The buy-to-let business is becoming increasingly popular, especially since house prices are at a ten-year high – most buyers have no choice but to rent as a long-term situation. People thinking about buying a property to rent out should all do their homework, including examining the current market and deciding where in the country is best to invest in. They also need to spend time thinking about their target tenant and doing the house up for their needs – for instance, a house full of students are going to need a different type of home to a lone, professional tenant or a young family. Time needs to be spent thinking about these terms because every landlord is different.
However, there are some things that all landlords should be aware of, and should protect themselves with.
Rent Guarantee Insurance
Even reliable tenants may not always be able to pay their monthly rent. Through no fault of their own – perhaps down to redundancy or an illness preventing them from working – they may find themselves a little short of money and therefore leaving you as the landlord out of pocket. Rent guarantee insurance will prevent the ‘lack of money’ from being your problem. Companies that offer this insurance differ slightly in what they provide and require, but the general gist is the same. You can be offered;
– a legal advice helpline
– cover (up to a maximum limit) in respect of unpaid rent
– and even dilapidation costs.
Legal Expenses Insurance
This type of insurance is there for when worst comes to worst and you need to take drastic action to deal with difficult tenants. Legal Expenses insurance covers what you spend in proceedings against tenants, including eviction processes which sometimes go all the way to the high court.
Tenant checks or references
You need to know exactly who is living in your property. Can you trust them to treat the place with respect? Do you know they are going to pay for it as-and-when needed? Have they given previous landlords grief for any reason? You should find out by getting tenant check or references, offered to you by many online forums.
Again, different companies, offer different options, but generally you should be given important information such as;
– confirmation of your tenant’s identity
– any irregularities in behaviour
– a reference from previous employers or landlords
– and possibly even bank details.
What is the next step?
As mentioned previously, different companies offer different levels of help and require you have obtained certain protections by yourself first (such as a deposit equal to, or greater than, your tenants first month’s rent). This is where the research comes in; take time and proper consideration into what policy would cover your needs best and possibly even ask for quotes from different places, weighing them against each other.
To invest in a property in this way is a big decision, so make sure you have fully invested in your own protection too. Download our free guide for landlords, full of useful information and advice; www.enlightenea.co.uk