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  • The most frequently asked questions for landlords

  • Landlord faqs

    Starting out as a new landlord can sometimes be confusing. That's why we've put together this guide. It'll help answer some of the most frequently asked questions from new landlords.

    What is landlord insurance?

    Landlord insurance is a combination of different covers designed to protect a landlord. It is sometimes also known as buy-to-let insurance. Landlord insurance is important for anyone renting out their property. Even with the best tenants, things can still go wrong and landlord insurance is there to protect you from accidental damage to loss of rental income.

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    What does landlord insurance cover?

    Landlord insurance should always include buildings insurance, which covers damage to the structure and the cost of any repairs that may come about. Contents cover is another important part of any policy. This protects against the cost of replacing any fixtures or fittings that may be damaged during the tenancy. Other things potentially covered by landlord insurance could be liability protection in the event that a visitor to the property is injured

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    Do I need landlord insurance?

    Landlord insurance is not a legal requirement, however, it is highly recommended if you are leasing a property. A policy is important as it protects you from financial loss as a result of damage to the property such as fire, flood, natural disasters, and other liability issues associated with your rental property. It may also be a requirement set out in your mortgage. If your rental property is damaged and you’re uninsured, the cost of repairs will come out of your pocket.

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    How much does landlord insurance cost?

    Generally, the cost of a policy depends on whether you are insuring a house or a flat and whether it is furnished. If you rent your property to students you may have higher charges, or not receive cover by certain landlord policies at all, than if you rent to a professional couple or a family. Choose a policy which you can tailor to your needs with a range of optional extras and you can save money in the long term.

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    Is it different from home insurance?

    While home insurance and landlord insurance may sound like the same thing, they are classed differently because, as a landlord, you receive an income through rent. While both types of insurance cover damage to the building, your home insurance may not cover you if the property is let out to tenants. This would have to be confirmed with your insurer.

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    How does loss of rent insurance work?

    Loss of rent insurance protects you against lost income if your property becomes uninhabitable, or if an incident causes a reduction in your rental income. An AXA policy can cover a shortfall in rental income for up to 36 months.

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    How much should I charge in rent?

    The amount of rent charged is generally based upon the location of the property and its local amenities, whether the property is furnished or unfurnished, the kind of tenants you are trying to attract, and the desirability of your property based on its size and condition. It's always best to speak to an agent to get their thoughts on rental values within your area as well as consulting with rental indexes.

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    How do I calculate my rental yield?

    A rental yield is calculated by dividing the amount you paid for the property by the amount you expect to receive in yearly rent. Your rental yield will be affected by the cost of owning or managing the property and so you will have to calculate a net yield to get a more accurate return on your investment.

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    How much tax does a landlord pay?

    A landlord will normally pay tax on any profit made from renting out a property. The amount of tax you pay on your rental income will depend on your situation. Your profit is classed as the amount left once you've added together all your rental income and deducted any allowable expenses. Rental profits fall into the same tax bands as income you receive from your business or employment, i.e. 20%, 40% or 45%.

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    How much stamp duty will I have to pay?

    Recent changes to stamp duty mean that anyone buying an additional property, which includes buy-to-let landlords as well as those buying holiday homes and second homes, will have to pay an extra 3% in stamp duty. Buy-to-let stamp duty rates are tiered and reflect the price of the property, meaning you will pay 0% for a property below £40,000 up to 15% on a property worth £1.5m or more.

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    How do I protect my tenant's deposit?

    It is a legal requirement that a tenant's deposit be placed in a tenant deposit protection scheme. The government-backed schemes ensure that tenants will get their deposit back if they meet the terms of your tenancy agreement, don't damage the property and pay the rent and bills. There are separate schemes available depending on where your property is in the United Kingdom.

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    Should I furnish my rental property?

    As well as keeping your property in a good state of repair, it may be worth considering offering your tenant’s furnishings as well. Whether you fully furnish or part furnish your property is up to you, but there are some considerations to take into account. If you’re letting your property to a family, it might be more likely that they will have their own furniture; however, if you are chasing the young professional market then offering a fully furnished property will attract tenants. If you do provide furniture, make sure it complies with all furniture and furnishings regulations.

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