In the current chaos surrounding the cost of living crisis in the UK, you may be forgiven for not even contemplating how much it could cost to insure your buy-to-let property in the future.

For many buy-to-let landlords, rental income pays for essentials such as the mortgage, maintenance, repair bills and insurance, leaving very little over in terms of actual profit.

With so many prices escalating from fuel to food and services, this profit is likely to be much less than in previous years, so it’s no wonder most landlords are concerned about inflation and how this affects their bottom line.

As a landlord, you know cheap isn’t always the best option, especially regarding insurance. Often more affordable insurances don’t provide the cover required when things go wrong.

That said, there are several ways to ensure you get the best value from an insurance policy that provides adequate cover at a cost-effective premium.

Inflation Vs The Landlord

Experts predict inflation to increase this year to an all-time high of 7.5%.

The last time inflation increased to such an extent was in 1992. With the base rate for landlords set at 1.25% by the Bank of England, this will affect landlords in the following ways:

• Increased mortgage interest rates
• Increased property costs (insurance/upkeep/fees)
• Increased maintenance and repair costs
• Decreased rental profits

Insurance Renewal Considerations

Of course, a rise in inflation affects other costs, such as the cost of insuring your buy-to-let property.

If you are due to renew your insurance policy in the near future, the unfortunate truth is your premiums will most likely be much higher than expected.

Budgeting for this eventuality can ensure you have the required funds in place before your policy premiums increase.

Most insurers can provide a rough estimate of the increase you can expect to be charged when the policy renews; therefore, it’s a good idea to contact them as soon as possible to discuss this further.

While saving money is definitely a priority, it’s important you have the protection you need on your property as well.

Check the policy terms and what’s included to ensure you are getting good value for your money and adequate insurance coverage.

Insurance Renewal Checklist

Knowing what to look for when renewing your insurance policy can save you quite a few proverbial ‘pretty pennies’.

Use the below checklist to help you get the best value for your insurance premiums:

• Is your policy index linked?

Index-linked policies protect landlords from increases in costs like inflation, materials and labour.

The insurer tracks the rises in these costs and automatically applies a percentage to the policy value, which protects the landlord from increases in the wider economy.

• Is your rebuild value correct?

The global pandemic has boosted property prices and the cost of labour and building materials.

This means your current rebuild cost could be higher than previously noted on your insurance policy.

Of course, higher rebuild values can increase premiums, but if you have over-insured your property, this could reduce the insurance required and thus lower the monthly premiums.

• Does your policy include public liability insurance?

This insurance protects you from claims made by a tenant, tradesperson or visitor to your property who suffers injury or damage to their possessions.

More serious claims may include costly medical bills and lost income, so this cover is definitely a good one to have on the insurance.

• Does your insurance cover alternative accommodation?

Should your property become uninhabitable as a landlord, you may be expected to find alternative accommodation for your tenants.

This can be costly, especially if you don’t have the necessary insurance.

• Do you need emergency cover?

Most people don’t think they need emergency cover on their insurance until an emergency occurs!

This cover is invaluable and provides access to accredited tradespeople in emergencies such as burst pipes, broken windows and more.

• Is your property covered for malicious damage?

No landlord likes to think their tenants might cause intentional damage to their property; however, unfortunately, these situations do occur.

While most insurance policies include this cover as standard, it’s worth checking to ensure you are covered.

• Is rent protection worth it?

As a landlord, you rely on your rental income for many things; however, this income is paid by tenants, also affected by rising inflation costs.

As a result, it’s important to consider that your tenant might also struggle financially and find it challenging to pay their rent in the future if they aren’t already.

Rent protection insurance is definitely worth considering as it protects your rental income should your tenant be unable to pay.

In most cases, this form of insurance pays you 100% of your rental income for a set period.

Portfolio Insurance

For landlords with multiple properties, portfolio insurance can be significantly cost-effective.

This is where one insurance policy covers more than one property location.

For many landlords, this is beneficial for the following reasons:

• One insurance renewal date

Managing and keeping track of multiple insurance policies can be time-consuming.

• One insurance premium

Multiple insurance premiums are generally more costly than a single premium covering numerous properties.

• Tailored to suit

Most insurers tailor their portfolio insurance to meet the bespoke needs of the landlord and their properties.

• Comprehensive cover

Portfolio insurances are not limited to the cover they can provide and often include public liability, accidental damage, home emergency, malicious damage and rental insurance.

Top Money Saving Tips For Landlords

With the cost of living skyrocketing and set to increase further, everyone, including landlords, needs all the money-saving advice they can lay their hands on!

• Expensable tax allowances

Many costs incurred by landlords can be deducted from the tax they pay on their rental income.

These include repairs and maintenance expenses, replacing supplied furnishings, ground rent (leasehold property), and, you guessed it, building insurance!

• Remortgage regularly

Remortgaging a buy-to-let property regularly can save landlords quite a bit of cash.

Spend time shopping around for a mortgage rate. Once your initial introductory rates end, remortgaging could save you thousands.

If you’d like to find out more about how Ashtons can help you contact one of our branches for further information.