The pensions overhaul announced by the Chancellor in last month’s budget could result in a whole new generation of ‘silver’ landlords as savers aged 55 or over will be able to withdraw their entire pension pot as a cash lump sum from next April.
We could well see a surge in buy-to-let investment. Property remains a staple favourite for many looking to maximise the return on their savings and as interest rates are likely to remain low for the foreseeable future, rental yields will continue to outweigh savings rates making property a good option.
While it might not lead to an increase in buy-to-let mortgages as I would imagine many of this new wave of would-be landlords will be cash buyers, it is going to lead to opportunities for intermediaries in terms of helping them source the right insurance covers to protect their investment.
This new generation of landlords will no doubt have focused their attention on getting the right property in the right area to deliver solid rental yields. They may have thought about rent guarantee protection to make sure they still get paid even if their tenant defaults, but they may have ignored the more practical issue of buildings and contents insurance.
For example, some landlord policies are specific to the property type including furnished, unfurnished, or unoccupied pending residential let. Some policies will cover a wide range of tenants including students and those in receipt of DSS benefits, while others are more restrictive.
They may not have considered the issue of a property standing empty in between renters. If they’ve invested their lump sum in the property itself, they may not have a buffer in the bank so it’s important that their landlords insurance provides un-occupancy cover for an adequate period. If they’re letting to the student market, they could benefit from cover between tenancies for up to 120 days.
And given the stormy weather we experienced this winter could become the ‘norm’ if climate change experts are to be believed, they may not have considered the need to cover loss of rent if their property becomes uninhabitable due to flood or storm damage. Not all landlord building insurance policies cover this as standard.
If we are to see a surge of ‘silver’ landlords, I believe there is significant potential for intermediaries to generate some valuable new clients. You are uniquely placed to help them protect their investment and ensure they can withstand the ups and downs of the market as well as the weather – so it would be well worth taking the time now to start getting a marketing plan in place to capitalise on the changes coming into effect next April.
Kevin Paterson is managing director of Source Insurance