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Here are a few things for every Real Estate investor or property owner to keep in mind.
1) The increasing costs of rebuilding
The rebuild cost is the amount it would cost to completely rebuild your property if it was destroyed beyond repair. Rebuilding costs are usually lower than the market value of the property but in some cases they can be more than the sale price. For example, rebuilding a listed building often ends up costing a lot more than rebuilding in a prime location. Costs also vary significantly across the country depending on demand for building services and labour.
Commonly, sums insured increases are based on rebuilding cost indices but after several years these indices may not accurately reflect the actual rebuilding cost. That’s why we recommend obtaining a professional rebuilding cost valuation every five years.
As part of NIG’s refreshed Premier Property Owners proposition we’ll consider offering a property owner a valuation bursary towards a professional valuation, ensuring sums insured are accurate. And what’s more where there is an up to date RICS valuation in place, we will waive average.
2) The risks of negligent (or a lack of) tenants
Owning a property without tenants means that not only does the investor lose income, the unoccupied property poses high risks. It opens the door to security breaches, malicious damage and high maintenance costs. That’s where our in-house risk team will advise how best to secure the premises to keep your property protected. When making security recommendations we’ll take into consideration whether you’re looking to attract new tenants and in that case maintain appearances – we want to give you the strongest prospect of re-occupancy.
Property investors with tenants face a different sort of risk. Getting the right tenants isn’t easy. And property owners with tenants in situ need to take out an additional layer of insurance to cover theft and malicious damage, the increased risk of fire, explosions, water damage, structural damage, electrical and plumbing damage, damage to fixtures and fittings and of course wear and tear. NIG’s Premier Property Owners policy includes cover for malicious damage by tenants as standard with £10,000 limit in any one claim.
3) The impact of climate change on your building
With sea and groundwater levels rising, flood predictions worsening, and more severe storms predicted each year, properties are being exposed to even harsher weather conditions. This increases the risk of collapse, significant loss of value, water damage, deteriorating indoor climate conditions and reduces the building lifetime.
Buildings are vulnerable to climate change so it’s pertinent to safeguard against seepage, subsidence and flooding. How does NIG approach this? We have a flood modelling system in place which is sophisticated and takes into account the risks spread across your whole property portfolio. And if you’re looking to add to your portfolio by investing in a new building, we can offer pre-purchase advice on flood risks for specific premises. In addition, our Risk Control Team will work with you to reduce your risk exposure.
4) The costs involved to rehouse tenants and availability of alternative accommodation
In the face of a major loss have you considered whether you could afford to support your tenants? The cost of rehousing a tenant following a large claim can vary significantly and the chain of settlement is often complicated. Depending on the complexity of the property damage, repairs can take a few days to a few months to complete. And during that time, you’ll want to provide suitable alternative accommodation to support your tenant/s and maintain their tenancy. As the supply of rental accommodation dwindles and the demand from tenants continues to go up, experts predict that rents in the UK will climb by 15% over the next five years(1).
In response, we’ve updated our Premier Property Owners product and increased the automatic extension for providing alternative accommodation from 20% to 33%, of the sum insured.
Why choose NIG to cover your property portfolio?
Our refreshed Premier Property Owners product is designed especially for mid-market property owners and investors and covers commercial, residential and mixed portfolios. We’ll consider including a valuation bursary to ensure your buildings are valued at the correct rebuild price. Therefore, if the worst should happen, you won’t be left out of pocket.
When you choose NIG, you are electing cover from an established insurer who understands the UK property market. We have a Real Estate underwriting team to make sure you receive specialist advice on every quote.