With a quarter of landlords taking out the wrong type of insurance, brokers and advisers must ensure that they provide the correct advice
I read something recently that both amazed and dismayed me in equal measure. A study by Simple Landlords Insurance revealed that a quarter of residential landlords in the UK don’t have the right insurance; one in four unwittingly take out standard buildings and contents insurance rather than specialist cover for a buy-to-let property.
The reason I found this research so shocking is largely because of the current state of the buy-to-let market. The next phase of the roll-out of tax-relief changes is under way, criteria remains difficult to meet and costs continue to escalate. And so it makes me wonder why landlords would risk further challenges in this way.
Then I thought about the role of brokers and advisers in this situation. Are we looking after the comprehensive needs of our landlord clients well enough?
While there is always an element of consumer responsibility, I fear there is a danger that we see landlords as more ‘responsible’ or, perhaps, more financially astute than standard mortgage borrowers. And while to an extent this may be the case, there is a danger that in adopting this view we are not giving landlords the support they really need.
A lot of this will be associated with the regulation, or lack of, in the sector. The argument has always been that the buy-to-let sector does not need the same sort of protection as standard buyers because they are business people. And, again, there is some truth to this. In making this assumption we’re assuming that all landlords fall into that category yet we know this isn’t the case.
There are landlords with one property, landlords who fell into buy-to-let, perhaps after inheriting a property or choosing not to sell theirs when moving in with a partner. These landlords need as much guidance as a first-time buyer – and that includes assessing and addressing their insurance needs.
We should be making sure our landlord clients never end up with the wrong type of insurance by advising them on the most suitable products or, at least, referring them to somebody who will.
Remember: not all landlords are property experts; the last thing they need is to face unplanned costs because their insurance doesn’t cover what they thought it might.
Ying Tan is managing director of Buy to Let Club