Key concerns of a large property portfolio holder
It has not been an easy journey for commercial property landlords over the last decade. The financial crisis left many large property investors nursing heavy losses, but the market seems to be on the up again. The combination of an improving economy, an increase in rental values and a more controlled approach to new development means that the outlook is brighter for the UK’s commercial landlords.
However, that doesn’t give you as a landlord carte blanche to simply sit back and relax. There may be lots of money in commercial property investment, but despite the positive signs, a number of concerns remain. You’ve worked hard to build up your property portfolio and you certainly don’t want to put it at risk, so let’s take a look at some of the main concerns faced by large property portfolio holders and how to minimise the risks.
Loss of rental income
Probably the main concern for all commercial landlords is the potential of lost earnings on a particular property. It’s generally agreed that it’s easier for investors to understand residential investing, but commercial investments bring more lucrative rewards when done well. And with this, of course, comes the risk of greater losses if things don’t go so well. As any landlord knows, there’s an ongoing danger that a property may not be in a fit state to let if an insurance claim is made on that property. If restructuring or building works are required, commercial tenants will be inclined to look for alternative premises. Depending on the work being carried out, this period could stretch over many months – during which time you, the landlord, will receive no rental income. To overcome this concern, you can choose an insurance policy that includes cover for lost rental income, such as the policies brokered by Stride Limited. (It is worth noting that rental income cover should not be confused with rent guarantee insurance which covers tenants defaulting on their payments).
The right tenants
All landlords want to find the right tenants and this can be significantly harder for commercial property than it is for residential property. If demand for your property diminishes, then you may be forced to reduce the rent. Being fully-versed in local business culture can help you make the right decisions throughout the process. As a landlord you should always protect yourself by carrying out business background and accounts checks.
Higher claim potential
By its very nature, a commercial property has a higher liability claim potential than a residential property. Properties intended for commercial use will typically have a far greater footfall each day. And with more people comes an increased risk of those people injuring themselves or damaging the property. Add to that additional factors such as severe weather conditions or vandalism and it is clear just how important it is that you have the right advice and insurance cover in place.
It’s hard to analyse the property market without referring to the economy, which poses a very real concern for all landlords. Another downturn in the economic cycle could spell disaster for landlords of commercial and residential properties alike. When a recession occurs, the knock-on effect is that jobs are lost and businesses suffer. If a business that is renting one of your properties is forced to move into smaller premises or goes into administration, your rental income will be affected just as much as the individual or business.
We all want to do business with people we can trust – and having confidence in an insurance provider is an absolute must for all landlords. As any landlord will agree, you want guaranteed stability of your insurer and broker, predictable premiums, and quality insurance cover you can rely on. At Stride Limited we understand that while price is always a consideration, you want cover that is as reliable as it is competitive. We recognise that you are looking for policies with added value that can get you through the tougher times. We also know that you want to be able to reach an account manager easily and get your issue resolved quickly and efficiently.
Stride Limited is a specialist property insurance broker offering you an independent, reliable and responsive service. Our team of experts offer quality, bespoke policies arranged with the UK’s leading insurers, at an affordable price and with a personal service. If you are a commercial landlord looking to minimise your risks then we can help.