With the average monthly rent paid by tenants in Britain now reaching £696 an increasing number of would-be landlords are entering the market once again.

But whether you are a novice or a seasoned property investor, it is essential not to overlook landlord insurance and rent guarantee insurance.

With rents up 4.4% higher than in 2011, buy to let may look like an attractive investment once again but it is important to remember we are still in the grip of recession.
Unexpected costs on an investment property can quickly mount up, as well as the hefty cost for maintenance and repair. There is also the very real chance of a tenant defaulting on their rent, so it always pays to be adequately insured and to have an emergency slush fund to hand in case the worst happens.

Landlord insurance in the UK is enjoying a mini boom – this is because the depressed housing market has led to an increasingly number of people choosing to rent out their property to enjoy attractive rental returns, rather than sell their property at a reduced price.

But while rents are on the rise, statistics also show that many tenants are struggling to meet their monthly rental obligations.

Non-payment or late payment of rent is a landlord’s biggest headache and can lead to serious financial implications if they in turn cannot meet their own mortgage repayment obligations.

One of the best ways to guard against defaulting tenants is to take out another form of landlord insurance –rent guarantee cover. This tax deductible insurance checks your tenants and decides if they are a good risk. If they pass the good risk test then they will insure your rent payments up to a maximum payment of £2500 per month for a policy that costs around £100-£150 per year. 

As a landlord you are affectively a small business owner, so should always put good financial planning at the heart of your business. Do your homework and compare several landlord insurance quotes for value and protection.

Since the Financial Service Authority began regulating landlord insurance policies, it is a requirement that all insurers issue the Key Facts document up front which have a list of facts that they are supposed to provide. All insurers should supply this before you apply allowing you to effectively compare all products using the same format. This will enable you to see what cover you get for what end price.

No one can protect the future and there are a myriad of problems a landlord must face, from tenant demands, wear and tear and burst pipes. By making sure you have money in the bank for emergencies and that you are adequately protected against disasters with insurance, you will have the peace of mind to get on with running your buy to let investment and making it profitable.

You should take a long term view on your investment property; the halcyon years of easy money are over. Don’t leave running your buy to let investment down to luck, research the market, understand that there are increasing costs in addition to increasing rents and always aim to make good business decisions.

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