factories, and offices.

As far as landlords and those responsible for fire safety in “multi-occupied” buildings, however, the most important news is the introduction of the Fire Safety Act 2021 and the Fire Safety (England) Regulations 2022 which came into force on the 16^th of May 2022.

Fire Safety (England) Regulations 2022

Guidance published by the National Fire Chiefs’ Council (NFCC) encapsulates the key aspects of the new regulations, how they clarify existing fire safety rules for buildings in multi-occupancy – from small to large and high-rise blocks of flats, for instance – and the responsibilities of those who own or manage them.

With effect from the 23^rd of January 2023, additional obligations are placed on those designated as Responsible Persons – including landlords, their letting agents, and the managers of blocks of flats.

The NFCC identifies the three main types of multi-occupancy residential building and the fire safety measures demanded by the revised regulations:

Buildings with just 2 or more flats with doors opening onto common areas

• formulation of a Fire Risk Assessment Prioritisation;

• the issue of fire safety instructions and information to all occupants of the building; and

• information for residents specifically about the importance of fire doors;

Blocks between 11 metres and 17.9 metres tall

• all of the above plus regular checks and maintenance of all fire doors (the standard of fire doors in buildings higher than 11 metres is stricter than the standard for lower-rise buildings);

• the Responsible Person (landlord, agent, or manager) must carry out checks on all communal fire doors every quarter and further checks on the doors to individual flats at least once a year;

Blocks taller than 18 metres (that is, more than 7 storeys)

• all of the above, plus a secure “information box” accessible to rescue services;

• specific standards for the design of and materials used on external walls;

• maintenance of accurate floor plans and a building plan;

• maintenance of lifts and fire-fighting equipment; and

• comprehensive signage of escape routes.

Clearly, the importance of the national Fire Door Safety Week and the enactment of legislation such as the Fire Safety Act 2021 and the subsequent Fire Safety (England) Regulations 2022 have all been thrown into much sharper relief following the Grenfell Tower tragedy that claimed 72 lives in June 2017.

Further reading: Landlord guidance: Fire door safety in HMO’s and flats.

UK property news headlines are inevitably underscored by the adverse headwinds of the underlying British economy – currently challenged by inflation, a rising cost of living, and declining currency exchange rates.

A reduction in Stamp Duty may yet help to promote growth. And house prices continue to rise despite the economic turbulence. The latest news stories note that the soaring cost of living has led to the reappearance of more extended family, multi-generational homes. Interest also focuses on improved energy efficiency savings.

Here is a round-up of some of the latest property news stories.

Stamp Duty Land Tax cut to remain

A headlong bid for economic growth by the then incoming Prime Minister Liz Truss was not at all well received by the markets. Several major political U-turns were made after the fall of her short-lived government.

One of the policies to escape such a reversal, however, was the retention of a welcome cut to Stamp Duty Land Tax – or Stamp Duty as it is more commonly known – explained a posting by Propertymark on the 17^th of October.

Thanks to the changes, there is no longer any Stamp Duty applicable on the first £250,000 of any residential house purchase. On the next £675,000 – that is the proportion of the price between £250,000 and £925,000 – Stamp Duty is levied at a rate of 5%. On the next £575,000 – the price between £925,000 and £1.5 million – the tax is 10% and on the balance of any price above £1.5 million, the rate is 12%.

As before concessionary rates are available for first-time buyers who now have no Stamp Duty to pay on the first £425,000 of their house purchase. For any sum between £425,000 and £625,000, they will pay Stamp Duty at a rate of 5%. No concessions are available if the home costs more than £625,000.

UK house prices rise in October despite economic turmoil

Despite the economic woes of inflation, higher costs of living and an unfavourable exchange rate, prices in the UK housing market remain firm, revealed a story in the Guardian newspaper on the 17^th of October.

During October, average house prices edged up by a further 0.9% to a new record of £371,158.

Nevertheless, the higher cost of living, increasing mortgage rates, and the withdrawal of many mortgage products from the market have discouraged first-time buyers – amongst whom demand has already begun to dip significantly.

Multi-generational homes are becoming popular as costs soar

A further result of increases in the cost of living and more expensive mortgages seems to be a return to multi-generational households in which an extended family lives under the same roof, according to a story in the Daily Mail on the 14^th of October.

The newspaper points out that an estimated two-thirds of homeowners between the ages of 50 and 65 own their homes mortgage-free. By selling that property and pooling resources with younger members of the family to buy a bigger house, several generations can all share the same home.

So appealing has this lifestyle become that at least one developer is now building homes specifically to meet the demands of such multi-generational families.

EPCs – Which areas have the worst rental energy efficiency?

As winter approaches and energy prices rocket, the energy efficiency of rented accommodation becomes a critical factor, explained Landlord Today on the 19^th of October, when it identified those parts of the country currently lagging behind in energy efficiency measures.

The very worst areas – measured by the proportion of poorly-rated Energy Performance Certificates (EPCs) – were:

• Cleethorpes in Lincolnshire, where 80% of the rental stock has an EPC rating between D and G;

• Barrow-in-Furness in Cumbria, where 79% of rented homes are rated D to G;

• Westcliff-on-Sea in Essex and Grimsby in Lincolnshire, where 72% are rated D to G; and

• Accrington in Lancashire, where 71% of the rented housing stock is rated no higher than D to G.

The government has already warned landlords that by 2025 it expects all rented property has an EPC rating of at least a C or above.

Buyers of new builds will welcome a raft of assurances and protective measures that came into effect at the beginning of October.

The good news is delivered by the formation of a government-backed New Homes Quality Board (NHQB). This independent body puts in place a code of practice for the resolution of disputes between buyers and housebuilders on quality issues with newly built homes.

Since the NHQB will be looking at all new build homes it may be expected to help reverse the exodus of landlords from the private rented sector and encourage them to invest with greater confidence in homes that have just been built.

The New Homes Quality Board

The NHQB of course recognises that the majority of homes in the UK will be completed to a satisfactory standard that achieves the quality expected by a demanding market.

Despite that, the industry is keen to demonstrate that it is on the side of the buyer if things should go wrong. That is reflected by the fact that more than 100 housebuilders and developers have now formally registered to work in concert with the NHQB.

Working with the newly formed NHQB, builders and developers will now have that added incentive to respond quickly whenever things are on the brink of going wrong so that homebuyers’ concerns and issues are greeted with a rapid and helpful response – if necessary, with the redress of an independent NHQB hearing at the end of the day.

In this way, it is argued, the standards and quality of construction, not to mention the timeliness of customer service within the building industry, will be steadily improved.

A New Homes Quality Code will ensure that every buyer has a two-year warranty on a new build property and that customer service remains first and foremost every step along the way – from an initial viewing of a new home through to the last visit to the sales office.

New Homes Ombudsman Service (NHOS)

In parallel with the NHQB a further independent organisation – the New Homes Ombudsman Service (NHOS) – has also been set up to provide an ombudsman service capable of resolving and enforcing breaches of the New Homes Quality Code.

The new ombudsman service has set out the six simple steps by which it will tackle housing quality issues:

1. the homebuyer lodges a complaint or raises an issue;

• the homebuyer is invited to provide evidence in support of the complaint or issue;

• the complaint or issue is referred in the first instance to the appropriate housebuilder or developer;

• the New Home Ombudsman studies and takes a preliminary view on the complaint or issue – calling for further evidence as and when that becomes necessary;

• a draft decision is issued by the Ombudsman; and

• in the light of any comments or counterarguments it receives, the Ombudsman publishes a final decision.

Working in tandem, therefore, the NHQB and the NHOS are committed to raising buyers’ confidence and trust in the standards of quality achieved by the builders and developers of new homes in the UK.

Those buyers are likely to include a fair share of buy to let landlords who choose to invest in new build property – and, so, contribute to the provision of private rented accommodation.

What’s the secret to a successful buy to let business? It’s really quite simple. You aim to generate an optimum rental income by keeping your property let to tenants while safeguarding the structure and fabric of your business asset.

You can achieve that continuous occupation and steady rental income stream by keeping your tenants content with the accommodation (and service) you provide.

Here, we offer a few tips and suggestions for keeping your tenants happy. Some might be make or break issues, but others might be so seemingly simple you previously overlooked them.

What are your tenants looking for?

You are most likely to be keeping your tenants happy, of course, if you are giving them – as closely as possible – whatever it is they want from the home they’re renting.

If you set out to become the type of landlord who goes above and beyond what is expected, not only can you attract a tenant who will be more inclined to pay the rent that you require, but you’ll stand more chance of keeping them – you’ll find it more than worth your while to go that extra mile as a landlord.

Various sources conduct surveys from time to time asking prospective tenants about what they are looking for in a rented property. What surveys such as these tend to highlight, however, is that there is no single list of what all tenants are likely to find the most desirable.

To illustrate the point let’s consider the list of sought-after features identified by Estate Agent Today on the 31^st of August 2022:

• a safe and secure home;
• a property that meets high energy efficiency standards;
• a let property this well-maintained and clean; and
• a landlord or letting agent who is both accessible and easy to talk to.

Estate and letting agents Centrick, on the other hand, published a quite different order of priorities in their posting on the 19^th of May 2022:

• the freedom to own a pet in the let property;
• a home with outdoor space – whether this is a garden attached to the property, access to communal or shared gardens, or even a balcony;
• space – whether indoors or outside – for exercise and fitness equipment and routines;
• dedicated parking space; and
• flexible furnishing options.

In other words, if you are trying to keep your tenants happy by providing the type of accommodation they want, you might be choosing from an especially long list of options. Added to that is the fact that whatever features make certain rented accommodation more desirable than others might vary from one type of tenant to another.

Flat, house or something in between?

A large flat, with several bedrooms, for example, might appeal to sharers, while a spacious house with a large garden may be preferred by a family. While older tenants are likely to be looking forward to a relatively long tenancy, younger tenants are more likely to want to move on (because they move jobs or want to buy their own home, for example).

Despite some differences across age groups, however, most of your tenants are likely to expect to continue renting. In terms of delivering what tenants want, therefore, you might want to gear your buy to let business towards longer-term tenancies – a win for tenants, but also a win for you since it leads to fewer voids.

As you delve into questions about tenants’ likes and dislikes it becomes ever clearer that you are unlikely to keep everyone happy by meeting all of their preferences. So much depends, of course, on the type of property you are looking to let.

The landlord-tenant relationship

With those realities firmly in mind, it may be worth looking at some of the ways you can ensure that you start as you mean to go on by building an appropriate landlord-tenant relationship – one of the bases on which you may be able to help keep your tenants happy:

Moving in pack

• when your tenant moves in, one of the documents you are legally obliged to provide is a copy of the government’s current How to Rent guide – which focuses mainly on the respective responsibilities and obligations of both landlord and tenant;
• but why not also give them a pack that tells them all they need to know about your particular property – how to operate the central heating controls, for example, or the days of the week the rubbish needs to go out;
• other useful information might be where they can find the nearest vet – or even phone numbers of the local takeaways;
• welcome packs such as these might make your tenants feel comfortable and show that you are a committed landlord;

Spring clean

• thoroughly spring clean your let property before new tenants move in;
• this underlines the importance you attach to your tenants treating your property with the respect and care it deserves – and presents the accommodation in the state you want it to be left in when the tenancy finally comes to an end;
• a thorough spring cleaning will also provide the baseline on which your inventory is based;
• the inventory needs to be detailed – and illustrated by photographs where appropriate – both agreed and signed by you and your tenants;
• the inventory – and the tenancy agreement itself – should spell out responsibilities for maintenance of the garden, if there is one;

Contact details

• even if your property is managed by agents, do give your tenant some way of contacting you if things fail to get done – perhaps by email;
• even when it is the managing agent’s responsibility to look after your tenant, some may not treat your client as a priority – and, ultimately, this reflects badly on you;
• if you self-manage your property and you can afford it, you may want to consider investing in a domestic emergency insurance policy, so that your tenant – and you – have the reassurance that should something happen (the central heating boiler fails, for example) it will get rectified as soon as possible;
• this shows your tenant that you value them as well as stopping you from getting a phone call in the middle of the night if something goes wrong;
• of course, while you are doing all this, you mustn’t forget that you are running a business so make sure you have appropriate let property insurance, and do keep a record of things, whether it is a schedule of repairs, conversations about the property, and so on – start the relationship as you mean to go on.

Being friendly yet professional with your tenant costs nothing and going that extra mile can make all the difference between keeping a long-term tenant or having a high turnover of tenants.

What is the tenancy deposit protection (TDP) scheme?

One of the areas over which tenants may have taken issue with landlords in the past was the payment – or more importantly the return – of the deposit they were required to pay against the possibility of rental arrears, breakages, or damage.

Since 2007, all assured shorthold tenancies – that is to say, the majority of all tenancies – have required the landlord to place any such security deposit into an approved scheme for safekeeping within 30 days of receiving the money. Lettings agents are under the same obligation to secure any deposit received on behalf of the landlord.

There are separate TDP schemes in Scotland and Northern Ireland.

Not only does the tenancy deposit protection scheme provide safekeeping for the monies paid over by your tenant but, in the event, of any dispute about the amount to be repaid at the conclusion of a tenancy, an arbitration procedure is available to help resolve matters.

With effect from the 1st of June 2019 (in England only), the maximum deposit you can charge any new tenant on an assured shorthold tenancy is five times the effective weekly rent – or the equivalent of six weeks’ rent if your tenant pays you more than £50,000 a year in rent.

Summary

Keeping a good tenant can save you time, money, and hassle. We hope these pointers have given you food for thought as to how to keep your tenants happy.

Don’t let anyone tell you they’ve learnt all there is to becoming a landlord. It’s almost certainly more difficult than you think. The challenges will vary from one type of property to another, depend on the tenants you attract to live there, and might even be influenced by your own personality.

Because it can be more than a little overwhelming taking on board all that you’ll need to know, here we answer some frequently asked questions (FAQs) for landlords.

Being a landlord – how does it work?

The principle is a simple one – you invest the hard-earned cash or money you have borrowed by way of a buy to let mortgage, in the purchase of a property you then let to tenants in return for the regular payment of rent.

As the landlord and owner of the property, you are responsible for maintaining your property, but you also have a long list of responsibilities and obligations, many of which are legal obligations – and all of them are outlined on the government website.

You can also take a look at our guides: Landlord Legislation Guide and Landlords Guide to Health & Safety.

Do I need to be qualified?

One of the attractions and widespread popularity of buying to let is that there is no need for any formal qualifications – but commitment, hard work and every lesson gained from experience is still going to be the order of the day.

If the property you let is a House in Multiple Occupation (HMO), though, you need to meet certain criteria that are less relevant to your competence as a landlord, but rather that you are a “fit and proper” person. That is to say, you (or your agent) are without a criminal record and have no convictions for breaching landlord laws, regulations, or codes of practice.

What rent can I charge and how much is it going to cost me to do so?

Although your buy to let business naturally looks forward to maximising rental income, you also need to be realistic – to attract and retain responsible tenants and reduce the number of expensive voids.

Careful research into the area in which your let property is situated and the rents being charged for comparable properties, maintained to the same standards, may give you a good clue as to what is reasonable. You might also want to consult a letting agent about a realistic rent for the property you are offering.

The principal costs of running your buy to let business are likely to include the mortgage repayments (typically, in the case of buy to let mortgages, these are likely to be interest-only mortgages), the cost of repairs and maintenance, any letting agent’s fees, and landlords’ insurance.

What do I do with the deposit I ask my tenants for?

You almost certainly asked for a deposit as security for any damage or breakages your tenant might cause during the tenancy, the payment of rent and other bills when they fall due, and the possible cost of cleaning the premises when the tenancy comes to an end.

As with any security deposit, it needs to be returned – less any deductions that are agreed upon – to the tenant when the tenancy ends. That means there needs to be sufficient money available to you to make that payment.

To safeguard the deposit – in the interests of both you and the tenant – the Tenancy Deposit Protection scheme requires that any deposit is held for safekeeping by an officially approved third party, who releases the money, in the amount agreed by you and your tenant, at the end of the tenancy.

Further reading: Guide to Tenancies.

Do I need landlord’s insurance?

Although there is no legal obligation to have landlords’ cover, the answer to the question will be a resounding ‘yes’.

The purchase of your buy to let property almost certainly represents a significant investment. You will now rely on the generation of sufficient rental income to repay any mortgage and keep it properly maintained and repaired. So, the biggest nightmare is losing it all from incidents such as fire, flooding, or subsidence, for example, as well as other risks to the building and its contents.

The landlords’ insurance we arrange here at Cover4LetProperty is specially designed to offer not only the protection that the structure and fabric of your property needs (in the form of buildings insurance) but also to safeguard your business interests – providing you:

• indemnity against claims of liability (if a tenant, one of their visitors or a member of the public is injured, for example, or has their own property damaged on or within your premises); and,
• loss of rental income (up to pre-set amounts) following a significant insured incident which leaves your property temporarily untenantable.

What’s more, if you are buying the property with the help of a mortgage, the lender is almost certain to require a certain level of buy to let insurance cover to protect their interest in the structure and fabric of the building. Note that the cover required by your lender is sufficient only to safeguard the outstanding mortgage balance on the property and may not cover the full cost of rebuilding in the event of a major disaster and its total loss.

Why do I need specialist let property insurance, rather than any other type of property insurance?

As a business-minded landlord, the risks you and your property face are simply different from those of a standard residential owner-occupier.

That is why a buildings insurance and contents policy typically arranged for the owner-occupying homeowner will not cover a property that is being let out either totally or even in part (a room or two in your own home, for instance).

In practice, there may be many variations and additional elements of cover provided by your landlord insurance policy (such as the loss of rental income that we have already mentioned) – and it is typically a broker’s responsibility to help you understand what those additional areas are and how they might benefit you.

What are let property insurance brokers?

The property insurance broker acts as a centre of excellence in terms of knowledge of the marketplace and in helping clients access the most suitable product for their own unique needs and circumstances.

Putting it practically, we may know, for example, that a given insurance company offers automatic cover for subsidence – something that is no longer universal (but a standard feature of all the policies we arrange here at Cover4LetProperty). The broker’s job is to bring that – and other elements like it – to the attention of a potential policyholder to provide them with informed choices.

What does let property insurance cover offer by way of protection?

Only a careful reading of your insurance policy documents will set out the full detail of everything that is covered – that’s why we’d always encourage you to study the documents carefully.

Typically, however, a policy is likely to offer cover across four principal headings:

• the structure and fabric of the building itself (typically, therefore, called buildings insurance);
• any contents you may have in it (landlords’ contents insurance);
• indemnity against the risks of you being sued by someone who has suffered injury or property damage after coming into any kind of contact with your property (landlord liability indemnity insurance); and
• compensation for the loss of rental income – following a major insured incident which leaves the property temporarily unlettable, pending repairs and reinstatement.

Do these areas include all-risks cover?

That is unlikely to be the case – but is often an optional extra offered by your insurer.

Typically, all let property insurance policies will contain conditions and exclusions that exist as much for your protection as to limit the insurer’s liabilities.

For example, some policies may exclude cover for electronic items that are included in your furnishings as part of the rental deal. There is rarely any alternative but to read and compare the policy details to be clear – and when in doubt, to ask your insurance broker.

I am refurbishing my let property, which remains unoccupied by tenants during the building works – what is the insurance position?

Typically, insurance companies see a significant difference, in terms of risk, when properties are unoccupied – when renovation work is underway, or there is a longer than usual void between tenancies, for example.

Burglaries and vandalism may be more common, and there is the further risk arising from otherwise relatively minor maintenance problems going unnoticed and creating major cumulative damage.

For that reason, policies typically won’t provide cover for properties that stand unoccupied for more than 30 to 45 consecutive days – the exact period varying from one insurer to another. This is a restrictive condition that also typically applies both to owner-occupied and let properties.

To maintain the protection and safeguards your property will continue to need in situations such as this, you may want to arrange specialist renovation insurance.

Further reading: Guide to Renovating.

What is a resident landlord?

The term is self-explanatory and refers to someone who rents out a room or rooms in part of the property in which they continue to live as their only or principal place of residence.

The definition and an overview of the essential rights and obligations of such a landlord are outlined on the official government website, in its description of the Rent a Room scheme.

Why should I rent out a room in my own home?

A handy way of earning some extra cash, suggests the government-back Money Helper, is through renting out a room in your own home – and improving your bank balance in that way is a prospect that few of us are likely to turn down.

You can earn up to £7,500 a year tax-free (correct as at October 2022 but this could change) this way and, more altruistically perhaps, you might also reassure yourself that you are doing your bit to help solve the nation’s current shortfall in suitable, affordable housing.

What are my responsibilities as a resident landlord?

You have a basic responsibility for ensuring that any room or rooms you let are safe and in a reasonable state of repair.

Provided that is the case, you are entitled to charge whatever rent you think is reasonable and is likely to attract the kind of tenant or lodger you deem to be appropriate.

But what if it doesn’t work out with a particular lodger?

One of the attractions of letting space in your own home to someone who may be regarded as a tenant is that the same rules do not apply as if it were an entirely self-contained let.

If they have a room but also share some facilities with you, such as your kitchen, bathroom, or sitting room, your lodger or tenant has what is known as excluded occupation. Typically, you may ask them to leave – evict them in other words – whenever you like and without the need for any kind of court order.

If your lodger or tenant has a more or less self-contained space in your home, with no need to share any facilities whatsoever, he or she may be able to claim basic protection under the housing laws, and you will then need a court order to secure their eviction.

If a let out a spare room, where do I stand as far as home insurance is concerned?

Most privately owned homes, of course, are protected by one or another form of home building and contents insurance. What is the impact on this safeguard if you are letting part of your home to someone else?

Different insurers may have different policies, so your first step needs to be letting your insurer know that you are planning to let space in your home to a lodger or tenant.

The answer might be a simple change of policy (to one which includes landlord insurance), an increase in the premiums you pay to continue the cover, or a termination of the cover you presently enjoy, and its replacement by another.

For reasons that may seem reasonable enough, your current insurer is likely to be especially concerned about the effect any such let might have on the insurance used to protect the contents of your home.

Additional considerations when having a lodger

Unlike landlords of self-contained dwellings, you are not subject to the requirements of the tenant’s deposit scheme and may choose any appropriate way of managing the deposit you may ask of a lodger or tenant.

If you are paying the bills for water, electricity, drainage, water, and other utilities you may charge whatever proportion of these costs you consider necessary in the rent that you charge.

If you have a mortgage on your home and do not inform your mortgage provider that you are letting out a room, it could cause problems further down the line – so do get in touch with them.

You remain responsible for the payment of Council Tax, however, and may need to inform your local authority if you no longer qualify for a single person’s discount on your assessment for the tax.

Becoming a resident landlord may be easier than you think and simply involves letting out to someone the spare room or rooms that you may have in your home – and, as at the time of writing (October 2022) you stand to benefit from a useful tax allowance of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.

Do you have more questions?

We hope these landlord insurance FAQs have proved useful. If you have any questions relating to your property insurance, please do get in touch with us. We’d be delighted to help.

There are many pressures and challenges faced by the buy to let landlord these days – and there are inevitably occasions when things can go horribly wrong. That’s when you will turn to your landlord insurance policy for support and financial assistance.

Let’s see how you can get the broadest possible cover at times like these by taking a look at those elements that might be included as standard items for your particular landlord insurance policy or which may be available as extras or add-ons:

Loss of rental income

• your buy to let property is a business investment that relies on the steady income stream rents you receive;
• following an insured incident that leaves the property uninhabitable – and therefore unlettable – until the necessary repairs or reinstatement have been done, many landlord insurance policies provide for compensation for that loss of rental income;

All tenants cover

• some insurers consider certain categories of tenant as too high a risk and decline cover if you are offering tenancies to these groups;
• specifically designated all-tenant cover, on the other hand, maintains the insurance safeguards you need – whether or not your tenants happen to be drawn from the unemployed, welfare beneficiaries, or others;

Landlord liability indemnity insurance

• landlord liability indemnity insurance is an element of cover so critical that practically any policy will include its provision;
• the cover indemnifies you against claims from your tenants, their visitors, neighbours, or even members of the public who may have been injured or had their property damaged through some contact with your let property;
• liability claims of this nature can involve substantial payments of compensation, so landlord liability indemnity insurance typically offers cover for a minimum of £2 million – and, often, a lot more;

Subsidence

• subsidence is probably one of the most serious perils to threaten any property – with remedial works invariably proving extremely expensive and sometimes requiring the demolition of the building;
• the insurance excess on subsidence claims can be high indeed – £1,000 or more – and many insurers simply fail to extend cover for such risks entirely;
• if you are in any doubt as to the structural integrity of your let property or its vulnerability to subsidence, therefore, you might want to ensure cover for this peril is included as standard;

Malicious damage

• however carefully you vet your tenants and take up references before granting any tenancy, there is always the possibility that you are landed with irresponsible individuals;
• some landlord insurance policies, therefore, incorporate the risk of malicious damage by your tenants or their visitors as a standard element of cover.

When you are purchasing your landlord insurance policy, there might be a natural temptation to get it over and done with as fast as possible so that you can continue with your normal daily business.

What we have hoped to illustrate is the importance of spending a little extra time scrutinising the policy, its terms and conditions, and just what is and what is not covered. You’ll be especially pleased to know, that all the elements of cover we have just mentioned come as standard with the policies we arrange (up to pre-agreed limits). So, you can be certain you have comprehensive protection for your investment property.

Every year, Fire Door Safety Week offers a timely reminder for landlords to pay attention to the vital importance of fire doors – in 2022, the occasion runs from the 31^st of October until the 4^th of November.

Fire doors

For most of the time, a fire door works just like any other door as a way of getting into and out of a room. Unlike other doors, however, a fire door is specifically designed to be part of a passive fire protection or safety system.

The Fire Door Alliance explains that a fire door is intended to keep any fire within the room in which it started, so protecting the occupants and providing an escape route through which others may leave the burning building.

They play such a potentially important, life-saving function that fire doors are obligatory in all factories, offices, and public buildings.

Perhaps less well appreciated is that fire doors are also required in houses in which there is a habitable room on the second floor – such as in a loft conversion – townhouses of two storeys or more, and in rooms that open into an integral garage.

Most important of all – as far as landlords are concerned – they are also required in flats and Houses in Multiple Occupation (HMOs).

Fire doors in flats and HMOs

Indeed, fire doors are so critical to residents’ safety that a press release on the 23^rd of August 2022 described amendments made to article 24 of the Regulatory Reform (Fire Safety) Order 2005 (Fire Safety Order) that stress their use in high-rise buildings and those in multi-occupancy.

In the wake of the tragic fire in the Grenfell tower block in 2017, the amendments to the regulations also focus on ensuring that local Fire and Rescue Services have as much information as possible about the management of fire risks in high-rise buildings.

If you are a landlord, you have a general duty to follow the published fire safety regulations that apply to either a purpose-built block of flats or a house converted into flats or used as an HMO.

So that you better understand quite what is involved in complying with these regulations, the organisers of Fire Safety Week have published a Fire Door Safety Week Toolkit – a collection of resources that will help landlords check the safe installation, operation, and maintenance of those fire doors for which they are responsible. The pamphlets and brochures also feature a Five-Step Fire Door Check.

Maintaining safety throughout a let property

Underlying publications by the government and reinforced in the Fire Safety Week’s material is the landlord’s responsibility for maintaining fire safety through the formulation of a comprehensive fire risk assessment of your let property.

Assessments need to determine what fire risks there are to the property, the level of hazard to your tenants and their visitors, and the measures you need to take to control or at least mitigate those risks.

There are strict rules on the installation of smoke alarms and CO2 detectors in many HMOs, but your risk assessment also needs to consider the standard and effectiveness of the fire doors you have fitted.

Bear in mind that, in addition to breaching any licensing conditions and your general responsibilities as a landlord, you may be subject to civil action if you have failed to conduct a fire safety risk assessment or failed to take adequate measures to control or mitigate those risks. Any tenant or visitor subsequently injured or having their property damaged in a fire may hold you liable and sue you for a substantial sum in compensation.

Even if you had the foresight to arrange landlord’s liability indemnity insurance, any settlement may be adversely affected by your failures, regarded as a function of your contributory negligence, and the amount paid out in insurance reduced accordingly.

Landlords might want to take particular attention to Fire Safety Week, therefore. Check the quality, standard and effectiveness of your fire doors – and you may not only help protect the health and safety of your tenants but avoid considerable additional expense.