Ensure you are covered against tenant troubles

In the midst of recession, Brits looking for extra income from a holiday home or second home may be turning to the rental market as ‘reluctant' landlords. For those unfamiliar with the process, ensuring you have adequate landlord insurance in place in the event of any financial losses is crucial, warns moneysupermarket.com.

Recent research reveals an increasing number of Brits could be finding themselves taking on the role of an amateur landlord, as letting a property becomes an increasingly attractive option, especially for those who have had no success with selling a property in the current market. Results from the final quarter of last year saw the lowest ever sales of properties by landlords, as two fifths of surveyors (42 per cent) reported a rise in new tenant lettings, and only 0.2 per cent of landlords chose to sell their property at the end of a tenancy.

Steve Sweeney, head of home and motor insurance at moneysupermarket.com, said: "Although letting out a property may seem like an attractive way to source extra income in the current climate, I urge anyone looking to jump on the landlord band-wagon for extra cash to proceed with caution. Whether you are downsizing your property to save money, or are a reluctant seller waiting for the property market to pick up, it is essential to have sufficient insurance to cover any financial losses connected with letting out a property. I advise anyone contemplating being a landlord to seek advice and get all of the relevant information before taking this venture on."

According to the UK's leading price comparison site, standard landlord insurance is available from as little as £117 a year from acumus, which covers rent not being paid in the event of damage to the property. However, for an additional £19 a year acumus will also provide landlords with cover for legal expenses should they arise from incidents such as repossession, tenant default, and debt recovery. A selection of standalone rent guarantee products are also available including a policy starting from £98 per annum with LandlordsandLetting based on £1,000 monthly rental income for one year. This type of policy covers a landlord if a tenant defaults on their rent payments, and if there are any legal expenses involved in recovering possession of a property or rent arrears.

Steve Sweeney continued: "It is important to have a good contract in place to know where each party stands should the ‘tenant and landlord' relationship fall sour. If things go badly wrong and legal proceedings commence, the associated cost can be hefty. I advise insuring yourself against these circumstances before they arise, it is always better to be prepared and there are a number of suitable insurance policies for landlords on the market. The varying levels of cover available means it's essential to do your research and pick the policy that is the best fit for your circumstances, policy wording can differ so it is vital to check the small print to determine exactly what is covered."

For more information, visit moneysupermarket.com