Only 7% of all landlords own more than five buy to let properties. Yet these account for more than 40% of the accommodation available in the private rented sector, according to research conducted by the London School of Economics (LSE) for the Council of Mortgage Lenders (CML) a number of years ago.
Recent changes in legislation governing the buy to let market are likely to have increased the proportion of multiple property-owning landlords.
But changes in the regulations have also affected the ability of landlords to expand their portfolios.
With effect from the end of September 2017, rules imposed by the Bank of England’s Prudential Regulation Authority (PRU) mean that any landlord looking for a mortgage to add to their property portfolio must pass a much tougher assessment of the overall profitability of their buy to let holdings.
Landlord Debt Advisory identified these changes as one of the factors most likely to affect landlords’ finances in 2018.
Landlord portfolio insurance
With landlords of multiple properties now having to pass more stringent tests on the finances of their business, it has become more important than ever to reduce operating costs by securing competitively-priced multiple property insurance.
This type of landlord portfolio insurance helps to optimise expenditure on essential insurance cover for all the properties in a portfolio because:
- discounts are generally made by insurers when more than one property is insured at the same time; and
- multiple property insurance maintains cover for all the properties under the one policy with a single renewal date, rather than multiple occasions throughout the year – so saving on valuable administration time otherwise spent monitoring and checking that none has been overlooked or expired.
Do note that with some insurance providers, you can cover both a variety of different property types and tenant types (e.g. a mixture of mixed-use, HMO’s, blocks of flats etc., and tenant types including DSS recipients).
An overview of what it covers
Property portfolio insurance offers the landlord just as much security and protection as insurance for each individual property in his portfolio, namely:
- building insurance: protection of the respective buildings against the major risks of fire, explosions, flooding, impacts, theft and vandalism that might result in the total loss of the property and its need for reconstruction;
- contents insurance: to safeguard those contents owned by the landlord – cover that is sufficiently flexible to protect either high-value, multiple contents or such basic items as the furnishings, fixtures and fittings in common areas of shared-entry flats;
- landlord liability insurance: as the size of the portfolio increases, so too does the landlord’s potential liability for injury or property damage suffered by tenants, their visitors, members of the public or neighbours – landlord portfolio insurance typically offers indemnity against such claims; and
- compensation for loss of rental income: any major insured incident may result in one of your properties becoming temporarily uninhabitable and your being unable to collect any rent – landlord portfolio insurance may offer compensation for that loss of rental income.
Multiple property insurance typically offers a convenient solution for any landlord owning several buy to let properties and who needs to rationalise expenditure on overhead expenditure for the whole business. If you are looking to expand your portfolio still further, that optimisation of overhead expenditure may be an essential part of meeting the tougher new regulations on lending by mortgage companies.