Things to Know About Renters Insurance

Generally it is assumed that the landlords insurance covers the tenant’s possessions also, but unfortunately it is not true. Insurance companies do not allow tenants to be covered under the landlord’s insurance. Therefore, it is advisable to have a separate renters insurance to secure from damages and losses. To find good rate on renters insurance, you have to clearly understand what all can be claimed with plan and choose a suitable one that covers all your requirements. The following are the basic things to know about the renter’s insurance policy:

Damages/Losses covered Under Renters Insurance

Renters insurance covers all your possessions from various disasters that are covered in the policy. It claims your possessions from damages/losses like, fire, theft, accident, explosion, vandalism, windstorm, and etc. It even provides coverage for your personal liabilities that covers the occurrence where anyone injures while visiting you. It doesn’t claim the damage caused by the earthquakes or floods. People who live in the places where regular floods or earthquakes occurs, needs additional insurance to cover those disasters.

Find a Reliable Insurance Provider

An easy way to find a reliable insurance company that gives you good services is to visit the website of insurance department of your state and determine the proportion of complaints against these companies. You can choose the company that has few complaints filed against them. Renter’s insurance rates may differ a lot from one company to the other. You have to spend certain time for comparing various service providers and select an efficient one.

Understand Your Requirements

The amount of coverage depends on the property you own. You have to evaluate the prices of all your belongings and choose the suitable policy that covers all your belongings. The sum of prices of all your belongings will be the amount of your required coverage for your personal property. If there is a need of excessive coverage, you can purchase the umbrella policy.

Renters insurance policy helps you in mitigating any damage/loss caused to your property by any mishap mentioned in the policy. This information helps you to understand the need of renters insurance that covers your possessions from a better service provider.

Why Benham and Reeves Residential Lettings Argue that Inflation is Great News for Buy-to-Let Landlords

Inflation is on the way back.
The Consumer Price Index has risen 0.6% from June to July (and is now over double the Bank of England’s official target of 2%) and the Retail Price Index (excluding mortgage interest bills) has increased by 0.5% to reach 5.3% (which is over double its old 2.5% target). The main factors for inflation are coming from abroad in the form of rising fuel and food prices with food and non-alcoholic drinks increasing at a record pace. A survey by The Economist of 55 countries has shown that 12 have double digit inflation rates.

Is inflation good news for landlords?
Most economists argue inflation is bad for the economy. The lack of stable prices makes economic decisions very difficult for both businesses and consumers. Landlords suffer from rising costs and prices, like any other consumer. Marc von Grundherr, Lettings Director of Benham & Reeves Residential Lettings, comments that in the past few years’ landlords have suffered from massive labour price inflation, as skill shortages have increased the costs of using tradesmen, such as plumbers, builders and decorators. Plus there have been other cost increases, such as accountancy and buy-to-let insurance rates, which continue to climb. But the main advantage of inflation for landlords is that many have used a buy-to-let mortgage to secure their property investment and inflation can reduce the value of their buy-to-let loans.

Benham & Reeves Residential Lettings’ Marc von Grundherr, advises how inflation reduces a buy-to-let mortgage.

Inflation and buy-to-let loans:
If a landlord takes out an interest only buy-to-let mortgage of £100,000 over a period of 20 years in a zero inflation economy (e.g. in Japan), then in 20 years’ time that buy-to-let loan would still have a real value of £100,000. But if inflation runs at the current Bank of England’s target rate of 2%, in 20 years’ time, the actual real value of the buy-to-let mortgage will have reduced to £67,297. If, however, inflation runs at double the Bank of England’s target rate at say an average of 4%, then the real value of the buy-to-let mortgage falls to below half its original real value to £45,639.

Inflation and buy-to-let loans:
If a landlord takes out an interest only buy-to-let mortgage of £100,000 over a period of 20 years in a zero inflation economy (e.g. in Japan), then in 20 years’ time that buy-to-let loan would still have a real value of £100,000. But if inflation runs at the current Bank of England’s target rate of 2%, in 20 years’ time, the actual real value of the buy-to-let mortgage will have reduced to £67,297. If, however, inflation runs at double the Bank of England’s target rate at say an average of 4%, then the real value of the buy-to-let mortgage falls to below half its original real value to £45,639.

A great time to be a landlord:
So with house prices falling and labour and insurance costs rising, many feel it’s a bad time to be a Landlord, but Marc von Grundherr of Benham & Reeves Residential Lettings argues this simply isn’t true – and states that “Professional landlords know that it’s a great time to buy because:

1. They can pick up buy-to-let properties at bargain prices.
2. Rents are increasing rapidly.
3. Borrowing costs are dropping. The Bank of England has cut interest rates three times this year and is doing its best to keep them as low as possible.
4. Inflation is shrinking the real value of buy-to-let loans.

So landlords are finding that in the present market borrowing is cheap and their debt balance is devalued due to inflation running above the Bank of England’s targets.

Prepare Well Before Plunging Into Buy-to-let or Becoming a Landlord

Recent research from the Association of Residential Letting Agents shows that 40 per cent of existing landlords are planning on making more acquisitions during 2008. But, potential landlords should consider many different factors before committing to letting a property. Performing a full risk assessment and being realistic about the finances required to pay for and maintain the property is essential.

Unless you own a property outright, then you need to consider the best way of financing its purchase. Until recently there were thousands of different buy-to-let mortgage products available throughout the UK, but since the credit crunch, many have subsequently been withdrawn. Those that remain have tighter lending criteria and therefore come with quite stringent conditions. Ensure that you shop around before committing to any lender, and don’t settle for the first offer before checking out others. It may also be wise to opt for a fixed rate buy-to-let mortgage as you can plan your expenses for a fixed period with a degree of certainty.

Being able to withstand a period of non-occupation, or non-payers is also an important consideration. If you can only afford to enter the buy-to-let market based on 100% occupancy of the property, then unless you are extremely lucky you will come unstuck at some point. Many experts recommend incorporating an average two months of non-occupancy when calculating your costs. Also, if you are employing a letting or property agent you will need to include their fees in your costs.

Insurance is vital. If you don’t own the property outright, your lender will insist that you have buildings insurance to protect their asset, and similarly you should seriously consider landlord’s insurance to protect you and your investment. That applies especially if you have a portfolio of properties, or if your property is one of a number in the same apartment block where there are other landlords. Indeed, you and your fellow landlords could pool your purchasing power to leverage a better deal from insurers. Buy-to-let insurance is a specialist product and some insurers in that sector offer complimentary add-ons such as tenant referencing services, which are very useful when it comes to assessing potential tenants.

Buy-to-let insurance can also protect you against owner liability claims, and no-one should seriously think about becoming a landlord without being adequately insured – both against liability claims and for protection of property.

Another important consideration is ensuring that you put aside a sum for regular and emergency maintenance. Things will go wrong and it is best to provide for it up front. Having adequate insurance will also help in emergency situations. Older properties generally require more maintenance so consider that before buying.

So, if you are thinking of becoming a landlord, make sure you assess all the risks, do your research and ensure that you are realistic about what to expect.

Buy-to-let value soaring

It is hardly a secret that the scale of buy-to-let has been growing rapidly in the UK in recent years, but the latest research indicates this is showing no signs of slowing down.
Sainsbury’s Bank carried out a survey of the industry over the year between November 2006 and November 2007, in which it found the aggregate value of buy-to-let properties owned by landlords had risen from £571.38 billion to £641 billion, which equates to an increase of £5.79 billion per month.
Commenting on the figures, the head of home insurance for Sainsbury’s Finance, Steve Johnson, stated: “People have invested a huge amount of money into this sector and as a result of rising house prices many have seen the value of this investment grow substantially.”
Figures such as this suggest that there is no sign yet of a slowdown in investment, given that the period covered includes several months after the onset of the credit crunch, when the overall property market was clearly slowing down. What is undoubtedly the case is both that the total value of these portfolios has risen in recent years through both price growth and higher amounts of initial investment.
The latter fact is borne out by a further finding of the Sainsbury’s research, which showed that buy-to-let mortgages grew by 98 per cent in the three years from the first half of 2004.
Of course, some will wonder out loud whether such an upward trend might continue through slightly tougher times. The answer, according to recent surveys, is yes. The Association of Residential Lettings Agents survey last month revealed two key findings in this regard. Firstly, that nine out of ten landlords planned to hold on to their investments for the long-term, which means that periodic downturns in the market are of less significance than would be the case for speculative investors looking for quick gains. Secondly, four out of ten respondents said they planned to add to their portfolios this year.
In any case, there may be good reasons to believe the overall property market is bouncing back, with increased affordability making buying, whether residential or buy-to-let, cheaper than last year. The Council of Mortgage Lenders has commented today that slower property price inflation and falls in interest rates will improve this situation. As director general Michael Coogan stated: “Affordability has been stretched further in 2007 but the recent base rate cuts and the expectation of future cuts will ease debt servicing burdens in 2008.”
One blot on this horizon may be the spectre of inflation, with the Office for National Statistics revealing today that the consumer prices index rate had increased from 2.1 per cent to 2.2 per cent last month, mainly due to rising petrol, fruit and furniture prices. How much of an effect this may have on interest rate policy may not be clear. In its statement after cutting the base rate last week, the monetary policy committee said it had to “balance” the various risks of higher inflation now against the potentially deflationary effects of lower growth.
In acknowledging that food and fuel could have an upward effect on inflation but that the impact of these factors “should begin to fade later in the year”, the MPC may have factored this scenario in, accepting higher inflation in the short-term in the expectation that it will fall without requiring a tighter monetary policy. This view would be in line with that stated in the November 2007 quarterly inflation survey.
The next such survey, as it happens, will be published tomorrow. Its projections, which the MPC will already have seen, may make clearer to the wider world what is expected to happen in the months ahead. It could well be that the decision made last week reflected an optimistic longer-term outlook. In the meantime, the optimism of buy-to-let investors over their long-term prospects has remained strong.
In today’s world Property investment is an excellent investment option especially investment in UK