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Most holiday lets occur during the period of about 20-30 weeks covering late spring, summer and early autumn, but city properties are a likely bet all year round, and there can be high demand at Christmas and New Year. Standard lets are by the week, but weekend and mid-week breaks are popular, again especially in cities.

Typical locations

Obviously there are hotspots such as the Lake District, seaside resorts and major cities, such as London, York and Edinburgh, but the market for holiday lets is wide ranging. Pretty rural or seaside settings are extremely attractive, and a site close to shops and with good transport links is likely to attract valuable repeat bookings. City properties should be as near the centre as possible, and certainly with good transport links. Elsewhere, the most attractive holiday lets are those that are conveniently situated among the local attractions, rather than on the edge of a popular region. A rural location might look attractive, but it could be vulnerable to burglars because it will be left unattended, and is likely to be equipped with attractive, portable equipment. You need a good burglar alarm.

Holiday lets are a quick turnaround business where the property needs to be freshened up between lets of a week or two, so either you will need to be on hand as a regular commitment, or you will need to find someone to do it for you: you can’t run it yourself properly from a distance.

There are strict rules as to what constitutes a holiday let. A holiday let must be in the UK, furnished, available for letting for at least 140 days a year and commercially let (not at cheap rates to family and friends) for at least 70 days a year, with the lets not exceeding 31 days.

Landlords content insurance

Option to include legal expenses

Letting agents: As a landlord insurance policy holder you may well have to go through letting agents because companies tend to work with other professionals. However, it might be worth contacting human resource departments of large organisations – you’ll save a big fee. They may arrange lettings themselves, especially for staff coming from abroad, or they may provide the employee with a budget and contacts. You may be able to advertise quite cheaply in the company newspaper.

Relocation firms specialise in helping executives move to new posts. The ideal scenario is when a company takes out a let itself and simply sublets to its staff: you get a guaranteed premium rent without the hassle of finding new tenants or the dreaded void periods. However, try to limit tenant turnover as it can be disruptive, and carry out an inventory check with each changeover.

Serviced Apartments and ‘Apart Hotel’ Lets

This is where you buy into the ownership of a hotel room or serviced apartment within a hotel or block. They are relatively new investments and, as such, have yet to prove their level of performance. Typically, these investments are based in international cities, such as London or New York, and you receive a percentage of the income generated from their use. Sometimes you are allocated a set number of days per annum that you can use the room for free.

As the income generated from hotels and serviced apartments is greater than from a standard buy to t, if they are well utilised, your average rental return can be a lot a higher. However, you need ready cash to invest as you can’t borrow for these investments. This means that the potential selling market, when you cash in to make profit, is limited.

How to find tenants

Independent letting: Around half of UK rented holiday homes are let independently rather than through agents. Contact the local tourist office and ask what information they need for you to be added to their list of holiday lets. Many people look for holiday lets on the internet and the easiest way to put yourself forward is to add your rental property to a local or specialist holiday homes directory.

Create your own website, but only try this if you know what you are doing, as it must look professional.

Use a letting agent, for marketing or managing the property. This will take up a sizeable chunk of your income (they’ll charge a percentage of income, possibly up to 49 per cent for a full service), but they should be able to fill your bookings list more efficiently than you can. You obviously have the option of taking a limited number of private (possibly repeat) bookings separately and informing the agent of any weeks that are not available.

Let to friends and family. This is a good option but beware of doing this for long periods at discounted rents as it could affect your tax position.

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As with any business, landlord insurance customers must identify their target market if they plan to rent out their buy to let property. This will help the landlord to identify the correct type of tenant for their property and this will ensure that the property will meet the needs of the prospective tenant. Landlords will need to do this before they buy, convert or decorate their property.

Short-term lets

Short-term lets are between one week and three months and are furnished. The rent usually includes charges for use of electricity and gas, with the tenant insurance customer expected to deal with the cost of the landline telephone (if used). The number of tenants requiring short-term lets is rising as employers increasingly expect their staff to be mobile and to work for short stretches in different locations.

From the landlord’s point of view, short-term lets are more work because the property must be in immaculate condition at all times and there is the ongoing need to market it for the next vacant period. In addition to higher set-up and maintenance costs, let property insurance premiums can be higher. However, rents are significantly higher and in the right location (usually city centres) a short-term let offers a better yield than a long-term one. Typical short-term lets are company and holiday lets.

Company Lets

A company, or corporate, let is when you have a contract with a firm to accommodate their employees as tenants. It can pay very well, but requires properties of a very high (and therefore costly) standard. Senior executives sometimes have a working
routine of being in one location for two days then moving to another region, but prefer the familiarity of a house or flat to the anonymity of hotel rooms. Beware that corporations may suddenly decide to relocate and no longer require property: if you go for this market, make sure there is more than one suitably large firm in the area. Hospitals and universities are other organisations that sometimes require short-term, high-quality accommodation.

Typical Locations

Obviously, the employee needs to be within easy reach of his or her workplace. Those without families are likely to prefer city-centre locations near shops and leisure facilities. Those with families tend to go for suburban or rural locations with good transport links, preferably near a park. Tenants are likely to be professionals and will have high expectations of local schools if they have a family with them. For those from abroad, an international school within easy reach could be important.

Lets can be long or short term, and often include a charge for water, gas and electricity so that the client does not have to deal with utility bills.

What you need to provide

An executive with no family or one who stays in the accommodation only during the working week is going to want a one- or two-bedroomed property with roomy living space. Families need more bedrooms, bathrooms and living space, a well-equipped utility room, and a garden suitable for children. Secure car parking is essential. The tenants will expect high quality TVs and hi-fi equipment, broadband access and a well-planned kitchen. Furniture should be modern and stylish. At the top end, corporate clients expect luxuries such as Egyptian cotton sheets and limestone bathrooms. Long-term professional tenant insurance customers may prefer to come with their own furniture, but since they are likely to have vacated their own family home, may also wish you to provide it. Decoration should be elegant (no strong colours) with accessories such as antiques or artwork. Some corporate tenants will expect a maid and a laundry/garden service.

The tenant’s take

As a tenant in accommodation recommended by (and possibly paid by) your employer, you’ll expect high-standard furnishings and fittings and excellent security to reflect the premium rent being charged. You’ll expect to be able to move in straightaway with the minimum of fuss, and know that someone from your firm or relocation agency has vetted the property thoroughly if you can’t do so. You may want to arrange for a cleaner to visit regularly.

Tenant insurance policy holders will include prospective first-time buyers trying to save a deposit, but could also include people who have sold a property but have not found the dream home they are seeking.

In such a situation, renting makes a lot of sense: it gives the tenants content insurance customer the chance to see what it is like living in an area where they may buy and to see what facilities and schools are like. They can then make an offer on a property as a cash buyer, rather than someone with a property chain dragging along behind them.

Another trend is for older people who choose to rent in the later part of their lives so that their outgoings are predictable and they can live within a set budget, possibly having sold the house that they owned.

There will, of course, also be some free spirits who choose to rent, preferring the flexibility it offers compared to that or living as an owner-occupier. They benefit from not being responsible for the maintenance of the property, so they can plan their finances very well because all the other costs related to accommodation (rent, tenants contents insurance and bills) are predictable.

TEMPORARY ACCOMMODATION

Another reason why tenant insurance policy holders rent is if your job moves to a different part of the country, perhaps temporarily, or that you are not confident will be a permanent arrangement. It makes sense to take a room or a small flat rather than go through the financial and emotional hassle of buying a property that you may need to sell in the near future. If you are considering moving to a new area, renting for six months to see what it is really like is an investment in your quality of life: if you find out that you don’t like the area, you can move to another one far more easily than if you had bought property.

Two other groups of people that require temporary accommodation are students who are unlikely to be able to afford a property, often go to college away from home, returning for holidays.

Many people don’t think about taking a holiday cottage as rental accommodation, but it is, in its truest form, going away for a few weeks and staying in a property by the sea or a remote area of the country, or abroad.

The advantage of renting temporarily is that it can be a safer bet in times of economic uncertainty. If you invest in a property when prices were high, a fall in the market – as happened in the early 1 990s – can mean you lose money on your investment, whereas rental prices are typically less volatile.

However, the disadvantage of renting in a rising property market is that you are not getting any return for your money apart from a roof over your head. Rent payments are ‘dead’ money, while the price of the property you might eventually want to buy will go up, possibly out of your range.

It’s your pension

Some people are concerned that they may not have enough invested to pay a nice bonus for retirement, and decide that by letting out property they can ensure that they receive an income while holding on to the equity of the rising value of their bricks and mortar. Few landlord insurance customers make a lot of money from rental income: the bulk of their profit is gained through cashing in on the rising value of the properties they let. While property prices have gone up in recent years, they can, of course, fall as well, and it is vital to allow for periods when you are ‘in between’ tenancies when calculating your anticipated income from letting. As always, when making crucial decisions about your future finances, it makes sense to get advice from an IFA.

Room to let

One of the many ways in which people let property is by renting out a room in their own house. There are many reasons why you might choose to do this:

• To help pay the mortgage or for extra income.
• For company, to combat the loneliness of living on your own, maybe after the children have fled the nest or after being widowed or divorced.
• As a way of staying in a much loved residence that would otherwise be too big.
• Because you have the space and feel it is the right thing to do to share it.

You may be able to offer some self-contained accommodation, such as a granny flat with its own bathroom and kitchen. Sometimes the arrangement begins informally as a way of helping out a friend who needs a room for a short time. If you want to try out such an arrangement but do not want to enter into long-term commitments, you could try:

• Local churches, which often have links with groups in other parts of the country and may know of someone looking for a local room.
• English language teaching schools. There are many of these around the country, mainly based in cities and some towns, where students come from abroad to attend a course for a set period and need somewhere to stay.
• Local companies or other large employers, who might be taking on someone based at another location, perhaps as a temporary arrangement.

First Time Landlord

Don’t be afraid to ask a local specialist letting agent for advice before you start. They are likely to want to help because they’ll be aware you might decide to market or manage the property through them. Look in local paper advertisements and ask letting agents for their rental lists to get an idea of local demand and prices.

You’re relocating

Another reason you might opt to let out your property is if you need to move to work away, possibly abroad, and do not want to sell your home because you love it or are unwilling to lose your place on the property ladder. Letting out your home allows you to return to it when it is convenient for you to live in it again, while still covering the cost of owning a property. The downside is that, unlike other properties, this is your home and you have emotional ties to it. You may not feel comfortable with the idea of others living in it, and the inevitable wear and tear that goes with occupancy may feel like an intrusion when it is not your children’s shoes that scuffed the paintwork.

Working away from home

In today’s job market, change happens fast. You might take on a temporary contract for, say, six months in another part of the country, or be offered a job elsewhere with the prospect of changing your conditions of work to do more from home, or from a base nearer to it. You may take a job elsewhere but want to maintain the equity of your current home, or keep your children attending a school where they are happy. There are many circumstances in which it makes sense to take on a flat near work but keep hold of your family home, even if you can only be there at weekends. You might then choose to rent out a spare room in the flat, thus improving its security by having someone living there all the time, and offsetting some of your own costs. The tenant gets a good deal because they will probably have the place to themselves when they most want it, at the weekend.

Your student children need a roof over their heads

One factor that has prompted a number of people to take the plunge into letting is the high costs of student accommodation at a time when further education is already expensive. Buying a property near the university your son or daughter attends means they won’t have to pay any rent if you choose not to charge them. You may well be able to let out other rooms in the property, and will be confident that at least one of the tenants has your interests at heart, so the property should be treated fairly well, Of course, you could still be the landlord insurance customer and will have to shoulder the legal and practical responsibilities that this entails.

You inherited property

Many people inherit property from their parents. They may choose to move in to it themselves, or to sell it. However, it may not be easy to market or they may be reluctant to let go of what may be a much-loved property that houses many memories, or prefer to see it as an investment. In such cases letting is an option.

You want a holiday home

Buying a second property as a holiday home is a popular choice for many who wish to combine property investment with pleasure. The advantages of this arrangement are that you have ready access to your holiday accommodation, but cover its costs through letting it to other occupants during the holiday season. If you decide not to holiday at it one year, you can rent it out instead. You may decide to limit the renting to friends and family, which may make you very popular within your social circle but won’t necessarily earn as much. Buying a holiday home to let out is an excellent way of establishing a foothold in a new area, perhaps with a view to retiring there.

A disadvantage is that the property may only attract interest during the holiday period and could stand empty (unoccupied property insurance) for half of the year while you still have to pay the mortgage and upkeep. There is also the hassle of advertising for and dealing with holiday renters, although you can pay an agency to do this. Also, the holiday home is likely to be some distance from where you live, so you will not be able to deal with on-site problems quickly or easily. You’ll need to do your sums and your business plan carefully if you plan to treat a holiday home as an investment.

There are other benefits too in becoming a landlord insurance customer. There is the satisfaction of providing a service to others (how would students manage their accommodation needs without landlords?) and, for some, letting a room at home is a source of companionship. If you are interested in the property market, you can enjoy the stimulation of researching market conditions and viewing properties without the emotional complications that are inevitable when looking for a home for yourself.

Do Some Research

Talk to as many people as you can to find out if buy to let property investment is for you: it’s a hard-nosed business that doesn’t suit everybody. A good place to start researching is the internet. You could also join a local private landlord association, which you can find via the telephone book or on the internet.

Other ways to make money from property

You may have great faith that property prices will at least stay solid and possibly continue to rise, but lack the commitment to be a landlord. If so, there are a number of other routes to property investment:

Being a landlord insurance customer is not easy. There are an enormous number of legal and safety checks to undertake, a lot of administration to keep on top of, and, of course, part of the role involves dealing with people, which brings its own complications. In addition, when a pipe bursts or a boiler goes cold, you get the call and need to sort out the problem fast. You will certainly need to set aside several hours a month to deal with administration and problems: one survey found the average was 12 hours a month – that is a day and a half of working time. Of course, much of this work can be done outside office hours, but that means it will eat into your leisure and family time.

Are you right for the role?

Not everyone makes a good landlord insurance customer. You need to be:

• Well organised to deal with all the paperwork.
• Prepared to get your hands dirty doing routine maintenance.
• Fit enough to shift beds and wardrobes.
• Good at dealing with people.
• Able to handle the responsibility regarding the legal regulations that come with the role.
• Equipped with a cool business head.

If this doesn’t sound like you, you probably shouldn’t become a landlord insurance customer, or you need to pay other people to deal with the hassle, which will eat into your income.

Supporting cast

A landlord needs a strong supporting cast of trusted trades people such as a plumber, carpenter and electrician, plus possibly someone to help with administration such as inventories and checking regulations (so you’ll know when your safety certificate expires, for example). Ensure that any tradesmen that you employ have the correct public liability insurance policy in place. A good letting agent should be able to help here. Without such back up, dealing with the inevitable problems can be stressful and expensive.

Also as a landlord you must a let property insurance for your rented building. At Active Insurance we offer fantastic landlords insurance rates for all types for let properties. Give us a call for a free no obligation let property insurance quotation or visit our get an online landlords insurance quote at http://activeinsurancecompany.co.uk/property/landlord/

In a market where the rent is determined by the number of rooms, size matters. Most rented properties are small: a third of privately rented properties are flats and the remainder are mainly terraced or semi-detached houses. Demand is high: rising property prices force many buyers to wait longer while they save a deposit, so they are fuelling the rental market.

Most of the 1.5 million tenants are young adults, nearly two-thirds of them under 35 and a quarter are yet to celebrate their 25th birthday. Many are professional single people or couples who either can’t or don’t want to buy into the property market and value the sense of freedom that comes with renting: if they want to move on, they can do so quickly and easily. Other factors driving tenant insurance customer demand are rising employment levels and continuing demand from first-time buyers unable to get a foot on the housing ladder. Increased immigration into the UK following the accession of the eastern European states is also having an impact in some areas.

The Pluses and Minuses

On the face of it, property is a sound investment: prices have risen in recent years, in many cases far out performing what can be earned from a deposit account or equity investment. Letting offers a rental income plus the benefit of any growth in the property value. However, prices can fall as well as rise (as shown by drops in value in the Eighties and early Nineties) and landlord is responsible for the maintenance of the property and has to find tenants willing to rent it or pay someone else to do this. It is important to view property investment as a long-term project, not a get rich quick scheme.

A higher percentage of the earnings is from the rise in value, as opposed to the profit made on the monthly rent. The introduction of buy-to-let-mortgages has encouraged more people into the letting market. These specialist deals are designed for those buying property expressly to let out to tenants. Such arrangements account for a tenth of the lettings market.

Dreams of yield

The key word for landlords is yield: how much the property is earning for them. Yield can be calculated in lots of different ways, but in its simplest form, it is the total amount of rent, minus running costs, divided by how much the property cost. Multiply the final figure by 100 to express it as a percentage.

The reason it is really important to calculate yield is that you may find your money would give a better return on investment just left in the bank or in some other investment scheme. Some buy-to-let areas are now so competitive that the yield on a rented property is hardly worth any more than putting your money in the bank.

Make sure that before you commit your hard-earned cash to buy-to-let, you discuss your options with an independent financial advisor (IFA) – it may be that you can get better returns from other investments, avoiding the associated administration of buy to let altogether.

One difficult aspect for both tenants and landlords is to get the legal aspects right. For example, tenants can no longer have loud late night parties nor can landlords kick out tenants when they like. If you don’t get the procedures right as a landlord, you may be sued or, if a tenant, lose your deposit.

The Rental Market

Rental prices are typically more stable than property prices and renting continues to grow in popularity across the UK partly due to changes in social trends, including:

• People preferring to rent or having to as they can’t afford to buy.
• More students going to university.
• Increased immigration requiring cheap rental accommodation.
• Increased workforce mobility encouraging people to rent rather than buy knowing they may have to move again within a few years.
• Those on benefits who are being encouraged and enabled to rent from the private sector.

To be successful, landlords need to buy the right property in the right area, but what is ‘right’ will vary from place to place and from year to year. In the past, two-bedroom terraced properties have out-performed the market and this may continue; but in some areas it might be one bedroom properties or houses in multiple occupation that are converted into smaller flats and homes when cashing in the investment that come to the fore.

Trade In

Whether a tenant or landlord, find a letting agent who belongs to a professional body – or if a landlord join one yourself. They will help to make sure that you get the right advice, contacts and information on good practice, and should reassure tenants of your good intentions. Landlords can also be accredited by some local councils and student accommodation officers.

Tenants Take

Of course, landlords are only half the equation: many of us will rent property at some time in our lives, and being a tenant is not always easy. Choosing the right property and landlord and the rights and responsibilities of both tenant and landlord need to be taken into consideration.

Landlords that over borrowed have received a nasty shock. Prices have stalled and is some cases fallen. Lending criteria for buy-to-let investment has tightened and mortgage costs increased. Even worse, an oversupply of certain properties (such as flats in major city centres) led to some highly publicised buy-to-let landlords and investment companies going bust.

However, this loss in value is likely to be short term and successful property investors know that buy to let is a long-term investment of at least ten or more years. So if you own a buy to let property, you need to ride out the changing property prices by thinking long term. In addition, if you are just starting out in the buy to let property market, careful, independent research of the local economy, the rental market and different property types are required to be sure you gain a good initial and continued return on your investment.

Investing in a buy to let property is the same as investing in a new business: you need to raise finance via loans/mortgages; make your properties attractive to gain the right calibre of tenants; keep your accounts in order; let within the law and sell at the right time to maximise your profits. Being a landlord is a demanding role that can soon become a nightmare if you are not prepared.

Active Insurance is a leading UK independent brokers specialising in property insurance. If you are looking for cheap landlords insurance, speak with one of our dedicated specialist insurance account handlers on 844 477 9805 or alternatively visit our website http://activeinsurancecompany.co.uk/ for a free online quote.