You should consider 3 very important steps at the beginning of your tenancy or in preparation of a planned rental of a property to a tenant: Reference/credit check your tenant Take out specialist Landlord Insurance cover Try and acquire a tenant guarantor
Be careful not to be under-insured, as landlord’s insurance (just like regular buildings insurance) is subject to something called ‘averaging’, which means your rebuild cover is pro-rata’d. Let’s say the rebuild cost is £100,000 and you insure the property for £80,000. If the property gets £50,000-worth of damage and you make a claim, you won’t get the full £50,000. Instead, the insurer will pay £40,000, and you’ll have to pay the rest.
Beyond basic landlord’s insurance there are all sorts of optional extras to consider. You can have liability cover, which protects you if tenants suffer as a result of your negligence. You can also get emergency assistance; if the tenant is burgled or has a severe leak in the middle of the night, some insurers will take the call and handle it for you.
Another extra is protection of your rental income. If you have a fire and tenants need to move out for a few months, the policy will cover not just the repairs but also the rent you’re missing out on. You can get rent guarantee cover in case tenants refuse to pay. Alternatively or additionally. you could get legal cover, which covers the costs of taking your tenants to court to evict them or recover rent. Just remember that, a lot of the time, when people stop paying the rent it’s because they truly can’t afford it, so you may not get your rent anyway.
You can get a policy that covers more than one property, but you should compare both joint and single policies to find which is cheapest for you.
Finally, consider the sorts of tenants you have, as this can affect the premiums. Professionals and families are safe bets, whereas asylum-seekers and multiple occupancies can cost a lot more. You’re not legally required to have landlord’s insurance, but, as you can see, it makes a lot of sense for many landlords.