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With changes affecting the buy-to-let market, insurance cover remains essential, says David McGowan, Chartered Insurance Broker at Woodward Markwell

Keep Buy-to-Let Insurance Cover - Despite Market Squeeze

Seismic change could be underway within a buy-to-let property market that has changed little over the past ten years. A financial squeeze is starting to be felt by many landlords and September 2017’s rental yields were the joint-lowest (below 5%) since records began in 2001. This market, which has boomed since 1996, when the mortgage requirement for a borrower to live in the house they were buying was lifted, is now being affected by a variety of factors.

This started with a hike in Stamp Duty in 2016 for those buying second homes or buy-to-let properties.  Landlords felt another blow to the pocket in April 2017, when the rules relating to writing off interest costs against income tax were tightened.  In November 2017, we saw the first rise in interest rates for 10 years.  

Whilst landlords in cities and university towns are likely to enjoy more stability than others, all should worry if rentals don’t keep up with mortgage costs.  Any void periods, in which rental income is not earned, will also make landlords edgy and we are likely to see much more cost control by those buy-to-let landlords who need to make savings, in the coming year.

One area they could focus on is insurance and their buy-to-let insurance premiums. Landlords across the country are likely to be seeking out more competitive, but comprehensive buy-to-let insurance cover.  Whether they are buying protection for residential or commercial properties, freehold or leasehold, or a single property or multi-property portfolio, will make little difference.

It would be a costly mistake to not have buy-to-let insurance in place.  Buy-to-let claims scenarios typically revolve around storms, burst pipes and break-ins, but there are also the risks of property being damaged tenants.  It is essential for landlords to have buildings and contents cover, plus protection for possible loss of rent and the costs of alternative accommodation, if the building is left uninhabitable.

Additionally, as the economy becomes more volatile, other insurance safety nets, such as tenant default protection and legal and compensation insurance cover (which will protect you should a tenant sue for injury), should not be ignored.

If you are looking for business insurance or are coming up for the renewal of your current policy, do give us a call on 01473 408408.