Building or Landlord Insurance - Some questions

jumperabv3

So I'm looking hopefully to exchange/complete same day next week, seller agreed to it as well, and this is also assuming my bank won't give me troubles transferring the remaining funds to my solicitor (had a thread about it already) - now I know before I exchange when buying a freehold house for BTL purposes - I need to ensure there is a building insurance on the property - at least that's what the letting agent has told me, that before you exchange you need to ensure there is an insurance in place.

Now the letting agent also offered me an introductory offer for rent insurance (which I'd take considering the current global COVID19 situation) - so they will pay for 6 months and I will pay only 50% of its price for the first year (and then after a year we'll see where the world is going to be with COVID19 as well as Brexit as well as how good the tenants are and if they stay etc.) - 

So if I'm covered with rent insurance directly from the letting agency - do I only need to buy a very cheap building/landlord insurance for myself excluding any clauses regarding rent because the rent is covered already by the agency? Do you by the way know of any places that sell you a cheap insurance? I'm not underestimating the value of insurance but I think it's not worth spending too much on it, unless I'm missing something - what do you think?

Also I haven't bought such insurance for quite a while, if I exchange next week then I can do it next week 1 day before I exchange, correct? Once you buy it then it's instantly taking effect, correct?

greatcrested

Look carefully into the rent insurance. It may be right for you ... or may not. Personally i'm no fan.

You don't really seem to understand what you ae insuring against. "not worth spending too much on it". It's not the cost, it's the cover it provides that matters.

Standard building insurance will be fine till a tenancy is created. Then it will be invalid. If you plan to create your first tenancy fairly soon after purchase, take out a landlord's policy.

You should have it in place on the day you Exchange. If the property burned down the next day, you'd still be legally obliged to buy the smouldering wreck at the agreed price. Get quotes now and decide on the provider/policy. Then on date of Exchange, activate the policy.

jumperabv3

The tenancy is already created (tenant in situ) - so right on exchange/completion (same day) I would become a landlord - so in that case I must take only a landlord insurance and not a building insurance, is it correct?

Thrugelmir

Speak to an insurance broker and let them guide you through the cover that's most appropriate for your circumstances. Little point in buying on price alone only to find that the cover is inadequate. The cost of the insurance is a tax deductible expense. 

MovingForwards

You need buildings insurance as that covers the building.

The rent insurance will have loads of clauses and may not cover what you think it might.

greatcrested

jumperabv3 said:

The tenancy is already created (tenant in situ) - so right on exchange/completion (same day) I would become a landlord - so in that case I must take only a landlord insurance and not a building insurance, is it correct?

Assuming by 'landlord insurance' you mean what is most commonly meant (it may be you have a different understanding!), landlords insurance basically IS buildings insurance, but specifically tailored for landlords.

Why do you not read up on this so you know what you are buying, and can then decide if it's what you want/need?

Find some policy documents online and read them!

Given your uncertainty in this area, I trust you have a better understanding of what's involved with buying a property with a tenant in situ? Both the additional legal requirements on you (eg LL & T Acts), and the practical /financial considerations (eg managing the tenant's deposit).

jumperabv3

greatcrested said:

Assuming by 'landlord insurance' you mean what is most commonly meant (it may be you have a different understanding!), landlords insurance basically IS buildings insurance, but specifically tailored for landlords.

Why do you not read up on this so you know what you are buying, and can then decide if it's what you want/need?

Find some policy documents online and read them!

Given your uncertainty in this area, I trust you have a better understanding of what's involved with buying a property with a tenant in situ? Both the additional legal requirements on you (eg LL & T Acts), and the practical /financial considerations (eg managing the tenant's deposit).

I have 1 property in London which I've been renting out since 2012 via letting agents, thankfully everything was going well, they fully manage it so I don't have to worry about gas certificate etc. as they do it themselves and deduct the costs from the rent.
My goal is to do the same with this 2nd BTL property and the letting agent will fully manage it, however the difference is that the first property in London is a leasehold property thus it already has a building insurance, whilst this 2nd property is a freehold property thus I have to buy the building insurance myself.

Yes, I'm aware of the fact landlord insurance is building insurance just tailored for landlords, I was aware of it previously... I've just never bought such a policy before which is why I posted it here asking for the best way to save some costs.

Yes, I'm filing taxes with HMRC every year so I understand it's tax deductible and my accountant deducts letting agent fees, service charges, ground rent from the 1st property - I also deduct other relevant expenses.

I think the most sound advice in this thread is to use an insurance broker for this matter - is that correct? I mean a broker can provide me with insurance on the building itself, which is all I need, the rest is something I don't need as I won't be living in the property and the rent will be covered by the letting agent's insurance policy, correct?

greatcrested

jumperabv3 said:

greatcrested said:

Assuming by 'landlord insurance' you mean what is most commonly meant (it may be you have a different understanding!), landlords insurance basically IS buildings insurance, but specifically tailored for landlords.

Why do you not read up on this so you know what you are buying, and can then decide if it's what you want/need?

Find some policy documents online and read them!

Given your uncertainty in this area, I trust you have a better understanding of what's involved with buying a property with a tenant in situ? Both the additional legal requirements on you (eg LL & T Acts), and the practical /financial considerations (eg managing the tenant's deposit).

I think the most sound advice in this thread is to use an insurance broker for this matter - is that correct? I mean a broker can provide me with insurance on the building itself, which is all I need, the rest is something I don't need as I won't be living in the property and the rent will be covered by the letting agent's insurance policy, correct?

* 'the rest'? Meaning? Can't comment on whether you need it as don't know what you are refering to.

* rent covered by letting agent's insurance - possiblly correct. Probably not. How do we know?

As I said, buying with a tenant in situ raises additional issues. On top of what you/your letting agent are doing with current tenancy. I may be teaching my grandmother to... in which case apologies, but buying is a seperate activity to letting, so your letting agent probably won't help with the purchase of the tenancy- maybe I'm wrong, bu make sure you cover all the angles.

jumperabv3

greatcrested said:

* 'the rest'? Meaning? Can't comment on whether you need it as don't know what you are refering to.

* rent covered by letting agent's insurance - possiblly correct. Probably not. How do we know?

As I said, buying with a tenant in situ raises additional issues. On top of what you/your letting agent are doing with current tenancy. I may be teaching my grandmother to... in which case apologies, but buying is a seperate activity to letting, so your letting agent probably won't help with the purchase of the tenancy- maybe I'm wrong, bu make sure you cover all the angles.

Sorry for not being specific, and thanks so much for trying to help, I will try to keep it short and sweet.
With insurance you cover 2 main things:

• The building itself e.g. in case it goes on fire you would be covered.
• Rent insurance would cover if the tenants loses his/her job (which is more common nowadays unfortunately) then you would still get the rent paid incl. all legal fees involved to evict etc.

These are the things I need to cover as a landlord, of course I can choose to cover contents but the property will be let unfurnished, and of course there are endless things you can cover such as the roof, the walls, and what's not - I am not going to take insurance for this as if and when I'd need to fix something I would simply do it out of my own pocket (unless if you think this is a wrong approach?)

So what I'm looking to get is a basic building insurance to cover the property, that's all.
I saw some offers on GoCompare, but perhaps there are other sites or brokers who can offer even better deals? I'm not too sure where is the best place to go to and buy these policies - can you suggest some websites/places to go to and get a basic building (landlord) insurance?

greatcrested

Some Landlords policies include, say, £5K of contents cover as standard. Useful if you have white goods, carpets, curtains etc (which all need replacing after a fire). Compare policies.

Rent insurance - read terms carefully. Often exclude, eg the first months rent. Often have 6 month maximum claim. May have other exclusions. Often dependant on category of tenant and/or tenant vetting done by a specific provider. As above, read policies carefully and make sure you're getting the cover you want.

jumperabv3

greatcrested said:

Some Landlords policies include, say, £5K of contents cover as standard. Useful if you have white goods, carpets, curtains etc (which all need replacing after a fire). Compare policies.

Rent insurance - read terms carefully. Often exclude, eg the first months rent. Often have 6 month maximum claim. May have other exclusions. Often dependant on category of tenant and/or tenant vetting done by a specific provider. As above, read policies carefully and make sure you're getting the cover you want.

Thanks, I went to CompareTheMarket, they forcing me to take covers I don't want - are there any good websites that let you choose a simple basic building insurance without anything in addition?