Brokers can help landlords mitigate risk of first-time tenants
Thousands of students will be packing their bags and heading off to university over the next few weeks. For many, it will be the first time away from home, bringing with it a sense of independence and self-reliance, as well as fear and excitement.
These next few weeks will also be important for landlords with properties in university towns. The start of a new term is a busy period as they look to secure rents that provide a decent return on their investment in student digs.
The surge in activity at this time of year represents a great opportunity for brokers to engage with any clients thinking about entering or expanding into the buy-to-let market in university towns.
Brokers have a vital role to play here, with their industry knowledge well-placed to provide expert advice on the fast-moving, first-time-renter market.
Preparing for the unexpected
Insurance is an area buy-to-let investors should be considering very carefully. Landlords should look to mitigate the risk of younger tenants, who are away from home for the first time, accidentally damaging their property.
Likewise, even if landlords carry out all the appropriate checks, some tenants will fall behind on rent and bills. Many landlords will not know insurers offer products that will guarantee income in cases where the tenant stops paying rent, whether intentionally or due to sickness or unemployment.
Landlords should also consider what would happen if they themselves were to fall ill. Brokers can help provide clients with peace of mind by recommending life and critical illness policies that will protect their investments.
Finally, landlords should consider property owners’ liability insurance for claims that could potentially be made against them by occupants. For example, if a tenant were to trip down the stairs, the landlord could be held liable for compensation if he or she was found to be negligent in some way. Property owners’ liability insurance protects landlords and property owners in respect of their legal liability for personal injury or property damage suffered by third parties and arising from the policyholder’s ownership of the property.
Houses in multiple occupation
New and even established landlords may also need advice on houses in multiple occupation. HMOs are becoming increasingly popular, as they are seen to generate higher yields, which can help mitigate the additional costs landlords now face after the government’s recent tax and regulatory changes.
New regulation due to come into force in October will expand the definition of HMOs even further. As a result, it is estimated an extra 177,000 properties will fall under the new definition. Crucially, there is no grace period and landlords will need to act now to ensure they are ready for the new rules by 1 October.
Brokers operating in this space not only have the opportunity to offer the best possible mortgage and insurance products for these clients, but also to keep them up to date on any new regulations in this area, such as the upcoming HMO changes. Working with landlords who target the student market can add huge value through tailored products and services.
Toni Smith is chief operating officer at PRIMIS Mortgage Network