If you’re going to be renting out a property, it’s crucial that you take out insurance to protect your asset from any unforeseen eventualities. These include flooding, earthquakes, fire, damage from tenants, and burglary, and many lenders will require you to have landlord insurance before giving you a mortgage.
You will usually need buildings insurance as well, which will protect the actual structure of your building, and while your lender will usually offer you their insurance, you’re certainly not obligated to take it from them, and your best option is to shop around and check out your options.
One thing to consider is the sum insured. This is the maximum amount you’re able to claim in the event that your property is completely destroyed. The reason this is important is that if you do need to claim and the amount insured is too small, you could end up with a shortfall and be out of pocket. However if it’s too big, that means you’re paying too much each month.
Keep in mind that the sum insured should cover the cost to rebuild the property and not its market value. It can be a good idea to get a professional to assess the cost of a rebuild, and your insurer can also estimate this based on a few different factors including the type and age of the property. This is where some policies will be more beneficial, due to the fact that they may offer unlimited cover so you don’t need to calculate the rebuild value.
Your insurance should also cover malicious damage, which is damage that a tenant has done purposely, and most insurers should cover key, lock and glass replacement as part of the policy.
It’s also crucial that you spend enough time looking into references for your tenants. Most of the time when landlords have huge problems with the people living in their properties, it’s due to the fact that they failed to do their due diligence.
When your property is sitting empty, it can be easy to snap up the first potential tenant you see- especially if you’re relying on that rent to cover your mortgage. However, by failing to look into their backgrounds, you could be setting yourself up for years of nightmare tenants and legal trouble when you try to get them to move out.
This is some of the most important advice around, and even for experienced investors and landlords, doing these basic checks can save you a huge headache down the line and allow you to have a property that you basically “set and forget” as the rent comes in each week and there isn’t any damage to the property.
Current housing trends are actually looking positive for many regions around the UK, and while the political situation, economy, and Brexit are all impacting property and rent prices, by spending some time on research, investors will find that they can still get a great deal this year.