RESIDENTIALlettings
bias towards the rights of the tenant; landlords found it This has several positive effects on the way the agent runs his
increasingly difficult to get justice. Further legislation brought the business. As each Agent is accountable for the profitability of their
payment of Housing Benefit directly to the tenant, who all too own scheme, the Agents’ own tenant selection procedure and
frequently found more entertaining ways of using the benefit, than successful management of their tenancies is maintained to a high
using it to pay his rent. standard so that they make their scheme as profitable as possible.
In recent years, prosperity; or, perhaps more accurately, boom, In the normal run of insurance, where a tenant disappears
created a relaxed attitude towards debt and, worse, to bad debt. leaving unpaid rent, the agent finds it too difficult and not cost
Tenants are seemingly happy to walk away from a tenancy owing effective to find the tenant and claim on behalf of the landlord
rent, agents, in some cases, seemingly happy to let them. After all, (or the landlord does it himself). The insurer, subject to validity,
it takes a great deal of time and money to find a missing tenant pays out. The landlord is happy.
and persuade them to pay their dues. The agent may not be so happy as his fee income may be
“The pressures of running a business, finding absconding compromised in the event of too many claims. No rental income
tenants, finding new tenants to replace them, keeping the landlord means no management commission.
happy, all have led agents into the habit of writing off missing When the agent is part of Philip’s National Residential scheme
rents,” says Philip. “That is all however, it is very much in his
very well when rents are interest to minimise claims.
sufficiently high and business
We developed an
The agent will pay the landlord
is doing well.” then attempt to find the tenant to
Now, though, we are in
insurance product under
get the rent repaid. In this way, he
recession once again. Money and his landlord are happy – and
is tight, profits not so high
our National Residential
he retains his share of the profits.
and tenants are losing This special product is now
overtime or jobs, separating
brand that enabled the
exclusively available through Let
under stressful conditions, Insurance Services - but it isn’t
struggling with credit card
letting agent to insure
suitable for every agency; the agent
debts... the black hole can get has to be sufficiently well
worse each day.
his landlords’ tenancies.’
established and fully aware of the
Meanwhile, the landlord greater responsibilities involved.
juggles with mortgage debt Training is provided and the
and rents that may not be rising as rapidly as costs. Dropping rent scheme is branded to each agent, who may set his own premium to
protection insurance seems an economy. That is when the spectre suit his market; a typical fee would be around three per cent + VAT
of unpaid rent rises up to compound the situation. – similar to other schemes providing much less cover. This means
that for a tenancy where the rent is £500 per month the premium
WHAT IS THE ANSWER? would be £15 + VAT per month. This is a small price to pay for the
Philip Cook believes that insurance is still the key, still affordable, peace of mind of knowing that the rent will be paid each month
still vital to the success of any letting agency. and no unforeseen legal costs will be incurred.
This explains his link with Let Insurance Services, where he
now sits on the board. Launched by Michael Portman and Robert IS IT POPULAR?
Lumley in January 2008, the company’s aim was to provide tenant “Yes!” says Philip. “It is very popular where we have offered it;
referencing and specialist cover for landlords and tenants, supplied for agents that suit the scheme it is an excellent way of providing
through professional agents. While still young, the firm is making a very good service and being rewarded for it, it is a win-win-win
good ground, finding a niche for a smaller, personal service-based plan!” For those yet to meet the specific criteria, Let Insurance
insurance provider. Philip’s experience is a great asset. Services provides a choice of other insurances for rental guarantee
Some landlords still think the regular Rent & Legal Protection and legal expenses – and they are easy to manage. These products
Scheme fees are high, that the agent should make sure that the range from comprehensive Rent Protection and Legal Expenses
tenant is ‘good for the rent. Eq’ ually, some agents believe that they Insurance with cover for up to 12 months unpaid rent (up to
are collecting money from landlords, for a small commission, £5,000 per month), legal costs to gain vacant possession and for
passing over considerable sums to the insurer – and only very other disputes (up to £50,000) and up to two months’ rent at 75 per
rarely making a claim, raising issues that do not encourage the cent while a new tenant is found to a standard cover which suits
purchase of insurance. the more cost conscious.
The solution lies with Philip Cook’s innovation. At Ashton Michael Portman says, “Our letting agent clients are very happy
Wingate, Philip had decided that there was another route to with the choice offered through this LIS range of Rent Protection
providing cost effective protection for landlords, particularly for cover. Coupled with tenant referencing, rent protection should be
the letting agent who is well established with longstanding landlord a key part of any agents’ strategy to manage risk and remove worry
and tenant clients. “We developed an insurance product under our from their landlords. We provide training and support on all our
National Residential brand that enabled the letting agent to insure products, which are FSA compliant.’
his landlords’ tenancies. The agent would charge the landlord a fee.
This fee would, in most cases, be less than a general market rate For more information go to www.letinsurance.co.uk
and it would protect against loss of rent and provide for legal or call Let Insurance Services on 0844 478 0202
expenses. The agents would pass over the insurance premium
to the insurer but the arrangement between the agents and the
www.propertydrum.com/articles/interviewfeb
insurer would be on a profit-sharing basis.
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PROPERTYdrum FEBRUARY 2010 47
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