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Do Rental Property The Right Way Or Don’t Do It At All


Wednesday, March 11, 2015
What Rental Property Risks Are Landlords Taking?

What Rental Property Risks Are Landlords Taking?

What Rental Property Risks Are Landlords Taking?

New research conducted by Liverpool Victoria (LV) landlord insurance, has revealed that there has been a significant surge in amateur landlord numbers across the UK, as more and more people attempt to boost their earned incomes by renting out properties privately without using a letting agent, however many are not aware of the risks that they are taking.

According to the insurance company research, some 7% of UK adults choose property rental to help supplement their earned incomes, receiving on average £678 per month per property before buy to let mortgage payments and running costs are removed, equating to almost £28 Billion (GBP) a year in additional income across the UK.

Moving to a new property and then renting out their former home is a major driving force behind the rise in amateur landlord numbers as property rental becomes a popular income generating method.55% of accidental, amateur or reluctant landlords in the UK rent out properties that they never intended to own, either due to being left property in a will by relatives or because they were unable to sell their previous home before moving on to another property.

Whatever the reason for getting in to the rental property business, all landlords must comply with current regulations on rented properties. The law states all landlords must ensure that gas appliances and equipment is checked annually by a Gas Safe registered engineer and any electrical equipment is checked annually by a competent electrical engineer.

Tenant deposits must be held in one of the Government approved deposit protection schemes and if operating a rental property business in a designated area some local authorities insist that landlords in their area must be licensed.

A lettings or property managing agent usually conducts tenant referencing checks on all applicants and manages the rent collection on behalf of landlords as well as taking over the responsibility to ensure that all local and Government legislation is complied with for a percentage fee of the rental price.

According to the insurance company’s findings, almost half of today’s amateur landlords manage their rental property on their own, without using a lettings or property managing agent to ensure legal compliance. The research also found that of those self managing their properties, 27% of amateur landlords have not had a gas safety check in the past twelve months, risking prosecution and a fine of up to £20, 000 (GBP).

Data analysis by the insurance giant also found that UK private rental sector landlords can also find themselves out of pocket if a tenant or neighbour of the rental property decides to make an insurance claim against them, because of poor property maintenance, such as an overflowing gutter causing water damage to a neighbouring house. The number of liability claims being made against rental property owners with Landlords Buildings Insurance policies has been steadily increasing in recent years, attributed in part to the adoption of an American style compensation culture.

Rental property can be a great way to generate additional income if owners are unable to sell or want to hold on to the property to make some extra money from it, but please remember, it is not without risk.

 


This was written by Mike Clarke. Posted on at 11:30 am. Filed under Buy To Let, Insurance. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.