Nearly one in five property investors spurn taking out specialist buy to let insurance even though standard home insurance fails to protect letting properties.
The figure was revealed in recent survey which also discovered repairs are one of the biggest expenses for property investors at £2,848 a year and that much of the cost could be reclaimed against landlord insurance.The survey looked at landlord expenses – and found on average they pay out £8,256 a year on running private rental properties, including mortgage interest.
The study also revealed the average private landlord owns 5.3 buy to let homes and earns an average £94,000 a year.
For many, specialist landlord insurance was the next largest cost after repairs – averaging £1,329 a year or 1.4% of gross rents a year.
Landlord insurance can bundle buildings and contents cover with a rent guarantee that pays legal costs and rents while evicting problems tenants or those behind with rents.
“Landlords should always take out the right cover for their investment properties. Ordinary home insurance is not designed to cover a buy to let. Landlord insurance also offers useful add-ons, like rent protection if the letting property can’t be rented out because of an event like fire or a flood,’ said Jazz Gakhal, of Direct Line.
“Good landlord insurance also has public liability cover, sometimes called property owner’s liability insurance as standard, as a landlord could be held liable for someone injured on the property or damage to neighbouring property.”
Other landlord property business expenses that amounted to around 20% of annual running costs included letting agents fees ranging from 8.9% to 12.6%.
Tenants should speak to landlords to ensure public liability cover is in place as the insurer is likely to pay out for alternative accommodation in the event of an accident at the rental property.