Buy to Let Home Insurance – Housing Benefit and Local Housing Allowance
The Local Housing Allowance (LHA) came into effect as a nationwide scheme from the 7th of April 2008. Even if your client has a professional tenant in place, this could still be of consequence further down the line should the tenant become unemployed or fall on hard times.
In terms of Buy to Let Home Insurance, the different tenant types ranging from a DSS Benefit Recipient to an Asylum Seeker can have a bearing on the premium you will have to pay. Buy to Let Home Insurance will view those tenants as a higher risk than a single Professional Tenant and the premium will reflect this. There are, of course, benefits that offset this choice of tenant; the property will enjoy near 100% tenancy near guaranteeing you a continued income from your rental investment. The council have generous grants available for the introduction of disabled facilities, new heating systems, electric re-wiring, increased security measures and renovation grants for unoccupied properties.
The allowance uses a Local Reference Rent based on flat rate rents for the area and size of household. These are to be established for every local area by officers from The Rent Service, and provided to local authorities on a monthly basis. This should mean that your client, the landlord, will receive a rent from the local council that closely mirrors market rates.
The main area of concern regarding this scheme is that the rent is now paid to the tenant, and not directly to the landlord as before. This poses the question as to whether the allotted funds will be sent straight on to the landlord or diverted for use elsewhere. In theory, by paying the rent directly to the tenant, the tenant is then in a position to top up the rent if they want better accommodation. There are Rent Guarantee policies within the Buy to Let Home Insurance sector but these will only generally cover you if no rent at all is paid, and does not apply if part payment is received.
Don’t be put off, there is The Buy to Let Home Insurance market has not yet had the promised rate increases due to the recent floods. In fact, if you look carefully for your Buy to Let Home Insurance you may well find yourself paying the same premium as last year or possibly less – despite the addition of Index Linking to your sums insured.
Having scoured the internet there are numerous sites offering Buy to Let Landlord Insurance but one of the favourites remain, being www.cover4letproperty.co.uk. They are UK based and specialise in Buy to Let Home Insurance policies.
Their website offers quotations from 6 Buy to Let Home Insurance companies and their Buy to Let Home Insurance premiums are offering great prices but with high levels of cover.