Key points for buy-to-let landlord insurance
Becoming a buy-to-let landlord there are some key things to consider....
Putting your hard earned cash into rental property can give you a good return but before investing and becoming a buy-to-let landlord there are some key things to consider.
Purchasing a rental property
If you don’t have the funds to buy a property outright and you don’t intend to live in it yourself but are planning on letting to tenants then you will need a buy-to-let mortgage. This type of mortgage generally requires a deposit of at least 25%. You will be required to work out your projected rental income for the mortgage lender and you should aim for at least 125% of the cost of your monthly interest payments as a typical monthly rental payment.
In addition, many would-be investors are unaware of the extra 3% Stamp Duty they are required to pay when purchasing a property as a buy-to-let. There is a handy Stamp Duty Calculator which will work out the extra – you just have to choose ‘additional property’.
Getting your property ready to let
Did you know the safety of your tenants is your responsibility? Your property will, therefore, need to be in a good state of repair before you let it out. You must inspect each room, looking carefully at such things as flooring – do carpets need replacing? Is the decorating up to scratch? Are there any damp issues? Are there current safety certificates for any electrical appliances? Have any boilers or water systems been inspected lately?
If you decide to let your property out as furnished then any furniture must meet fire safety standards. If your property has gas then you will need to obtain a gas safety certificate. It is also a good idea to hire cleaners before you let your first tenants through the door so the property starts off in a good clean state.
Agreements and Deposits
Before you let out your property you must have a tenancy agreement drawn up. This is a contract between you and your tenant which details both you and your tenant’s obligations during the period of the tenancy. A tenancy agreement can be over a six or twelve month period.
In order to cover any damage caused by your tenant to your buy-to-let property, you should take a deposit before they move in. However, you must ensure you use a Government-backed deposit protection scheme. You will also need to make sure your tenant has the right to rent.
How to insure your buy-to-let
Landlord’s insurance is vital to protect your investment property. You must have buildings insurance at the very least and it is advisable to take out contents insurance too. Contents insurance will cover carpets and curtains along with those built-in appliances such as an oven, fridge or washing machine. Your tenants’ possessions will not be covered so they should be encouraged to take out their own contents insurance.
If you are a Landlord and would like a quote please call Silversurfers insurance on 0800 032 5953 and receive a 10% discount as a Silversurfers member.
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