There’s no doubt that the once prosperous buy-to-let market has hit the rocks in recent times, after nearly 20 years of almost unprecedented growth since the 1990s.
Thanks to the introduction of supposedly punitive tax levies and a 3% additional stamp duty charge, a marketplace that was worth an estimated £239 billion at its peak has gradually seen its bubble burst since 2016.
Despite this, the buy-to-let market remains incredibly popular amongst private landlords nationwide. The only issue here is that a handful of less reputable property-owners have taken to cutting corners as a way of optimising their profits and offsetting their additional tax burden.
What are the Risks When a Landlord doesn’t have Insurance?
In some respects, landlords are actually empowered to cut certain corners by the vagaries of UK law. More specifically, they’re not legally compelled to purchase insurance for their properties, and this enables them to lease houses and flats without the necessary protections in place.
Whilst this may help landlords to save money and boost their short-term profits, however, it’s a strategy that’s fraught with risk for both property-owners and tenants alike.
To understand these risks further, it’s important to consider some of the insurance products available to landlords. The most obvious of these is landlord building insurance, which is required to cover the cost of repairing or rebuilding a property in the event of its structure being damaged and destroyed.
This type of coverage provides protection for all parties, as your initial investment is immediately safeguarded regardless of what fate befalls the property.
In the case of tenants, they’re able to pay their rent safe in the knowledge that their home can be restored if it’s damaged, and without this they’ll have no choice but to find interim accommodation elsewhere.
On a similar note, landlords should compel renters to insure their own material possessions that are housed within the property, with this written as a requirement of their tenancy agreement.
Whilst this doesn’t necessarily save them any money (as this type of policy must be taken out and paid for by tenants), it creates transparency for landlords and negates the risk of legal battles in the event of fire or damage.
How can Landlords Negate these Risks?
Regardless of what the law says, landlords have a moral duty to safeguard their tenants and protect them in the event of the structure being damaged.
This means that landlords must avoid the type of short-term thinking that prioritises profits over best practice, as they look to invest in relevant and comprehensive types of coverage.
The best strategy is for landlords to seek out comprehensive policies that are priced competitively, with service providers such as Homelet able to help in this respect.
This way, they can protect both their investment and the homes of individual tenants, whilst also reducing costs and optimising profitability in an ethical and sustainable way.
To read more on topics like this, check out the lifestyle category.