landlord insurance rebuild value?

UKSBD

Looking at getting landlord insurance and it asks for rebuild value rather than actual value.


Although the value is approx. £270k the property is a very simple, detached 2 bedroom property which I would estimate would be well under £100k to totally demolish, clear site, and rebuild.


Am I OK just putting £120k down as rebuild value and would mortgage people accept this (currently applying for £50k buy to let mortgage?


If not, is there a set minimum criteria mortgage companies accept?

G_M

Nothing to do with it being a BTL!

Rebuild value is not the same as market value. when you buy a house, you buy the land underneath as well. Market value is usually (not always) higher than rebuild.

You can

* use the rebuild value provided by Valuer/surveyor when you bought the property (allowing for increase over time)

* Pay a survyor for rebuild value

* use the RICS calculator

On the other hand, if you think you are qualified to judge the rebuild cost yourself, go for it. Keep your fingers crossed you're right cos if the place burns down the insurer won't rebuild it if you under-insured.

UKSBD

G_M wrote: »

Nothing to do with it being a BTL!

Rebuild value is not the same as market value. when you buy a house, you buy the land underneath as well. Market value is usually (not always) higher than rebuild.

You can

* use the rebuild value provided by Valuer/surveyor when you bought the property (allowing for increase over time)

* Pay a survyor for rebuild value

* use the RICS calculator

On the other hand, if you think you are qualified to judge the rebuild cost yourself, go for it. Keep your fingers crossed you're right cos if the place burns down the insurer won't rebuild it if you under-insured.

Thanks,


I found that RICS calculator just after posting.


It gave a figure of £187k (I oversized rather than undersized) but then said between £147k and £230k.


It seems awfully high, but I'll say £150k just to be on the safe side.

anselld

UKSBD wrote: »

Thanks,


I found that RICS calculator just after posting.


It gave a figure of £187k (I oversized rather than undersized) but then said between £147k and £230k.


It seems awfully high, but I'll say £150k just to be on the safe side.

You will find that is not "being on the safe side" if you need to make a claim. The insurers can equally make their own assessment based on the RICS criteria and if they find you are underinsured they will pro-rata any claim based on the degree of under-insurance.

Up to you of course; you could not bother to insure at all, but why decide to insure only a percentage of your property?

G_M

The difference in your annual premium between nsuring for £150K and, say £187K is probably £10 - £20 a year. Maybe less.

There again, if you want to save money, why not save another £10-£20 a year and insure for £120K?

Or, as anselld suggests, just forget about insurance altogether?

UKSBD

anselld wrote: »

You will find that is not "being on the safe side" if you need to make a claim. The insurers can equally make their own assessment based on the RICS criteria and if they find you are underinsured they will pro-rata any claim based on the degree of under-insurance.

Up to you of course; you could not bother to insure at all, but why decide to insure only a percentage of your property?

The £187k appears to be the minimum the calculator gives.
It also gave a message,

"The property is smaller than the cost models available: in order to calculate a rebuilding cost a larger property has been
assumed."

eddddy

UKSBD wrote: »

...currently applying for £50k buy to let mortgage?

So presumably a valuer will visit the property and provide a rebuild cost to your lender. (Many lenders ask valuers to do this so that they can then check that borrowers have adequate buildings insurance).

I'm sure your lender would tell you the rebuild cost if you ask them - once they have the info from the valuer.

HappyMJ

UKSBD wrote: »

The £187k appears to be the minimum the calculator gives.
It also gave a message,

"The property is smaller than the cost models available: in order to calculate a rebuilding cost a larger property has been
assumed."

That's because it costs a certain amount to start a rebuild on a property no matter what it's size is plus a cost per square metre. It's a difficult calculation to make. I would always go for a much larger figure just in case. The premium difference should be small as the actual risk that your property will be destroyed is low but it can make make a big difference in a partial claim. If just your kitchen was destroyed by a fire it could cost £20,000 to repair. If they assess you've under insured the whole building by 50% they would reduce your claim by 50% and you only get £10,000 towards your new kitchen which wouldn't be anywhere near enough to replace the plasterboard in the walls and ceiling, flooring, kitchen units, built in oven and hob, boiler, sink, taps, tiles, doors and windows.

UKSBD

I asked for a quote £180k in the end, but then they bumped it up to £207k anyway.

dacouch

CobaltBlue wrote: »

I have found many insurance companies give a high minimum rebuild / buildings figure of about 500k. Not sure of the reason..
My house market value is about 120k - but I think the rebuild value was about 180k...

Marketing and to save on labour costs

CobaltBlue_2

Labour costs?