The last decade has seen a real boom for property investors in the buy to let field. When you compare it to the risky and unstable nature of stock market investments, property investing has for some time provided a winning combination of security and good returns.

That’s all about to change now though – latest stats indicate that the buy to let bubble will soon burst. The profit that can be made on lettings is falling – tenants are finding it just as difficult to pay rent as homeowners are to pay their mortgage payments. Home sellers, unwilling to accept what they regard as insultingly low asking prices for their properties, have been turning to the rental market and letting them out. What that has meant is a large rise in the number of rental properties in the UK, which means rents have dropped by approximately 4.8% over the year.  

That said, demand is on the increase as well. Less people than ever are buying houses despite the prices dropping (a case of wait and see how far they fall), and the recession’s job insecurity is leading to people increasingly turning to rented property. However the buy to let option is still an attractive one, and existing homeowners can still get a buy to let mortgage with a 15% deposit. What counts as far as buy to let mortgages are concerned is that the rent is forecasted to bring in a minimum of 130% of the total mortgage repayment value, rather than depending on your main income level.

The key to success in the buy to let market in the current climate is patience – you need to take a long-term approach. The yield on renting will be at a low level in the short to medium term, with the prospect of capital gains on hold for the time being. The onus is on the property owner to make sure they are doing everything they can to attract tenants, as well as taking measures to protect themselves. Buy to let insurance is essential to cover both buildings and contents (if furnished) and those packages are difficult to find and can often be an additional cost factor many don’t add into their figures. Insurance should be in place for any let, whether it’s on  a long term basis or a short hold tenancy agreement, to protect residential property owners and landlords from the unexpected risks.

If possible a buy-to-let insurance policy needs to give equally broad levels of cover while the property is let as when it is unoccupied.Look for policies which contain public liability insurance with a minimum £5 million indemnity per claim for both owner and tenant. Dont forget employer’s liability insurance if you pay a cleaner or caretaker to look after the property.  

The cream of the crop in buy to let insurance will also take care of alternative accomodation costs and loss of income should you lose out on pre-booked rental.There are some policies which, if you happen to suffer loss or damage when there is an insured event taking place at the property, will give you double the amount covered in your contents policy – automatically. The same is true for a decent holiday home insurance or overseas property insurance policy.