What advisers need to know about Generation Rent and protection

Persistent affordability problems, however, mean that buyers are as likely to be professional landlords as those getting their first foot on the housing ladder.

As early as January 2017, the Council for Mortgage Lenders estimated that while over 60 per cent of landlords let out just a single property, the 7 per cent owning five or more accounted for 40 per cent of all rented dwellings.

That means 'Generation Rent' is not disappearing any time soon. Consultants PWC estimate that the declining stock of affordable homes and rising property prices will see more than half of adults under 40 living in privately rented houses by 2025.

For advisers this presents challenges, but also opportunities.

Declining home ownership poses obvious issues for advisers’ mortgage books, but also their insurance business, too.

Fewer homeowners – and even fewer mortgagees, given that a majority now own outright – has implications for life cover.

Less obviously, but perhaps no less profoundly, it has significant implications for sales of protection and general insurance, too. 

There are two aspects to the opportunity for advisers when it comes to insurance.

While the number of buy-to-let mortgages slumped following the tax changes in 2016, the insurance market is still large – and also largely untapped.

The first is that the decline in home ownership is not a decline in property ownership. The houses are still owned by someone, and landlords have different, but still significant, insurance needs to those who own their own home. 

The second is that a decline in home owners does not mean a decline in households; indeed, with the population continuing to grow, quite the opposite is true. There are more households than ever, and tenants in the private rental sector also represent a substantial market that is, as yet, widely ignored.

To make the most of these opportunities, advisers need to understand both.

Protecting property owners

While the number of buy-to-let mortgages slumped following the tax changes in 2016, the insurance market is still large – and also largely untapped.

Indeed, if anything, with the shift towards more professional landlords, the opportunity has grown.

As a report earlier this year by analysts from GlobalData put it: “This should benefit insurers as career landlords will have more time to focus on all areas of managing a property, including making sure it is properly insured.”

Its report estimated that the size of the landlord insurance market alone is £807.3m, up from £759m in 2016, with massive underinsurance in the sector as well.

Some surveys suggest that 35 per cent of landlords have no specialist cover, according to research by simplelandlordinsurance.com.