Property Owners Insurance- more than just buildings cover

Redstones Financial

Redstones Financial

Buildings Insurance may be a requirement for lenders who advance money to finance buy to let property purchases. Many insurers will provide a basic policy that effectively covers the risk of fire however a Property Owners Insurance can be extended a little extra cost to provide so much more to the Investor.

Covers can include Loss of Rent and Alternative Accommodation, both of which are useful if you find yourself in a difficult situation with a claim. One of our clients had a drain blocked which caused water to come into the property through the toilet system, leaving as you can imagine quite a mess to be cleared up. The Alternative Accommodation on the client’s policy provided the cost for the tenant to stay in a hotel whilst the property was sanitized and made fit for habitation. Likewise, another client suffered loss from a burst pipe, the water created significant damage to the property, water brought some of the ceilings down, damaged flooring and walls. The property took 10 weeks to dry out to allow the property to be a position to be redecorated and carpeted for the tenant to move back in. The Loss of Rent on the policy covered the cost of the rent which the client did not receive, this was vital for to allow the Landlord to meet his monthly loan repayments which the bank still expected to be met.

Contents insurance can be added to a Property Owners policy to provide for cover for any appliances/ furniture/ carpets/ curtains which are provided by the Landlord. These wouldn’t be picked up by a standard buildings policy and can add up. Even a small amount of cover – say £2000 can be useful should there be a significant claim and the cost of the cover is very nominal to include.

Property Owners Liability really is a must for the Property Owner. It is not compulsory by Law but it protects the Owner for any claims against them for negligence or damage to other property or to people.  A client of ours received a claim for damages due to a tenant slipping on some water outside of a flat that they occupies which the claimant said was down to the Landlords oversight. The insurers put a £15,000 reserve as the tenant had fell and hurt themselves as a result. Injury claims really can add up and be a major issue if insurance is not in place to defend the claim or make a payment if the landlord is found to be liable.

We see quite a few claims coming in where properties have been broken into and damaged maliciously, often this involves reckless damage and theft of items like copper piping and fixtures leading to water damage.  Theft and Malicious Damage can be caused by tenants also and it’s important to check that your insurance policy provides cover for these risks.

Hopefully this highlights some of the issues that Landlords find themselves with and ways they can try to mitigate their exposure. A Property Owners Insurance from a Reputable Insurer can really help to reduce the risks. We are happy to talk to Property Owners who may have concerns and want to know how to protect them- please call  Claire Oakley on 08000 686 001 or email claire@a2ofs.co.uk

Redstones Financial Services ltd is a trading name of Acorn to Oaks Financial Services ltd, authorised and regulated by the Financial Conduct Authority, our number is 486131.

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Landlords – Are Your Ready For The Right To Rent?

In a recent article we highlighted essential legal obligations of landlords including the ‘Right To Rent’ legislation which is expected to be rolled out across the UK in the spring.

What does the ‘right to rent’ legislation involve?

As a result of The Immigration Act 2014, all landlords will eventually be required to ensure that their tenants have the right to live in the UK before signing a tenancy agreement.  This legislation will include anyone who rents out a room to a lodger or sub-lets a property.

Checks will only apply to tenancy agreements beginning on or after 1st December 2014 and must be carried out on all adults living over the age of 18 who will be living in the property. Landlords will be required to confirm a person’s citizenship, identity and their right to live in the UK by checking their passport of residence permit, for example.

At present, the Right To Rent applies only to landlords, lettings agencies and property owners in the West Midlands, specifically Birmingham, Walsall, Sandwell, Dudley & Wolverhampton.

Copies of all relevant documentation must be retained for one year after the tenancy agreement has ended.

What happens if landlords fail to comply with the new requirements?

Landlords who neglect their obligations and let a property to an illegal immigrant risk incurring a fine of up to £3,000.

While a change in government after the General Election may affect the extension of the scheme, it is widely anticipated that this will become a legal requirements for all landlords.

More information can be found on the Government’s website.

Concern over tenants

At Redstones we recommend that landlords carry out extensive checks on all prospective tenants including the following:-

  • Thorough background checks before entering into a tenancy agreement.  These should include bank statements covering the previous three months, references taken from employers and previous landlords (a history of timely rental payments is ideal) and credit checks for fraud.
  • Confirm your tenant’s identity and proof of their current address in the form of utility bills or tax documents for example. Private landlords are typically less rigorous in carrying out checks than lettings agents but this is an important aspect of the process.
  • Carry out a thorough inventory at the commencement of the rental period and request a deposit from the tenant. As a landlord, you are legally obliged to place the deposit in one of three national deposit protection schemes. To protect against damage to your property, you may also wish to take out a landlord insurance policy. Redstones Financial offers a range of financial services for landlords and can advise on the most appropriate one for your needs.
  • Carry out mid-term inspections. At Redstones we carry out inspections on behalf of our clients for fully managed properties. This ensures that the property meets all safety requirements from the landlord’s point of view and that no unreported damage has occurred.

If you are concerned about keeping up with the increasing legislation affecting landlords Redstones can help. Our fully managed property service ensures that all legal obligations are complied with by all of our clients. Contact us today to find out more.