Reducing the risks from buy-to-let

Securing property-owners liability insurance is essential
The burgeoning numbers of buy-to-let investors moving into the UK property market may be unaware of their insurance needs, according to Leaseguard.

The specialist risk consultant is warning home insurance alone may not be sufficient, explaining many insurers would refuse to pay out on a claim where it had not been disclosed to them the property was being let to tenants.
"The risks involved for a landlord can be substantial and can vary quite considerably from an owner occupying their own home," said Mairi Scott, managing director of Leaseguard.

In response, the organisation recommends landlords secure property-owners liability insurance (OLI) with a minimum value of at least £2 million.

Buy-to-let has seen a tremendous growth in popularity in the previous decade as property owners choose the investment as a future pension investment or rent out their existing home when they relocate to new jobs.

According to figures from the National Housing and Planning Advice Unit (NHPAU), the buy-to-let sector now has boomed in recent years, with an estimated 2.5 million homes in England being rented from more than half a million private landlords.

The market took off in the late 1990s, helped by the introduction of buy-to-let mortgages calculated on the anticipated rental income rather than the landlord's earnings.

"Property OLI is an essential requirement. Anyone with a legitimate reason to be on the premises could potentially raise an action against the landlord," continued Ms Scott.
"While it provides cover against action from the tenants, it is not restricted only to them but potentially a claim could be made against the landlord by other parties such as the postman or even the meter reader."

OLI also offers protection when a property cannot be occupied due to a major loss such as a fire, with a specialist landlord's policy generally providing cover for loss of rent.