A survey by the Landlords’ Association has shown that half of landlords do not have any insurance on their properties. Owner occupiers should always have insurance too, but the effects of them not having it are likely to be less severe should something go wrong than if landlords are not insured. The Association’s Partnership Manager, Jay Kasli, said he was ‘shocked’ that so many landlords did not have insurance, because of the obvious risks involved to both them and their tenants.
Landlords need specialist insurance cover for their properties that will protect them from rent arrears and damage caused by tenants, as well as general problems with the building’s structure and accidental damage.
Why get insurance?
Landlord insurance is a must for landlords who want to make sure they keep their investment safe. Landlords insurance policies will often include cover for rental arrears and void periods. Without rent coming in each month, landlords can often struggle to meet their mortgage payments, especially if they only have a small portfolio. Insurance will help landlords meet their mortgage payments even if their tenants are not paying rent, helping them avoid getting into mortgage arrears as a result of rent arrears.
At a time when arrears are rising because of the economic downturn and rising rents, this is particularly important. While obtaining references can help landlords avoid tenants who are likely to get into arrears, they are not foolproof – anyone can unexpectedly lose their job and get into financial difficulties as a result.
Damages
Similarly, good references do not always mean that tenants will not cause damage to a property and its contents. When you rent out a property, you put it in the hands of the tenants. Damage might only come to light during house inspections, by which time the cost of repairing it could have increased. Serious damage is not likely to be covered by withholding a deposit at the end of a tenancy.
Insurance can also give landlords cover for damage due to wear and tear, fire or other causes out of the tenants’ hands. Landlords are legally required to carry out repairs in good time, and tenants are entitled to claim a reduction on their rent while repairs are being carried out. Insurance can help landlords get repairs done quickly, reducing their costs and keeping tenants happy.
Having good landlords insurance in place means peace of mind and better landlord-tenant relationships. Having insurance means that you can minimise risks to your investment and be a better landlord.