HOW MUCH IS LANDLORD INSURANCE?


Let’s face it - most landlords are in the letting business to make money, not just for the fun of running their own business or the thrill and adrenalin that comes with managing a property and dealing with tenants.

One of the key ways to ensure you become a profitable landlord is to keep a sharp eye on cost control and that means shopping around for good quality landlord insurance at the very lowest price.

According to recent statistics, the average monthly rent is now hitting the £650 mark and while this may look like a fantastic return on your investment, it is worth taking a step back to work out exactly how much of this sum you will actually take home. In other words you must learn to budget carefully for maximum returns.

For example, when working out how much money you will actually make you will need to include: letting fees plus VAT, landlord insurance, Gas Safety certificate, maintenance and repairs and disaster funds. Not to mention the tax you will need to pay.

One way to cripple your buy to let business model is if you splash out on state of the art kitchens and bathrooms, mood lighting, landscape the garden or face the potential financial disaster of a broken boiler and central heating systems. A new boiler can cost more than £2000. So try to reign in your enthusiasm!

Whatever you do don’t be tempted to scrimp on landlord insurance cover. The worse you can do is under-insure your property. Similarly, don’t be tempted to sign up for the cheapest cover on the market, always read the small print and make sure your chosen policy includes all the cover you need.

Always shop around for landlord insurance - policies bought from a specialist landlord provider will typically be cheaper and they will be able to tailor cover to your specific needs with add-ons such as rent guarantee or boiler insurer. Add-ons may increase the cost of your landlord insurance policy but may be worth it for the peace of mind they bring.

Always be realistic and look to manage your costs as much as possible. For example, if you are concerned about interest rates going through the roof, fix the mortgage for a set period – this is an especially good idea if you don’t want any jumps or nasty surprises but always consult a specialist mortgage provider before signing on the dotted line.

As a general rule of thumb, letting agents fees cost around 10%. You may decide to “go it alone” but remember you will have to be available at a moment’s notice for a tenant and give up lots of your free time to show potential tenants around your property.

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