Holiday Lets – Holiday home Insurance for Landlords

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Landlords that are considering using a property as a second home or as a holday let need a holiday home insurance policy.

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It sounds perfect: buy a property somewhere you enjoy visiting (and perhaps plan to retire to), use it when you like, and get it to pay for itself the rest of the time by running it as a holiday let. In reality, a lot of landlord insurance customers operating holiday lets are glad to break even in this competitive and labour-intensive market. However, this is an expanding market: more than 4 million people rent cottages and holiday apartments every year, and self-catering holidays are increasingly popular.

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.

[stextbox id="info"]Although holiday lets attract far higher rent than residential lets, especially in high season, there are significant marketing, administration and managing costs. Using the property for your own breaks will reduce the income you receive, and you will probably have to visit regularly to check on its condition, while arranging repairs from a distance can be a nightmare. Finally, you can buy a lot of holidays for the cost of a house or flat! However, you will benefit from any rises in the property market and if you attract a full complement of bookings, you will generate a sizeable income.[/stextbox]

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.

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Put together a handbook about the property with notes on how the hot water system works, when rubbish should be put out, and contact details if there is a problem. Include an inventory of all equipment provided, with a polite request for any broken items to be replaced and any damage or faults notified.

In addition, put together a separate folder containing local information, such as shops, attractions and emergency contacts, such as the doctor. A visitor’s book allows guests to leave their own suggestions and may provide you with useful feedback.

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Landlord Insurance Policyholders – How to Find Tenants

Posted by Active under Landlord News

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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.

[stextbox id="info"]You must take out specialist landlords insurance cover on the buildings and landlords contents for your let property: a standard household policy will not be suitable. Your policy should include public liability cover in case someone suffers injury or damage on the property.[/stextbox]

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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Landlord Insurance Policy Holders Knowing Their Market

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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.

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