Be safe this Christmas


Neil Simpson is a former Personal Finance Journalist of the Year and the author of the Buy-to-Let Investor column in Financial Mail on Sunday. He is a keen property investor and writes about buy-to-let online as well as for a variety of publications including City AM.

It’s the season of giving and goodwill – and also of home fires and burglaries. Insurers such as Norwich Union and Halifax say this is a prime time of year for claims in both categories. And new research from Direct Line suggests that rented property may be most at risk.

The insurer’s latest seasonal survey shows that one person in four may be spending Christmas away from their main home. Youngish tenants who head back to their families or go overseas are most likely to travel. Up to 11 million homes expected to be vacant and vulnerable for at least a couple of days this December. Direct Line says tenants in London, the North East, Scotland and East Anglia are most likely to lock up and leave over Christmas. Opportunistic thieves may well be relying on this for some easy pickings.

As a landlord you don’t feel the personal pain if one of your properties becomes a statistic and your tenants’ belongings get snatched. But in the current climate financial pain can hit just as hard. Recent investors who may already be subsidising their properties out of their own pockets won’t want an extra repair or replacement bill this Christmas.

The right insurance is worth considering for safety-conscious landlords. Buildings insurance is normally a necessity if you have a mortgage and it’s vital for cash buyers as well. Contents cover is optional – but no less important. You can get policies to cover the fixtures, fittings and white goods on unfurnished properties, as well as most of your goods in furnished flats and houses. The right policies also offer extra benefits.

The best will pay out to help re-house tenants if they have to move out of your property after an insured event, normally flooding, fire or other extreme damage. You’ll normally be able to claim up to 10 per cent of the buildings sum assured for this. Good policies should also offer loss of rent cover so you get money even if your tenants stop paying. Again the amount you can claim normally depends on the building sum assured – up to 20 per cent over the course of a year is typical. Policies also offer legal expenses cover and even basic advice lines which can be useful in a crisis. The plans Landlord Mortgages has vetted and examined can also cope seamlessly with a growing portfolio of properties – the extra cost of insuring each new home may be lower than you might fear.

Having a policy properly vetted is important as there are now plenty out there – and terms and conditions do vary widely. Some may only apply if you have certain types of tenant – DSS tenants or students may be excluded, for example. It’s also important to check what happens to your cover if a property is empty between tenancies.

Landlord policies aren’t likely to protect your tenants’ own possessions – so it can be worth encouraging them to buy cover of their own. Many people in the industry feel that tenants who do fork out for policies will tend to be more responsible overall. Insurance policies for tenants aren’t well promoted, however. So it can be worth suggesting a few to your tenants – again Landlord Mortgages can help, while Endsleigh and HomeLet are commonly recommended.

Tipping tenants off to useful products won’t cost a penny. But it can pay dividends by building up a good relationship for the future. And in today’s market that’s pretty important. Investors are no longer able to lie back and make money while they sleep.

With this in mind, I’ve got a strange tip from one landlord who says being nice to tenants helps him lay the foundations for future rent rises. Maybe he is fooling himself. But he reckons his tenants feel better when he says he would like to come around to check the smoke alarms, the window locks or whatever else he comes up with. He simultaneously gives them a (tax deductible) carbon monoxide detector or a timer for the lights in the hope that it makes him look even nicer.

He reckons this makes his tenants feel they are getting value for money when he reluctantly tells them that their rent is going up when their current tenancies come up for renewal. If the tenants move out he takes the timers and the carbon monoxide detector with him so he can repeat the trick with their successors in a few months’ time.

Mind games apart, these kinds of upgrade visits are a great way to gain early warnings about other potential problems, without the bad atmosphere of a formal inspection.

Another landlord I know says the right safety features can help sell a property to potential tenants. He reckons that in the London market single career girls are the best bet as reputable tenants. To attract them he avoids basement or even ground floor properties. And he goes the extra mile on other homes to assure potential tenants that they will be safe. A few years ago he gave up on his building’s management company and single-handedly paid for better lighting to the front entrance to his block to reassure potential tenants that it was a safe place to live. His next set of tenants (two single career girls, interestingly enough) moved in nearly three years ago and are still there today. He also offset the cost of the work against tax for an extra bonus. So playing safe really has paid off.