The first three months of 2016 saw what the Guardian newspaper called a “frenzy” of activity as existing and would-be buy to let landlords rushed to buy property before the deadline of the 1st of April.
This is the date on which a 3% stamp duty surcharge was introduced on the purchase of any home which is not your main residence – a change which was bound to affect property investors and buy to let landlords in particular.
This surcharge on the initial purchase of your buy to let property is clearly a cost that needs to be taken into immediate account, but there are other recurring costs which it is also important to bear in mind.
Failing to account for some of these “hidden costs” is described as one of the common pitfalls into which first-time landlords may fall, says the financial section of the Daily Mail newspaper in its edition of the 15th of September 2015.
Among any landlord’s hidden costs may be ongoing expenditure on repairs and maintenance, possibly letting agency charges and above all let property insurance.
Let property insurance
Perhaps the very first pitfall to avoid when getting insurance is choosing the appropriate type of cover in the first place.
If you are letting your property to tenants, the risks and perils are of a different nature and order to those if you are occupying the premises as your own home. Let property is essentially a business asset which is used to generate the rental income on which your enterprise demands.
This distinction needs to be kept very firmly in mind, since arranging the wrong type of cover may prove expensive indeed. Specialist let property insurance – also known as landlord insurance – is essential if your property is occupied by tenants. If you attempt to rely on standard home insurance, you are likely to find that any subsequent claim is denied.
Buying let property insurance
This is a specialist type of insurance. Although you may see it marketed through a number of different outlets, therefore, you might prefer to buy it through a specialist provider – such as us here at Cover4LetProperty.
We have many years of experience in the provision of specialist cover for this particular niche of the wider insurance market. This allows us to draw on our unique expertise in first understanding your particular needs and requirements as a landlord and then matching those to the appropriate products available – at a competitive price.
Areas of cover
Our starting point is that not all let property is the same, not all landlords have the exact same requirements and that the insurance needed therefore differs from one set of circumstances to another. Landlord insurance needs to be tailored to the particular needs and requirements of each individual landlord.
Take the cover required for the protection of the building and its contents. Amongst many of the risks and perils typically covered are: fire, flooding, subsidence, storm damage, smoke damage, escape of water, impacts, vandalism and theft.
But there may be instances either where cover for subsidence is not extended by the insurer or you may elect not to buy that element of cover. This might be your option if premiums are disproportionately expensive because an insurer assesses the risk of subsidence to be especially high.
If your let property is in an area especially susceptible to flooding, you might also find insurers wary of extending cover or even accepting the risk at all. Unfortunately, too, let property is not included in the recently launched Flood Re initiative to spread the cost of insuring properties in areas at risk of flooding.
Another important aspect of protection for the owner of let property is landlord liability cover. It is used to protect yourself against claims from tenants, members of the public or visitors to your property who may suffer an injury or have their property damaged and claim it was the result of your negligence as the landlord and property owner. Although cover against this risk typically extends to at least £1 million, there are circumstances where you might want to increase this level of cover and a specialist insurance broker may provide just the advice you need.
Advice may also be necessary when it comes to selecting your let property insurance for the compensation it provides against loss of rental income in the event of an insured incident which leaves the accommodation temporarily unusable. Different insurers may offer different levels of cover.
Spotting hidden costs such as these – and getting them right – may prove critical to managing the operating expenses of your buy to let business, so protecting its longer term success and viability.