Landlords are reviewing their portfolio strategies ahead of the Autumn Budget, with searches for company ownership, tax changes and property sales rising sharply, according to research from CIA Landlords.
Analysis of Google Trends data found that searches for “transfer property to limited company” and “property SPV” (special purpose vehicle) both increased by more than 5,000% in the past month compared with the previous month. Searches for “buy to let limited company” also rose by more than 5,000% year on year.
Interest in tax changes and selling increased over the same period. Searches for “landlord tax change” recorded a breakout rise of more than 5,000%, as did searches for “sell buy to let” and “selling rental property”.
The figures suggest landlords are exploring several options, from changing how they own properties to selling some or all of their portfolios. However, search trends indicate interest rather than confirmed decisions or transactions.
CIA Landlords said that whichever route landlords consider, changes to property ownership or occupancy can affect insurance requirements. It is encouraging property owners to check their cover before making significant changes.
Checking insurance after a company transfer
Transferring a property into a limited company or special purpose vehicle changes its legal ownership and may affect who needs to be named on the insurance policy.
CIA Landlords says a policy taken out in a landlord’s personal name may no longer provide appropriate cover once the property title has been transferred. Landlords should check the terms with their insurer or broker and arrange any necessary replacement cover in the company’s registered name.
Landlords with multiple properties should also check that each property is insured under the correct policy and ownership details, particularly where only part of a portfolio is being transferred.
Insurance considerations when selling a rental property
Selling is another option landlords appear to be exploring. With the average time to sell a home reported at five months, landlords should consider potential void periods and check how their insurance will respond while a property is on the market.
Standard landlord insurance policies often include conditions covering how long a property can remain unoccupied. Where a property is empty for longer than a specified period, commonly 30 to 60 consecutive days, specialist unoccupied property cover may be required. Depending on the policy terms, landlords could otherwise face restrictions on protection against risks including escape of water, fire and accidental damage.
Conditions vary between insurers, so landlords should check their policy wording or speak to their insurer before a property becomes vacant.
“Our research shows that speculation before the Autumn Budget is driving property owners to look at their portfolios and evaluate their options,” said Nick Long, managing director of CIA Landlords.
“What’s important to understand is that if a landlord moves a property into a limited company or SPV, it’s usually the company, not the landlord personally, that will need to be named on the insurance policy. To avoid coming into complications down the line, it is better to have this arranged with your insurance broker or insurer before the transfer than to find out afterwards that something has been missed.”
“This also applies to properties that are between tenants or are on the market,” Long added. “Landlord insurance policies typically have conditions around how long a property can be empty, so it’s important to check the wording of the policy. Whether a landlord decides to move a property into a limited company or sell up, they should speak to a qualified financial advisor and their insurance broker or insurer to ensure that they are covered.”
