Sunday, 30 November 2008

We appear to be in recession in the UK – make sure rental properties are properly insured

Estate agents have reduced sales and have been laying off staff and in some cases as reported by a major Irish agent in the last ten days transferring staff to the buoyant lettings market. This has been happening a lot in the UK although only a small percentage of UK Estate Agents actually have lettings departments.
I have been in the letting business for over 30 years and in my career have been responsible for setting up the residential letting departments of Frank Farr & Sons in Iver,Uxbridge and Beaconsfield and The JNP Partnership in High Wycombe. All these have been located in the south east of England to the west of London.
I have also worked through the times when the sales market have been very good and very bad. In a recent press release I said "in the late 1980s and early 1990s there was negative equity problems, people could not sell so they turned to letting, however unemployment was not so good so quite often it was harder to let a property".

"This time round, fortunately unemployment figures are still very low and those thinking of buying are waiting for property prices to drop and consequently they will prefer to let instead of buy."

There are signs that unemployment may start to rise again and unlike the early 1990's the rental housing stock in the UK and Ireland has vastly increased fuelled by the "buy to let" market. In Ireland many developers have not been able to sell apartments so entire blocks have been added to letting market. The downside of over supply could mean that rental prices will not increase and could fall.

With the on going credit crunch, consumers tend to cut back, people will continue to require mobile phones, satellite TV, but when it comes to economies the question of insurance comes high on the agenda.

In my recent Press Release I warned that landlords and tenants must continue to insure their properties and contents. He has come across many landlords in his career who think that they will not take out limited contents insurance on an unfurnished property.

Often they think the tenant's will cover their carpets and curtains, which it won't and then there is a burst pipe. The buildings insurance covers the repairs to the ceiling, decoration and plumbing, but not replacement of carpets and curtains.

Many tenants simply do not bother with insuring their belongings. They think these are covered by the landlord's policy, which in the UK they cannot be. They might spend a lot of money on ipods, mobile phones, TVs and computers and either forget to get them insured or cut back as they think "insuring them is a waste of money and they could spend the money on entertainment instead!"

In the UK there are several specialist providers of Landlord and Tenant insurance products, Companies like HomeLet, Endsleigh and Devon Direct. Rental insurance providers normally offer Landlords policies for buildings, contents, emergency repairs, legal expenses costs and rental guarantees.

For tenants they usually offer contents insurance and can cover items like bicycles as well. With some companies the policies are portable, so if a tenant moves to another rental, the insurance cover moves as well. Students are not forgotten either. These types of specialist insurance company will allow Landlords and Tenants to pay monthly or annually and quite often credit card payments are accepted.

When paying monthly of course, if the Landlord or Tenant, does not make their payment, they will find that insurance cover will stop and in the event of a claim there will be no insurance, so it is imperative that payments are continually made.

My company jml Property Services has been running jml - Insurance since 2002, this is an on line introduction service for Landlords and Tenants to obtain a quote on line and buy direct on line a policy from HomeLet, Endsleigh or Rentshield Direct. It is easy to think that insurance is costly, however the costs can be offset against tax for a Landlord and the costs of replacing an uninsured lap top computer are going to be much greater than a year's insurance premium on all a tenant's personal possessions.

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