The current economic climate means that there is a general increase in the demand for rented property. It's tough these days getting a mortgage and for many people, uncertainty about their job security means they're reluctant to enter into the home ownership market. According to ARLA, the Association of Residential Lettings Agents, around 70% of their members say that the demand for rental accommodation is now outstripping the supply. So, if you're thinking of moving into this sector, this may well be a great time to do so.
However, you must make sure you do things properly and one of the many issues you need to consider is taking out appropriate and adequate landlord's tenants insurance.
No doubt you will be doing your homework on what income and expenditure you can expect from letting out your property for the first time. You will have researched the rent levels in the area and checked out any legal requirements pertaining to the type of lease you're proposing to offer. You will have decided what checks you'd like to run on any prospective tenants, including those on their financial security. And if it all seems too much like hard work, you may well have decided to engage a lettings agent to do a lot of this work for you. But organising the correct tenants insurance for your property is your responsibility and the chances are that in the future you'll be thankful you spent time getting this correctly sorted out, right from the outset.
As landlord, you will be responsible for insuring the building itself. You may already have buildings insurance on the property but don't fall into the trap of thinking this is enough. If you let out the property, your insurers will want to know. If you fail to inform them and agree any amendments or changes to the policy to reflect this, any future claims may well be invalidated. Tenants insurance to cover your buildings is absolutely essential.
Your tenants insurance will also need to cover any items you provide in the property. You may be letting it fully furnished, or perhaps you are simply providing white goods along with carpets and curtains. These things belong to you and must be covered by your insurance. It will also protect you against any potential claims your tenants could bring against you in the event that they sustain an injury because of something that's your responsibility. They may fall over a loose edge of carpet, or burn themselves on a cooker that's not working properly.
For any personal possessions that belong to your tenants insurance will of course need to be arranged by them. You are not expected to provide for this.
You might want to give some thought to whether you would like to extend your tenants insurance to cover you against the possibility of your tenants failing to pay the rent. In the current economic uncertainties the UK is facing, many people are falling on hard times and through no fault of their own find they are unable to meet their financial obligations. Tenants insurance can be arranged that will pay out any losses you would incur as a result and may prove to be a very wise investment bearing in mind how many people are suddenly experiencing huge drops in their income because of redundancy.
There are a number of companies which specialise in providing tenants insurance for landlords and they will advise you on other aspects such as extending your buildings insurance to cover periods when the property is unoccupied and therefore more susceptible to vandalism or illegal occupancy. You may also wish to cover yourself against the financial cost of evicting a tenant and of finding a new one.
For a prospective landlord, entering the property rental market can seem a little daunting. But if you take care to ensure you do everything by the book, including arranging the right sort of tenants insurance, you are giving yourself the best chance at making a financial success out of your venture.