Landlord Insurance and Property Insurance Articles

There might be any number of reasons for your deciding to renovate a property:

it is one that you have bought in an abandoned or derelict state, with the express purpose of renovating it and bringing it up to modern standards for you and your family to live in or to let out to tenants;

you might want to renovate the property you already own to improve the living accommodation or to increase its market value prior to onward sale;

if you are a buy to let landlord, a renovated property may command a higher rent and, so, increase the yield on your investment; or

you might have inherited a property and decide to renovate to realise an improved market price on its sale or to enhance its potential as let accommodation.

The renovation of an empty property – either one you already own or one which you intend to buy for that purpose – may serve two purposes:

it contributes to the overall standard and quality of the country’s housing stock – an important consideration given the current pressures on the supply of decent housing; and

it increases the value of your investment in the property – whether you intend to live there as an owner-occupier or subsequently letting it to tenants.

Indeed, some local authorities are generally so keen to see empty properties returned to the housing stock at an improved standard that they may offer grants, loans, and plenty of advice to encourage property owners to those ends.

It is important to note that councils may impose conditions on the subsequent resale of such a property or conditions about it being let to tenants.

Renovating a property

Whether it is your own home or a buy to let property, any renovation project is a serious matter, not least because of the expense and disruption. How often have you heard the complaint that it cost twice as much as you bargained for by the time the building works are complete?

And if it is a let property you are looking to renovate, it is not just the cost of the building works themselves, but also the rental income that is lost whilst tenants cannot be living there.

Budget

Even the most carefully planned renovation projects have a way of getting out of hand when it comes to unscheduled and increasing costs – it is important to formulate a budget which you are able to adhere to.

A good way of keeping a handle on your budget is to keep firmly in mind just why you are embarking on the project in the first place – do you want more room, for example, are you looking to update and improve tired, worn or simply out of date facilities in the kitchen or bathroom, or is the project essentially one to address areas of the property in need of repair.

Budgetary control is also important when contracting builders and other tradesmen – make sure to secure a written agreement that details the costs of their work and the time in which it is going to be completed.

Ensure this also includes holding back a certain percentage of the payment to the builder for six months after completion of the works – to ensure that faults, errors or “snags” are put right at the builder’s expense and not your own.

Planning permission and building regulations

When you engage in anything likely to be so extensive, time-consuming, and expensive as renovating an empty property, careful planning of every aspect of the work is clearly important.

High on your list of priorities may be the need to establish whether the renovations require planning permission and, if they do, that you make an early application for the necessary planning permission. Since your application may take some time to process, the sooner you are able to submit it, the sooner might the work actually start.

Starting the work without planning permission or failing to comply with the relevant building regulations may ultimately prove very expensive – if you are subsequently required to tear down and rebuild any part of the works.

Insurance for properties undergoing works

Another critical element of preparation is insurance for the property during its renovation:

inform your current home insurer or landlord insurance provider of your plans;
if these involve relatively minor renovation and redecoration works, the fact that you have informed the insurer may simply be enough;
on the other hand, your insurer may want to impose additional conditions or charge an additional premium for cover for the duration of the works;
alternatively – and especially if the property may not be occupied during the building works – your insurer may impose conditions you consider unacceptable or even remove cover altogether;
in that event, of course, you are almost certain to consider purpose-designed renovation insurance.

If you have bought a property to let or to eventually use as your own home with the specific objective of renovating it first, you may find it difficult even to secure renovation insurance.

Therefore, you might want to turn straight away to a specialist provider capable of providing this type of cover from inception – from the time you buy the property even though you have not lived in it yet or let it to your first tenants.

Why do I need specialist renovation insurance?

In response to that question, let’s take a look at your current home or landlord insurance.

Whether you own your own home or are the landlord of buy to let property, any insurer needs to know the use to which the insured property is put and any structural changes, modifications or extension that are built.

As the British Insurance Brokers’ Association BIBA) explains, these are “material facts”, which need to be declared to your insurer and your failure to do so may invalidate your home or landlord insurance.

For any project involving more than a lick of paint and perhaps changing a few doors, your standard home or landlord insurance will typically not suffice.

This is because the extra risks associated with renovating a property (perhaps it will be left empty while undergoing works; it will not be secure; you will have expensive machinery on site; accidents may be more likely to happen etc.) will not be covered under your insurance.

Renovation insurance exists to provide the additional protection needed when your property is undergoing works.

Specialist renovation insurance becomes necessary, therefore, because your existing home or landlord insurance is unlikely to provide the cover the property continues to need during renovation works.

Arranging the appropriate renovation insurance also helps you comply with one of the conditions almost certain to be attached to any mortgage you have on the property. This is the requirement to maintain adequate building insurance at all times – an almost universal condition, which is noted in guidance offered by Citizens’ Advice.

If your regular property insurance becomes restricted or lapses because of the building works in progress, therefore, renovation insurance continues to ensure that you are complying with the mortgage conditions.

If you are the landlord of let property, your hand may have been forced into commissioning some degree of renovation in order to meet local licensing requirements which may have been introduced in your area – especially if the property is a House in Multiple Occupation (HMO). The housing charity Shelter has published a guide to the different types of HMO licence and their conditions.

What does renovation insurance do?

Renovation insurance is standalone cover but designed to provide temporary protection while building works are in progress. Once the latter are completed, you revert to your normal home or landlord insurance – reviewing the total building sum insured to reflect the increased value of your renovated property.

Because it is temporary cover, therefore, a distinctive feature of renovation insurance may be the ability to purchase it for periods of less than the full 12 months normally required for other forms of general insurance. If the works are scheduled to last just three or six months, renovation insurance may be tailored to cover just this period – yet also remains sufficiently flexible to be extended if unexpected delays or hold-ups occur.

A detailed guide to renovating and what renovation insurance you may need is found in the library of different property guides we have published here at Cover4LetProperty.

What does renovation insurance cover?

Although different policies may vary quite widely in the details, the following are some of the principal elements typically covered:

Building insurance

you need to restore the protection of the existing building against the usual major risks, which are likely to be that much greater whilst the works are in progress – whether because of the added risk of flood damage, for example, if the existing building is no longer wind and watertight or because of any structural damage caused during the work in progress;
in addition to the existing structure, some renovation insurance policies may also provide protection against loss, damage, or the need for reinstatement of the new works;

Contents insurance

the contents of your existing home or let property are also under greater threat during any renovation works – especially since the premises are likely to be unoccupied and for there to be no one onsite for significant periods of time, especially at night;
renovation insurance may restore the protection you need for the property’s contents;

Public liability insurance

building works on your property may pose a risk of injury or property damage to passers-by, visitors to the site, neighbours, and other members of the public;
if one of these third parties suffers a loss or injury, you may be sued as the property owner – and claims may be substantial;
public liability insurance provides indemnity against such claims – typically for at least £2 million;
bear in mind that your contractor’s own liability insurance typically doesn’t cover any claims against you – although the contractors working on your renovation works are likely to have arranged insurance cover for their own public liability, this does not extend to any incident for which you as the property owner may be held liable;
In addition to public liability cover and safeguarding the existing structure of your property, there are other risks associated with the renovation works in progress – onsite, for example, you may have valuable materials, supplies, plant, machinery, and tools which are at risk of being stolen or vandalised.

To find out more about renovation insurance, why you may need it, and to see the answers to FAQS, please visit our renovation insurance page here.

Unoccupied property cover

One further important aspect of renovation insurance is its role in providing cover when your property is unoccupied for longer than a month or so – something that is almost certain to occur if extensive building works are being carried out and you need to vacate the home or temporarily vacate it of any tenants.

Even though there may be people working on the property throughout the day, there are significant periods of time when the property is empty – and these are times when it is likely to be at its most vulnerable.

When no one is living there, the need for minor repairs may go unnoticed and rapidly develop into major emergencies, whilst an empty building is especially vulnerable to squatters, vandals, arsonists and other intruders.

As a result of the heightened risks, most home and landlord insurance policies severely restrict the scope of cover, or regard it as lapsed entirely, once the property has typically been empty for longer than 45 to 60 consecutive days (the exact period varying from one insurer to another). Once again, renovation insurance plugs this gap by incorporating a valuable element of unoccupied property insurance.

Typical exclusions?

The exclusions incorporated into any insurance policy are every bit as important as those risks and perils that are covered.

Although each policy will vary in the details, renovation insurance typically excludes damage caused by the contractor (which should be covered under the contractor’s own insurance).

Usually, where structural works are taking place, no cover is in force for any part of the building that is either being constructed or worked upon (the works in progress, to which we have also referred to above).

How long does renovation insurance last?

Whenever the builders are in, you are likely to have a carefully planned schedule of works that include a completion date. Delays in even the best-laid plans occur and building works are notoriously prone to unexpected delays.

To make sure that adequate protection remains in place however long the delay in completion, therefore, renovation insurance is typically flexible enough to allow extensions to the period of cover provided.

Since many such building projects are likely to be completed well within the full year, moreover, as we mentioned before, renovation insurance is also designed to offer the necessary short-term cover, which may be bought for periods of just three or six months, for instance, rather than the full 12 months customarily required for most other types of general insurance.

Next steps

The specialist, niche cover provided by renovation insurance may provide the solution for ensuring that works in progress, the supplies, materials, and tools likely to be onsite, and the potentially substantial claims arising from your public liability are all suitably protected.

In short, if you are planning any renovation project for your home or let property, you might want to give careful thought to the need for renovation insurance. So, if you are about to embark on an exciting new renovation project for your property, just give us a call or get an online quote for renovation insurance today.

Study – how landlords have cut costs in challenging times

A recent report reveals just how landlords have been rising to the challenge of these difficult financial times, said Landlord Today recently.

There were a number of areas in which landlords have tightened their belts over the previous year and a half to meet the rising costs of running a buy to let business:

30% of those surveyed, for instance, said that they have renegotiated (with their current lenders) the terms of their buy to let mortgages;

29% have decided to increase the rents charged on their let properties;

25% have ditched any plans to invest in additional buy to let units;

22% have remortgaged their properties with an alternative lender;

15% have reduced their monthly mortgage repayments by paying off at least part of the outstanding mortgage balance with savings or other non-rental income; and

15% sold some of their let properties to reduce their operating overheads.

Additionally, one in six landlords cut costs by reducing their reliance on letting agents and taking on more of the management functions themselves, while 8% said they had cut ties with letting agents altogether.

Police urge landlords to look out for cannabis farm tenants

One of the persistent risks faced by many a landlord is the illegal use of their let property as a cannabis farm. Indeed, so insidious is the threat that we have published a “Guide to Landlords and Cannabis Farms” designed to help you be aware of what to look out for.

Evidence of the persistence of such illegal activity was revealed by Nottinghamshire police on the 30^th of May when they described the arrest, conviction, and imprisonment of a tenant resident in Mansfield.

The tenant, Aljon Kacaj, had set up a cannabis factory in the home he rented, and, in a raid, police seized more than 160 cannabis plants from the premises.

Kacaj was tried at Nottingham Crown Court, found guilty of producing cannabis, and sentenced to 20 months in prison.

A Nottinghamshire Police spokesperson said: “This was a large and sophisticated operation that will have cost a considerable amount of money to set up.

“It has also caused a very large amount of damage to the internal structure of the property which the owner will now have to rectify at their own expense.

“For that reason, I urge residential landlords to think very carefully about who they let their properties to and to ensure that all relevant background checks are completed.

“People should also be wary of red flags like people offering to pay a large amount of rent up front or in cash, because the cost of falling victim to this kind of criminality far outweighs any short-term financial gain”.

Surge in debt repayments as costs hit household budgets

A headline feature of the Nationwide Building Society’s recent household Spending Report reveals a surge in the repayment of debt – these repayments shot up by 25% in April as the number of repayment transactions rose by 14%. Borrowers repaid a total of £735 million in unsecured debt during the month.

As housing costs have risen – either through increased rents or mortgage interest repayments – households have offset these increases by reducing their spending on supermarket bills and utilities.

As consumers looked to spread the impact of their purchases, spending on purchases through mail-order catalogues went up by some 12%.

Altogether, Nationwide’s analysis showed increased expenditure on essential costs of 1% and non-essential costs of 2%.

New-build homeowners save £1,685 a year on energy bills

If you’re looking to cut the costs of your energy bills, it pays to live in a new-build home. That is the conclusion of research conducted by the House Builders Federation and reported by Zoopla recently.

The research showed that 85% of newly built houses scored an Energy Performance Certificate (EPC) rating of A or B. Fewer than 5% of older properties achieve such ratings.

The energy efficiency of a new-build home can typically be attributed to its double or triple glazing, cavity wall insulation, and modern appliances rated A+. Energy efficiency on this scale is built into the construction of new housing from the word go.

If you are a landlord, there is a whole host of laws and regulations with which you’ll need to comply – often on pain of financially heavy penalties. So, it pays to keep abreast of those that impact your buy to let business.

To help you make sure that none are overlooked, here are some of the most common requirements – though bear in mind that this list is by no means exhaustive:

Safety

a growing list of laws and regulations is designed to keep your tenants safe in their rented home;

currently, this includes annual gas safety checks, electrical checks at least every five years, compliance with all national and local fire safety regulations, the installation of smoke and carbon monoxide (CO2) alarms where appropriate, and additional regulations for Houses in Multiple Occupation (HMOs) – such as the installation and use of fire doors;

these measures are all mentioned in our Landlords Guide to Health & Safety;

Right to rent checks

immigration concerns are a top priority for the major political parties and landlords are expected to play their part in monitoring the situation through measures that grant immigrants to this country with a Right to Rent;

therefore, as a landlord, you are generally required to check the status of all your tenants to confirm that they have such a Right to Rent – and you face stiff fines if you continue to let to tenants whose permission to stay in the UK has expired;

Landlord licences

if you are the landlord of a House in Multiple Occupation (HMO), you might want to review our Landlords Guide to HMOs;

if yours is a large HMO – or any type of HMO in certain areas designated by your local council – you may typically need a licence to run such a let property;

Tenant deposit schemes

as we mentioned in our recent article entitled Landlord Money Saving Tips, managing your let property can be an expensive business – especially if you overlook your obligation to keep any tenants’ deposits in accordance with the government-approved Tenancy Deposit Protection Scheme;

once again, you could face stiff fines if you overlook compliance with this requirement;

Energy efficiency

intending to improve the overall standards of housing in the private rented sector, the Government has introduced steadily more stringent Minimum Energy Efficiency Standards (MEES) for let property;

although its implementation has been delayed somewhat, before too long all privately rented dwellings will need to have an Energy Performance Certificate (EPC) rated C or higher;

you might want to prepare for any future changes by reviewing our article about How to improve your property’s EPC rating;

How to Rent Guide

in the interests of transparency between landlords and tenants, the Government requires all landlords to hand all new tenants a copy of the current edition of the official booklet How to Rent (it was last updated in October 2023);

Landlord insurance

although it is no legal requirement, there is one final issue that the prudent landlord should never overlook – the need for suitable landlord insurance;

landlord insurance is a vital safeguard for your let property and the viability of your buy to let business itself – it is such a central issue that our Guide to Protecting your Property remains as true as ever today.

These are just some of the issues framed in the raft of legislation governing how landlords in the UK’s private sector run their businesses. Although we have compiled these comments on our understanding of the current legislation, remember that the laws and regulations impacting your business remain subject to further change in the future. They can also vary depending on where you are in the UK.

It is a well-known fact that the roots from trees may cause subsidence in houses. In the battle between nature and the man-made environment where does your allegiance lie? Though most people are likely to say they love to see trees growing, it might be an entirely different situation if it is your own home or let property under threat.

The facts

The latest figures available from the Association of British Insurers (ABI) revealed that more than 18,000 households made claims worth a total of £219 million in 2023 as a result of Summer 2022’s record breaking temperatures. This is the highest expected insurance subsidence bill since 2006.

The problem

The conflict between trees and property lies mainly in the roots of the former. As they grow – spreading out a considerable distance from the trunk – the roots take up water, causing the soil around them to dry out.

The problems are especially prevalent on clay soils where trees are typically extremely efficient in absorbing moisture and quickly shrinking the clay as it dries out, especially in dry weather and periods of sustained drought.

When there is a particularly dry summer, or a drought, therefore, the soil is likely to collapse and if it is ground supporting the foundations of a building they may be disturbed. Disturbance to the foundations may then cause the building to subside.

Living together

Paradoxically perhaps, trees have a very important role to play in our urban – and rural – environments. Tree planting is widely seen as one of the ways of combatting some of the effects of climate change by helping to regulate the forecast increases in ambient temperatures.

It is widely believed that trees have a very important – and increasing – role to play in safeguarding the environment.

The quest, therefore, is in finding ways that trees and buildings are able to live together. According to a report on the Subsidence Forum, for example, it has been found that not all trees are responsible for causing subsidence. The problem, however, is that it may prove extremely difficult determining which of them might end up causing subsidence problems for nearby buildings.

The Forum mentions advice from certain experts who advise that one of the ways of preventing or limiting the disruptive effect of root growth is to keep trees near buildings regularly pruned. In this way, the reduction in foliage may limit the amount of water taken up from the soil, preventing it from drying out and therefore reducing the risk of collapsing ground and the subsidence of property built upon it.

The future

Most people are likely to find it a much poorer world if city streets were totally denuded of trees because of the potential threat they pose to the buildings on either side.

The damage caused by trees may need to be controlled – and homeowners and buy to let landlords may need to continue to protect their properties with insurance against subsidence – but the longer term solution appears to lie in finding the most appropriate harmonious balance between nature and the demands of the built environment.

Is subsidence covered under my buildings insurance policy?

The answer depends upon who provided your policy.

Unfortunately, not all policies provide cover for subsidence automatically. some providers, including ourselves might not do so, therefore, it would be in your best interests to check your quotation documents and you policy carefully. We are always on hand to explain our cover in detail to you.

Some policyholders occasionally express surprise that subsidence isn’t automatically included in all policies. Here is a little history to explain that position.

At the risk of generalising, at one time cover for subsidence would have been typically included automatically in most if not all property cover. It is a fact though that over recent decades, subsidence claims have soared and they have proven to be a major problem for some sections of the insurance industry.

The reason for the increasing claims is not entirely clear. Some suggest:

it is due to climate change having a knock-on effect on the geology our properties are built on;
properties in the past may have been built with scant regard for foundations;
a greater awareness of what subsidence is may have led to an increased tendency to make claims for problems that previous generations would simply have lived with or not noticed.

Whatever the reality is, some buildings insurance providers no longer consider this to be a standard risk – and that might apply just as much to owner-occupier policies as it does to landlords insurance.

The potentially massive costs associated with subsidence might even be of the magnitude of needing to completely demolish the property and rebuild it from scratch. As a result, it might not be a good idea to take subsidence insurance lightly.

If you are not already clear, it might be advisable to check in the very near future just what your current policy is providing.

My property has a history of subsidence – can you provide cover for it?

Our buildings insurance policies can cater for many historic issues your property may have – typically even, in some cases, subsidence.

Should you require a property insurance quotation from us for a property which has previously suffered from a subsidence claim we will ask you for some additional information including:

date of claim;
cost of claim;
full explanation of the cause of the claim;
full breakdown of the work undertaken to rectify the problem;
current/recent surveyors report following the completion of works.

If you are currently going through the progress of making a subsidence claim against your existing insurance we will always suggest you remain with your current insurer as these risks are almost impossible to replace during the early stages of a claim.

We do understand how stressful having had to make a subsidence claim has been for you and we will do our utmost to find you a competitive landlords insurance quote.

Please note that if you are unable to provide us with any of the above information, then we will not be able to provide terms to you.

The team here at Cover4LetProperty are here to help, contact us and ask away as it is our job to deal with your queries and concerns regarding your property insurance.

Homes in Great Britain are designed principally to keep the warmth in when winter’s cold begins to bite. They are not designed as living spaces during very hot weather.

If you are the landlord of let property, that home is unlikely to have been designed with scorching temperatures in mind – so how might you protect your property and your tenants in the heat?

Prevent burst pipes

the winter’s scourge of burst pipes is probably the last thing you’d worry about in the summertime;
but extreme weather could lead to disturbed foundations and structural shifts that damage pipes, the effect of very hot weather heating and distorting the pipes, blocked drains, and the accumulated effects of hard water;
so check for clogged drains, have a water softener installed, and cover any exposed pipework with insulation to block the extreme rays of the sun;

Check for subsidence

It follows from this warning that you will do well to check for any signs of subsidence – or, indeed, any structural changes your let property might have suffered because of the extremely hot weather.

For more information, please see our blog: Subsidence – what causes it, and what about subsidence insurance?

Fire safety

ensure electrical systems are not overloaded, as heat can increase the risk of electrical fires;
keep a fire extinguisher readily accessible and ensure everyone in the household knows how to use it;
clear dry vegetation and flammable materials from around the property to reduce fire risk;

Keep drains and gutters clear

the longer the dry weather goes on, the more likely you’re going to forget those gutters and downpipes that make up your rainwater goods;
indeed, the debris that normally collects in those fittings will have been baked rock hard by the scorching sun – and the first you’ll know of any blockages will be the first outburst of heavy rain;
pre-empt any problems or emergencies by clearing blocked drains and gutters now – and keeping them clear while you await that first downpour;

Keep cool and carry on

In the heat of the day, it’s going to be much hotter outside than it is inside – it might be worthwhile reminding your tenants how to keep as cool as possible inside their home;

advise them to try to preserve some of the cooler air by closing windows and curtains to keep the heat of the midday sun away from heating up the indoors;
install ceiling fans or use portable fans to improve air circulation;
open windows during the cooler parts of the day to allow fresh air in and close them during the hottest times;
limit the use of heat-generating appliances such as ovens and stoves during peak heat times;

Mirror, mirror on the wall

something that might be easy to overlook is the – potentially lethal danger – of reflected light from mirrors in the home;
with the intensity of the sun’s rays during any heatwave, reflected beams can be strong enough to set fire to anything at all inflammable in the room;
urge your tenants to remove mirrors from direct sunlight and take them down from the wall during the height of extremely hot and bright weather.

Summary

British homes are not designed for extremely hot weather so you and your tenants may need to take special care to keep as cool as possible during any heatwave – protecting both property and people from the damaging effects of the weather outside.

What are some of the challenges to domestic expenditure in the UK economy at the moment? And how does property news about the present state of the housing market reflect those trends?

Perhaps some of the latest headlines will reveal the answers – let’s take a brief look.

Are landlords facing a crisis? Buy-to-let (BTL) mortgage figures

Alarmed by an almost 124% increase in BTL mortgage arrears in the 12 months since the end of 2022, the Daily Mail recently reported that many landlords have reached a crisis point.

The newspaper points to clear evidence that Britain’s two million or so private sector landlords have been hit hard by rising mortgage interest rates. The impact is reflected in the staggering 55.4% fall in buy-to-let mortgage lending in the final quarter of 2023 compared with the last three months of 2022. During that period, interest rates on those loans went up by 5.7%, compared with an increase of 3.67% the previous year.

As landlords struggle with those rising interest rates, the volume of arrears – and, ultimately, repossessions – also starts to climb.

At the end of 2023, some 13,570 landlords were in arrears with their mortgage repayments. During the final quarter of 2023, 500 buy-to-let properties were repossessed by lenders – as a last resort after other options had failed to clear outstanding arrears. Those repossessions represent an increase of more than 56% on the repossessions made during the final quarter of 2022.

The difficulties have led to a general increase in rents and some landlords – especially those with only one or two let dwellings – have sold up and quit the market. Commentators suggest that bigger landlords, however, are seizing the opportunity to buy up potential investments – looking towards the longer term with a conviction that the private rental sector will deliver favourable returns.

Fresh hope for Brits as household bills fall and discretionary spend rises?

For the many households worried about recent increases in the cost of living, a report by Nationwide on the 23rd of April offers a glimmer of hope.

The building society found that its estimates of “essential costs” for families fell by 4% in March while the expenditure by households remained more or less the same. Those savings in essential costs, however, were perfectly balanced out by a 4% increase in “non-essential costs” – such as expenditure on holidays, eating out, or gardening.

More clement weather of late could account for some of this respective ebb and flow in savings and expenditure.

While glimmers of hope could be detected, the building society warned that mortgages, rents, and supermarket shopping costs remain high.

Average rent in the UK: April 2024

The latest report by the online listings website Zoopla on the 19^th of April reveals that average rents across the UK as a whole have risen by 7.2% during the past 12 months – the equivalent of £960 per annum.

While average rents in the northeast of England are £695 a month and £2,121 in London, Scotland is where rent levels are rising at the fastest rate (despite the rent controls there).

The analysts at Zoopla predict that rent rises will slow down during the remainder of 2024 as the affordability for tenants restricts further growth in demand.

Housing market bounce pushes prices close to new record

Another online listings website Rightmove in a posting dated the 22^nd of April revealed that the average advertised price of a home for sale in the UK now stands at £372,324 – an increase of 1.1% since March alone.

Although this is in line with the increase in prices typically recorded at this time of the year, Rightmove detects a bounce in the market. It has pushed average prices just £570 short of the all-time record high that was reached in May last year.

Unsurprisingly perhaps the market bounce is driven by the increase in asking prices for higher-value, large, detached homes with five bedrooms or more.

Many property owners continue to struggle with the rising costs of energy bills. Energy consumption takes many different forms, of course, but a major expense comes from the simple need to heat your water.

Can solar panels help to cut those water heating costs – and, if so, how?

What is solar hot water?

Just as the term suggests, solar hot water makes use of the solar energy from the sun to heat water. It can do this in one of two ways:

solar thermal panels are installed to directly employ energy from the sun for hot water and heating; and

solar photovoltaic (PV) panels that convert energy from the sun into electricity – that can be used for heating and hot water.

Either way, it is the solar energy from the sun that is used to heat your water but for this article, we are looking at solar thermal panels only

What are the benefits of solar water healing?

The immediate, obvious benefit of solar water heating comes from the fact that you pay nothing for the sun to shine – solar energy is a free resource.

But that’s not the only saving Landlord Today reminded us on the 13^th of April 2024 – harness the sun’s rays and you’ll not only save money but also reduce your carbon footprint. So, you’ll be doing the world a favour by switching to a thoroughly sustainable heat source while also saving a fair packet in your pocket.

Not only is the sun free, but you’ll also be protecting yourself against future price rises and potential fuel shortages. You might consider it priceless to safeguard your future energy needs in this way.

What are the cost savings?

Of course, there will be an initial outlay to get the panels installed, so this will need to be factored in, overall. But that aside, the cost savings will be variable. These include your geographical location (how many hours of sunshine you can typically expect), the volume of hot water you use, how efficiently your solar heating system works, the cost of the fuel you would otherwise consume (electricity, oil, or natural gas), and your options for finance and any financial incentives currently available.

Green energy consultants GreenMatch estimate that these savings could represent up to £475 a year for the average consumer.

How do they work?

Solar thermal systems – or solar water heating systems – take the energy directly from the sun to heat the water you can then store in a thermal store or hot water cylinder.

The system relies on “solar collectors” which are tubes or panels used to gather the energy from the sun. The tubes are filled with a mixture of glycol and water, enabling the solar collectors to convert the infrared spectrum of visible light into heat. The water and glycol mixture is then pumped around a circuit that includes the hot water cylinder.

Given the UK climate, the amount of solar energy available to you varies throughout the year. The Energy Saving Trust explains that the typical solar thermal system installed in most residential situations will not meet all your hot water needs the whole year around. Instead, you will need to back up the solar supply with a conventional electric immersion heater or continue to rely on a central heating boiler.

The installed system can be expected to meet your hot water needs for taking a shower, bath, or running the hot taps.

What if I already have solar panels?

If you already have solar panels, Landlord Today suggests that you consider installing an Immersion Power Diverter so that any additional energy you are generating can go towards heating the hot water cylinder.

There is an initial installation cost, of course, but Landlord Today estimates that your savings on energy bills could effectively cover that cost within just two years.

Please note, this blog is based on current research and any figures and information supplied are based on this research as of May 2024. If you are interested in solar panels, please consult a professional.

If you have joined the ranks of an estimated 2.8m buy to let landlords in the UK, your property is an investment – probably one of the most valuable investments you are likely to make.

It makes sense, therefore, to protect that investment with one of the wide range of products designed to provide the safeguards you need, according to the changing circumstances of your property holding.

But before we actually look at some of the principal ways in which landlord insurance may continue to protect your property, let’s take a look at the different types of landlord there are in the UK. This is important as, typically, different types of property insurance will be required depending on the type of landlord and letting situation.

The different types of UK landlords

In the UK, there are several types of landlords who own and rent out properties:

Private landlords: These are individuals who own one or more properties and rent them out to tenants. They can range from individual property owners to those who own multiple rental properties as part of their investment portfolio.
Corporate landlords: These are companies or organisations that own and manage rental properties on a larger scale. They may own residential properties, commercial properties, or a combination of both.
Social landlords: Also known as housing associations or registered providers, social landlords are designed to provide affordable housing to people in need. They often receive funding from the government and may specialise in housing for specific groups, such as low-income families, the elderly, or individuals with disabilities.
Local authorities: Local councils or government authorities in the UK also act as landlords by providing social housing to residents. They own and manage properties within their jurisdiction and allocate them to eligible tenants based on housing needs and criteria.
Institutional investors: These are institutional investors such as pension funds, insurance companies, and private equity firms that invest in the UK property market. These investors may own large portfolios of rental properties either directly or through investment vehicles.

Each type of landlord may have different motivations, responsibilities, and regulatory obligations when it comes to renting out properties in the UK.

For the purpose of this article, the focus is on private and corporate landlords.

Insurance for landlords

There are several insurances that landlords need to consider, depending on their circumstances.

Landlord insurance

UK landlord insurance is a specialised type of insurance designed to provide cover for individuals who own properties that they rent out to tenants. This insurance typically goes beyond standard home insurance to address the unique risks and liabilities associated with being a landlord.

Landlord insurance typically includes cover for the building structure, as well as optional cover for any contents owned by the landlord that are included with the rental property. Additionally, it may offer liability cover in case a tenant or visitor is injured on the property.

Depending on the policy, landlord insurance may also provide cover for loss of rental income if the property becomes uninhabitable due to an insured event, such as fire or flood. It may also include cover for malicious damage caused by tenants, legal expenses, and alternative accommodation costs for tenants if the property becomes uninhabitable.

Overall, UK landlord insurance is tailored to meet the specific needs and risks faced by property owners who rent out their properties to tenants.

Recap:

let property insurance typically provides cover for the structure and fabric of your let property, and if required, any contents which you own within the premises;
as with any property insurance, the worst case scenario needs to be envisaged, so that the total building sum insured covers the estimated cost of completely reconstructing the premises, clearing the area and legal and professional fees;
but landlord insurance may also cover much more than the physical risks and perils to your let property;
your liabilities for the health, safety and well-being of your tenants, for instance, might be looked after thanks to the cover provided to indemnify you against claims of negligence in your duty of care as a landlord;
landlord insurance may also ensure that your anticipated rental income is just about maintained even after a major insured event has rendered your let property temporarily unfit for letting.

HMO insurance

If you own an HMO (House in Multiple Occupation) then you will require HMO insurance. This is a specialised type of insurance designed to provide cover for landlords who rent out a property to multiple tenants who are not part of the same household.

HMO insurance typically offers protection beyond standard landlord insurance to address the unique risks associated with HMO properties. Cover may include protection for the structure of the building, liability cover in case a tenant or visitor is injured on the property, cover for loss of rental income in case the property becomes uninhabitable due to an insured event, and optional cover for contents owned by the landlord.

HMO insurance may also provide additional features such as cover for malicious damage caused by tenants, cover for properties with a high number of tenants, and cover for specific tenant types such as students or individuals receiving housing benefits. Read more: A landlord’s guide to HMOs.

Commercial property insurance

With similar emphasis on safeguarding the structure and fabric of your let property, commercial landlord insurance also recognises the particular needs and requirements of those owning property that is let for business purposes.

Whether the premises are let as a shop, a workshop, a salon, a bed and breakfast business, a pub, bar or restaurant, commercial landlord insurance is tailored to safeguard the particular business operations of the enterprise.

In addition to the security generally provided by landlord insurance, therefore, this specialist cover also focuses on the provision of compensation for business disruption in the event of an insured incident.

If the commercial property is unoccupied, then unoccupied commercial insurance will be required.

Portfolio insurance

In the context of property investment, portfolio insurance typically applies to landlords or property investors who own multiple rental properties.

Just as the name suggests, it is possible to arrange insurance not only for a single let property but for a whole portfolio of such premises – typically earning the landlord attractive discounts on the cost of insuring premises versus on a case by case basis.

Portfolios insurance has the added advantage of keeping all of your buy to let properties under a single insurance policy, with just one annual renewal date to manage.

This type of insurance typically offers comprehensive cover for the entire property portfolio, providing protection against various risks such as damage to the properties, loss of rental income, liability claims, and legal expenses. It may also include cover for contents within the properties and additional features tailored to the specific needs of property investors.

Portfolio insurance is essential for landlords or property investors who want to safeguard their investment portfolio against unexpected events that could potentially result in financial loss or legal liabilities. It helps to mitigate risks and provides peace of mind, allowing property owners to focus on managing and growing their investment portfolio effectively.

Unoccupied property insurance

With the best will and the greatest care in the world, you are unlikely to avoid vacancies in tenancies – whether through incoming and outgoing tenants or your decision to refurbish the premises themselves. In either event, there is every possibility of your let property lying empty for more than a few months.

Given the particular risks and perils to which an empty property may be exposed – whether through unattended maintenance problems or the unwanted attentions of burglars and vandals – purpose designed empty property insurance is necessary to maintain the level of cover and security demanded by the typical landlord. Read more here: Guide to unoccupied property.

Renovation insurance/property undergoing works

You might have bought it with the express intention of refurbishment or decided to revamp a property you already own, but there is likely to be a place for landlord’s renovation insurance in your plans.

Renovation insurance may be the key to ensuring the protection not only of the existing structure and fabric of the property you own, but also the works in progress and the final extension, reconfiguration or remodelling itself.

All the while, your property owner’s liabilities may also be safely protected with indemnities likely to start at a minimum of £2m

During the course of any renovation building works you are also likely to want cover for the plant, machinery, tools and materials employed in the project. Read more here with our Guide to renovating.

UK holiday home insurance

This is aimed at individuals who own a second home or a holiday property that they rent out in the UK and is, in many ways, a blend of both standard home insurance and landlord insurance. Here’s why:

ownership and occasional occupancy: You own the property and likely use it intermittently as your holiday getaway;
potential for rental income: Since you don’t occupy it year-round, your holiday home has the potential to generate extra income by renting it out to paying guests. In this scenario, you assume the role of a landlord to short-term tenants.

The unique, almost hybrid, nature of holiday home insurance sets it apart from both standard home insurance and landlord insurance.

For further insight into the necessity of holiday home insurance, refer to our Guide to UK Holiday Homes.

Summary

As may be clear, therefore, owning your buy to let property might not just call for a basic, all-purpose landlord insurance policy, but one that is specially tailored to meet the diverse and changing needs and circumstances of the typical landlord.

Ensuring that you are prepared to meet some or all of these changing demands, you might want to consider the expertise and experience that a specialist insurance provider such as ourselves may bring.

Please contact us today on 01702 606 301 to see how we can help.

Last month’s Spring Budget was billed by the Chancellor of the Exchequer as a “Budget for Long Term Growth”. Only time will tell whether it achieves that aim but, in the meantime, let’s look at just what the budget holds in store for landlords.

Please note that this is based on the author’s current understanding and research and therefore should not be deemed as professional advice.

Holiday lets

Recent years have seen quite widespread criticism of the growing number of short-term holiday lets – especially in tourist hotspots. Some might argue that the favourable tax regime granted to landlords of furnished holiday lets – tax-free mortgage interest repayments – has unduly encouraged such growth.

The Spring Budget, therefore, proposed the abolition of those tax advantages – arguing that the loss of this and other benefits will encourage owners into much-needed longer-term tenancies. On the other hand, some of those landlords of holiday lets might simply choose to sell up and quit the buy to let market altogether.

An estimated 127,000 dwellings currently benefit from the furnished holiday lets regime and its abolition is expected to raise an additional £300 million for the Treasury (according to an estimate calculated by Landlord Zone on the 20^th of March).

The budget includes further blows to the holiday let market by abolishing the right of landlords to deduct the costs of fittings and fixtures from their taxable income, the removal of tax privileges for pension contributions, and the loss of the option to pay a 10% business rate instead of the full capital gains tax (CGT) whenever a property is sold.

Capital Gains Tax (CGT)

On a brighter note, higher-rate taxpayers will welcome the reduction – with effect from the coming tax year – from the current 28% rate of CGT to 24%. There is no change to the basic rate of CGT which remains at 18%. Landlords are affected by the changing rates of CGT, which is a tax applied when temporary residences such as second homes, holiday lets, and but to let rental property is sold.

Even at 24%, CGT is more onerous for higher rate payers than the tax on other assets such as stocks and shares, where the rate is 20%.

Stamp Duty: Multiple Dwellings Relief

Landlords looking to increase the size of their buy to let portfolios will be hit by the abolition of Multiple Dwellings Relief (MDR) from Stamp Duty Land Tax (SDLT) on purchases of residential property in England and Northern Ireland with effect from the 1^st of June 2024.

MDR has served as a tax break for landlords investing in multiple properties. It has reduced the amount of tax payable on the purchase of one dwelling calculated according to the average price paid for multiple dwellings. The Chancellor argued that MDR no longer fulfils its original intention of incentivising investment in rental properties.

The saving to the Treasury from the abolition of MDR is estimated to be £700 million annually.

Empty Property Relief

With the imminent start of the new tax year, there will be a “resetting” of the current Empty Property Relief (EPR) arrangements.

Commercial landlords can apply for empty property relief and avoid paying business rates for the first three months from which premises become empty. Up until now, there has been an obligatory 6-week waiting time after the end of one period of relief and the start of any new period of vacancy.

That “resetting” period has now been extended to 13 weeks. The Government website explains: “The current 6 week reset period requirement will therefore still apply where that period started before 1 April 2024 and ends on or after that date. If a previously empty property is reoccupied on or after 1 April 2024, it must be occupied continuously for 13 weeks before it can benefit from a further period of empty property rate relief.”

By extending the delay before qualifying for relief once again, the Treasury hopes to curb the practice of some landlords who have persistently rolled over successive periods of business rate relief on empty properties they own.

VAT

Most landlords do not have to worry about VAT since residential lettings are exempt from that tax.

The exceptions, however, are holiday lets and self-catering accommodation. If you are the landlord of this type of business and your rental income from such property exceeds the tax thresholds, you must register for VAT.

The Spring Budget raised that VAT threshold from its current £85,000 to £90,000 per annum with effect from the 1^st of April. The threshold for deregistration has been similarly increased from £83,000 to £88,000.

Industry reactions

Although the reaction from the private sector rental industry has been mixed, the overall assessment is probably best summed up by the National Residential Landlords Association (NRLA) in its comments on the 6^th of March.

The Spring Budget represented a “missed opportunity” and a failure to give priority to investment in the provision of new homes to rent, said the NRLA. It accused the Chancellor of “tinkering” with marginal issues for short-term electoral gain rather than giving support for longer-term investment in a high-quality private rented sector. By way of illustration, the NRLA considered that increased taxation of holiday lets and bigger allowances on CGT would make little difference to the long-term investment in this sector of the housing market.

There had been a failure to address the current high demand for and low supply of affordable, quality rented accommodation, complained the NRLA.