A steep rise in renting rather than buying should serve as a reminder of the importance of getting the correct home insurance for all concerned, experts have warned.
The Residential Landlords Association says there are several reasons for the increase in the number of renters, including:
- the difficulty of obtaining a mortgage as banks become choosier about new customers;
- a rise in the deposit required on mortgaged properties, with a 20% downpayment now common;
- more people struggling to save up to buy a home because of the effects of the economic downturn; and
- a drop in the number of new houses being built meaning people who have to move home may struggle to find a suitable purchase to buy in the new location.
While there are some insurance benefits to renting rather than buying, such as avoiding the need to buy buildings insurance (this is usually the responsibility of the landlord), it's important to remember the landlord is not responsible for insuring a tenant's personal property.
If a problem with the house, such as a burst pipe, causes damage to belongings it's possible a tenant may be able to sue the landlord to cover the costs, but this can be an expensive and lengthy process and doesn't exactly help landlord-tenant relations.
Contents insurance designed specially for tenants can include cover for any accidental damage to items belonging to a landlord, such as those in a furnished flat. While a tenant policy won't normally cover the full replacement costs, it may cover the loss of any deposit.