Being a landlord – be that a ‘semi-professional’ buy-to-let landlord with one or two properties or a full-fledged professional landlord with a large portfolio of properties – has become widespread in the UK in the last few decades. Since the 1980s the number of private landlords in the UK has proliferated, driven in part by a desire to see good returns on investment and in part by the relatively free availability of mortgages.
Landlords: Increasing returns. Increasing Regulations. Increasing Responsibilities.
Life for landlords in the UK over the past few years has been – on the whole – good. House prices have continued to rise and the demand for good quality rented accommodation shows no signs of slowing, especially in the South East of England. Accompanying this growth, however, has been a steep rise in the level of regulation. UK landlords now have to comply with no less than 50 Acts of Parliament and more than 70 sets of regulations governing the private-rented sector.
According to official HMRC data, the number of landlord investors filing returns in the UK is now almost 1.6 million, with 120,000 of those becoming private landlords in the last year. But whilst we bask in the growth of this market, landlords need to consider the risks they are taking on. Too many landlords do not realise that once they have invested in a rental property that they now own a business and with that business comes a host of responsibilities. There’s much more to being a private landlord than buying a house, filling it with tenants and waiting for the rent to roll in.
Landlords Biggest Mistakes
New private landlords are often prone to making the following mistakes:
- Fail to understand that they are now landlords – they continue to see themselves as investors, teachers, plumbers etc. rather than that which they are now, private landlords with many legal, financial and insurance responsibilities.
- Fail to conduct rigorous due diligence – whether it be on the property they are buying, the letting agent they are using to manage it or the tenants that they allow to live in it.
- Unaware of the tax issues, what represents a good yield, how to ensure tenant scrutiny and the accounting procedures that are associated with being a landlord – issues that can lead to trouble if not properly investigated.
- Unaware of the insurance obligations they face. Remember this is a business, not a private home, and as such there are a range of insurances – landlords insurance (which will insure them against problems such as rent arrears), buildings insurance, liability insurance – that need to be considered.
Private Landlords: The New British Profession
If being a landlord is for you, then you must treat it as a profession, act in a professional and responsible fashion and look to protect your business. Landlord insurance therefore is a must as is property liability insurance: What if a piece of stair carpet came loose and one of your tenants slipped and fell, injuring themselves? As a landlord you need to be covered if they decide to make a claim against you for any injury and it’s the landlord’s responsibility to make sure that tenants are as safe as possible. Equally, if for any reason you need to find tenants alternative accommodation, insurance can provide for that too.
Landlords: Better Safe than Sorry
Many of the risks you face as a landlord may seem unlikely; but it is worth remembering that even though the margins in being a landlord can be tight, it’s the longer term investment that makes it worthwhile and landlords do need to be prepared for costly one-off events by having adequate insurances in place.
If you’d like to know more about protecting your property investment or any other aspect of landlord insurance then please get in touch with your local Coversure Insurance broker today. Our team of friendly property insurance experts will help you to get the right cover to help your property business thrive.