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Rent guarantee insurance

POSTED ON 21 AUGUST 2017

… and why a landlord can’t live without it

With thousands of tenants in arrears each year, rent guarantee insurance is more important than ever, so here we outline all of its main benefits and conditions

Protecting against financial loss is becoming ever more important. And in the case of private rented accommodation, we know that if the situation does not work out with the tenant – for whatever reason – their contract can simply be terminated. In this case, the rental deposit paid by the tenant may not need to be returned to them.

However, because of this tenancy contract (which, of course, always needs to be honoured), you could end up losing a substantial amount of money if your tenant fails to pay any given rent payment in full, or indeed at all. If you are relying on that rent money to significantly contribute toward the mortgage repayments for that property, you could suffer exponentially.

With 9.3% of all tenants in Britain going into arrears each year, rent guarantee insurance could be the answer to these problems. Of course it is optional to have the cover, but having it helps to protect you, as a landlord, from being at risk if your tenants have difficulty paying their rent. Making sure you get paid, even when your tenant defaults, is another benefit of this cover. However, it’s important to note that both landlords and tenants will have to meet certain conditions for a tenancy to be covered by rent guarantee insurance. For instance, most policies will require that the landlord has an ‘assured short-hold tenancy agreement’ in place, and that the tenant has passed credit and reference checks.

There are different options for varying levels of cover. It would be recommended that you seek a policy that offers rent protection for non-payment of up to twelve months at least. Within the policy, legal expenses cover is often provided as standard.

Sometimes there will also be additional legal cover which will include access to a panel of solicitors who can offer you legal help and advice on a range of matters.

With possession fees running at an average of around £800, along with the changes made to the Immigration Act in December last year (which insists that you may have to issue notice), this further legal cover recommendation is indeed justified. There are many landlord insurance providers to choose from, and what they offer will of course differ from each other but, ultimately, it’s down to you as landlord to find the most suitable policy to cover your specific circumstances and needs.

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