There are many reasons a landlord decides to purchase a property to let. Listed below are some of the reasons why landlords purchase a buy to let property.

• Buy to let property is often purchased for the purpose of long term investment returns. The landlord assumes the value of the property will increase over a period of time but at the same time the rental income should cover all the ongoing costs.
• In some circumstances a property is inherited and the landlord lets the property out to tenants to supplement their income.
• Some homeowners that are unable to sell their property decide to rent their home instead of leaving the property unoccupied.
• Parents of some children attending a university purchase a property whilst their child is completing their students. This allows the property to be rented out on a student shared basis.
• Often a buy to let property is used to either supplement an existing income or to provide a regular monthly income.

New landlords entering the buy to let market need consider the many drawbacks and pitfalls associated with rented premises. Items that need to be considered are such as:

• The initial costs can be very high in preparing a property for rental purposes. Often these costs can be overlooked by a new landlord entering the buy to let market.
• Landlords must adhere to certain legal obligations and any failure to abide by these regulations can result in very serious financial implications for the landlord. In worse case scenarios it could even lead to imprisonment.
• Good tenants are often very hard to find. This can cost the landlord a considerable amount of money and time in vetting and advertising for potential tenants. Whilst the premises are empty the landlord is losing money. Also most insurers will not provide insurance cover for vacant premises. The landlord however can get an unoccupied property insurance. Terms and conditions do vary from one insurer to the next, so do check to make sure that the policy offered meets your needs.
• With some tenants the landlord will have to spend both time and effort in dealing with them.
• Maintenance costs can be high in ensuring that the rental property is suitable for its intended purposes. From time to time there will be maintenance costs such as getting the electrics and gas checked by qualified professionals.
• Also any profits that result from the let property are also subject to tax.
• In some cases a landlord needs to take account of the property prices falling. This could lead to more rental properties on the market which in turn can create a reduction of rent.

Any buy to let property investment can be challenging and financially rewarding. At Active Insurance we offer buy to let home insurance solutions for landlords with a single property to landlords with 100’s of properties in a portfolio.