Quarter of Landlords Dont Think Landlords Buildings Insurance Is Vital!

Tuesday, December 23, 2014

25% of UK Landlords Operate Without Landlords Buildings Insurance

Landlords Buildings Insurance Is Financially Vital!

Landlords Buildings Insurance Is Financially Vital!

It appears that many UK landlords are still attempting to save money by cutting corners in the wrong places, such as with landlords buildings insurance.

Over 500 landlords with small to medium sized portfolios of rental properties were asked about their landlords buildings insurance costs as well as general rental property running costs by Direct Line for Business and the results from the landlord respondents were staggering:

  • 25% of landlords do not have landlords Buildings Insurance.

These landlords have mistakenly relied on standard residential property insurance policies, not realising that those policy types DO NOT cover properties used for rental purposes.

  • According to the research, landlords incur average annual running costs of around £8,560 (GBP) for their rental property portfolios.
  • The average landlord’s property portfolio comprised of 5.1 properties and provides an annual income of £94,544 (GBP).
  • Repairs, materials and labour were the largest reported average cost, around £2,885 (GBP).
  • Landlords Buildings Insurance was the second highest cost, accounting for £1,329 (GBP) or 1.4% of the gross annual rental income.

Despite this, 18% of the landlords surveyed did not have landlords buildings insurance.

A spokesman for Direct Line for Business, said: “It’s vital that landlords get the right insurance cover for their rental properties. It is highly unlikely that rental properties would be covered in a standard residential property insurance policy, and there are many valuable extras available, including rental income protection if your property is uninhabitable due to an insured event such as a fire or a flood. A good landlord’s policy will also include public liability insurance, also known as property owner’s liability insurance, as standard, as you could be held liable for injuries on your property or damage to neighbouring property.”

Of the other costs incurred by landlords, letting agent and property management fees accounted for slightly more than 22% of running costs, with letting agents collecting 8.9% of the total income and property management firms taking 12.3%.

Rachel Clarke from Manchester based Geo Property Lettings offers landlords the following advice: “From our point of view, having the right landlords buildings insurance does make all the difference for landlords, having had one of our properties broken into and completely wrecked by vandals, who stole all the radiators, copper piping and electrical wiring in the property, as well as smashing the kitchen and bathroom fittings and throwing paint over the internal walls causing thousands of pounds worth of damage that took 6 months to repair. If we didn’t have good landlords buildings insurance we would now be well over £30,000 (GBP) out of pocket and possibly would still have an empty property too. Private rental sector landlords need to have the right type of insurance and this point cannot be stressed strongly enough. Cutting spending costs may keep a little extra cash in a landlords pocket for a short while but the dire consequences of not being insured or having the wrong type of insurance could be financially catastrophic”.

Legal4Landlords spokesman, Sim Sekhon said: “It is vital for landlords to have the correct type of landlords insurance, standard residential buildings insurance does not cover Buy To Let properties because the owner is not the main or sole resident in the property. It is also important for tenant’s to have their own contents insurance to cover their personal belongings, as these may not be covered by Landlord insurance providers”.

This was written by Mike Clarke. Posted on at 12:30 pm. Filed under Insurance. Tagged , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.