The recent new of a national rise in private housing rental prices has led to insurance providers reminding advisers of the importance of specialist landlord cover.
The Office of National Statistics’ (ONS) revealed private rental prices paid by tenants in Great Britain rose by 2.5% in the 12 months to June 2015.
As demand for investment opportunities within the private rental sector is expected to continue to rise, fuelled by this upward trend in rental yield, Paymentshield is alerting the industry to the importance of ensuring that landlords are adequately covered for their properties.
Lee Mooney, commercial director of Paymentshield, said: “Just as mortgage requirements can differ when purchasing a buy-to-let property, the cover needed to protect properties occupied by tenants is more complex.
“Purchasing a buy-to-let property is a major investment and it’s essential that landlords also invest in a comprehensive policy to protect them from the potential damage or losses involved with letting a property.”
Specially designed landlords insurance products provide policyholders with a greater level of protection against damage or loss, over and above circumstances typically covered by traditional home insurance, such as fire and theft.
Earlier this year, the Council of Mortgage Lenders (CML) announced that there had been a year-on-year increase in buy-to-let mortgages of over 20% as this is increasingly seen as an attractive investment, particularly due to the reduction in constraints around the use of personal pension funds. Paymentshield also cites house price inflation as a significant driver of increased rental demand.
Mooney added: “House prices have risen by up to 9.3% in the last year, making it increasingly difficult to climb the property ladder and leaving people with no other option but to rent.
“Whilst this is great news for property investors, it reinforces the importance of ensuring that landlords are investing in the correct cover – not only to protect their property and contents but also their legal liabilities as the property owner.
“Landlords could be financially ruined if a loss occurred and they found their insurance did not provide appropriate cover leaving them with no choice but to fund their own repairs, replacement or even rebuild. Intermediaries, such as mortgage advisors, are in the perfect position to communicate this to clients and it’s vital that as an industry, we work together to educate clients about the need for adequate insurance.”