Landlords 'must take out insurance' - buy to let mortgages

16 December 2008

People with buy to let mortgages have been advised to take out rental guarantee insurance as a safeguard against the current economic situation.

Property investors must take steps to "manage their risk" in the current climate, according to a spokesperson for the Association of Residential Lettings Agents (Arla).

He noted that many landlords face the possibility of tenants being unable to pay their rent, saying that even reliable occupants "may not know what's around the corner" in times of recession.

"There are ways that landlords can manage that risk and the most important way is to insure themselves," he remarked.

And he recommended that buy to let investors should always carry out credit checks on potential tenants whether there is an economic downturn or not.

Recent figures from the National Landlords Association show that 71 per cent of landlords expect rent arrears to rise next year.