Investing in products and services to protect their investments remains a high priority for many UK buy-to-let landlords despite the growing cost of being one.
According to tenant referencing and insurance provider FCC Paragon, 2017 was a record year for sales of rental protection products.
Two of the main sources of increased landlord costs are the 3% stamp duty surcharge on the purchase of buy-to-let properties introduced in April 2016 and the gradual phasing out of buy-to-let mortgage interest tax relief which started last year.
However, despite testing times, it appears landlords are committed to spending the necessary funds to protect their investments.
Bryn Cole, Managing Director of FCC Paragon, said: "We've found that as the stakes get higher, landlords are actually more willing to invest in rental insurance and protection products.
Arguably, a more regulated rental sector - with increased costs and government interference - has forced out many of the risk-taking investors and left behind the landlords who are keen to maintain a long-term project and protect it accordingly."
FCC Paragon says the trend for increased sales of rental protection products has continued in 2018 so far as landlords look to mitigate risk in an uncertain sector. The firm reports that it sold 40% more rent protection products in January 2018 than in the same month last year.
In the event that a tenant defaults on their rent, protection products cover the payment so landlords can continue to finance their buy-to-let mortgages.
Cole explains: "A perfect storm of continually rising rents and the prospect of further interest rate rises mean landlords want to be protected. The costs for landlords are higher than ever before and so understandably they want peace of mind that they are covered financially if something goes wrong. It seems to us that many landlords are of the mindset that spending now could save them significant amounts of money in the future.
Even the most reliable of tenants could default on their rent due to a change in circumstances and as rent and living costs rise, unfortunately the chances of reliable tenants falling into arrears increases,."
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source http://blog.evolutionproperties.co.uk/2018/03/21/rental-protection-remains-a-priority-for-landlords-despite-increasing-costs/
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