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Legal and financial aspects to buy to let services



Financial services:
 
- Economics of Buy to let
- Market appraisal and demand
- Tenant supply
- Financial considerations
- Planning 'Gain' and Development
- Mortgages
- Insurance
- Legal

Insurance

There are various categories of insurance as follows:

Buildings Insurance

Buildings insurance is very important at it will pay out to rebuild the property in the event of loss or damage. Some policies pay for proportions of lost rent. Remember the loan or mortgage repayment demand does not stop after a fire or some other such catastrophe. Consequently Buy2LetExpert would certainly strongly recommend this type of insurance. It may be that the insurance is actually a legal requirement anyway. Many tenancy contracts and certainly the one used by Buy2LetExpert stipulate that the landlord must have building insurance in place. The last think any investor wants after fire or damage is a bill to re house the tenants as well as a bill to rebuild and refurnish the property. Cash flow is normally tight for buy to let investors and so the investor simply could not afford these bills. Hence the insurance is a must. Buy2LetExpert recommend using the internet to obtain several prices. Shopping around easily can save 20%.

Contents Insurance

There are a variety of reasons (e.g PAT tests) why furnishing and contents costs should be kept to a minimum. Buy2LetExpert might expect to furnish a typical 2 bed property with £2000. It is almost impossible to obtain contents insurance for articles in a house lived in by the non insured tenant and any policies of this type are so stuffed with exclusions they are not worth anything. Buy2LetExpert suggest contents insurance is given a wide berth in the buy to let arena. Of course, this advice would be very different for one’s own home.

Boiler Insurance

In recent years boilers have become more and more complex in part in response to increased electronics seen as boilers become more efficient. Most boilers will have an expensive printed circuit board (PCB), brand specific timers, valves, ports and more. Furthermore, it is the one area of maintenance that Buy2LetExpert do not touch other than for basic faults. See more in our maintenance section but the best person to fix a boiler is the boiler manufacturer. They carry the parts for their boilers and so the chance of an immediate fix is high. Non manufacturer repairers may be competent but cannot stock all the parts of all the boilers in the van! So any repair becomes a two stage operation. First the visit to establish the fault. Secondly the ordering of the part. Finally there must be a revisit to fit the new part. The whole process can take a couple of weeks and cost the landlord two site visit costs and not one!! Remember also this is a boiler and the house is probably ice cold! Speed is of the essence otherwise tenants will become very upset and may even start demanding rent refunds! Most boiler manufacturers offer boiler insurance but Buy2LetExpert would not tend to take the insurance 'up front' as bolier issues are quite rare. If the boiler had a problematic record we might suggest renewal but it would depend on the circumstances.

Other Insurance

It is very unlikely Buy2LetExpert would recommend any other form of insurance. Appliances (such as fridges and washing machines) tend to be initially guaranteed for 2 years (assuming they have been properly registered). After that period an insurance invitation will follow and should go straight in the bin. Most appliances are quite reliable. Washing machines have a shorter life but the insurance costs are far too high anyway and are stuffed with exclusions. Furthermore appointments tend to have very loose arrival time slots. A whole day can be lost 'house sitting'. The cost of this labour must be added to make the true cost of the repair.

 

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Legal side to property investment

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To contact us call: 020 7482 0300 or email