When inflation is going up at a faster rate than usual, everyone feels the effects of prices rising across the board. And with inflation currently at nine per cent and the Bank of England already predicting it could rise to 10 per cent, landlords and tenants alike are feeling the financial squeeze.
As a landlord, with your own costs unavoidably increasing, it should be a priority to make sure that rental income keeps arriving in your account each month. But what if your tenants are struggling to make rent payments because their take-home pay simply isn’t stretching as far as it used to, thanks to spiralling utility bills, fuel and food costs?
There are two types of rent insurance you can secure:
Loss of rent cover due to an insured event, such as a flood at the property. With loss of rent, if the tenant has to move out, the insurer will cover both the cost of repairs and lost rent for the period of time the property is uninhabitable. Both Total Landlord Insurance’s Essential and Premier policies include loss of rent or alternative accommodation cover as standard.
Rent guarantee insurance to give you peace of mind that if your tenants default, you’ll continue to receive the full rent amount each month (up to a specified limit). This will protect you, whatever happens to your tenant’s finances.
It’s important to check with your insurer what cover they offer with respect to both these issues and work out whether you’re happy with just the first type of cover, or if you also want to have rent guarantee insurance.
Most insurers offer rent guarantee protection as a separate policy. Although terms and cover will vary, most policies include:
Your landlord insurance policy can also help protect your profits by making sure you’re not left out of pocket if your tenants cause damage to your property – whether deliberate or accidental.
Whether we like it or not, damage to a property happens through burglaries, burst pipes, malicious damage, storms, fire and flooding. While you may be able to make a deduction from the tenant’s deposit for small costs, if it costs much more than the amount held or there’s any issue with retaining funds, it’s good to know that your insurance policy has you covered.
While this is not something many people think about, it’s important to check that your insurance policy is index linked. This means there’s a facility in place that tracks any rises in the cost of insured items and automatically applies a similar percentage increase to the value of your insurance product.
So, although the cost of things like fixtures and building materials has risen over recent months, as long as you have an index-linked insurance policy, this rise is automatically covered by your insurance. It also means the rebuild valuation of your property will be automatically adjusted each time your policy is renewed.
Find out more in our article, ‘Why landlords need to understand how index linking affects their let’.
“Total Landlord Insurance can help make sure those unexpected costs are covered, for instance a tenant having to vacant the property due to a flood. We will cover both the repairs and your loss of rent whilst your property is being repaired.”
– Steve Barnes, Associate Director at Total Landlord Insurance
With prices rising month-on-month at the moment, it’s worth discussing your current policy with your insurer to make sure you have the level of cover you need and in particular that you aren’t under insured. If you’d like a comparable quotation, you can get one from Total landlord Insurance online, or you can speak to an adviser directly on 0800 63 43 880.
To find out more about navigating these turbulent times, read our new guide, surviving the cost of living crisis: the ultimate guide for landlords, and for advice and tips on handling deposits, read mydeposits article, helping tenants with deposits during the cost of living crisis.
