Insurance & Finance Guarantee your rent

Collecting rent on time is essential for a successful landlord. On behalf of Just Landlords, Rose Jinks explains the benefits of rent guarantee insurance.


t’s no secret that a standard home insurance doesn’t offer loss or damage protection to properties that are rented out. To cover your letting assets adequately, a specialist landlord insurance is required.

However, simply keeping a property in good condition is not the only element of a landlord’s success – receiving regular rent payments is just as vital. That’s where rent guarantee Insurance comes in. Unlike basic landlord

insurance, which protects the physical property, a rent guarantee policy is ‘a peace of mind’ cover. By opting for rent guarantee insurance, which is often combined with legal expenses cover, landlords can be sure that they would get paid even if their tenants fell into rent arrears. Meanwhile, the legal expenses part of the insurance covers any legal costs incurred during a legal dispute with tenants.

Why it’s essential

It would be fair to say that rent arrears are every landlord’s worst nightmare; if a tenant withholds rent, this can immensely damage a landlord’s business. For example, buy-to-let investors could be likely to have monthly mortgage payments which they fund through their rent income. Similarly, those with large property portfolios will likely need to put significant contingency funds in place for regular maintenance and unexpected repairs.

“Insurers often request reference and Right to Rent checks to be carried out before issuing the policy”

While landlords may have procedures in place to chase any late or lost

rent, it’s clear that even just one month’s arrears can disturb your balance sheet, causing a decline in rental yield and possible mortgage arrears on your part. Putting rent guarantee insurance in place for each tenancy can ensure

that you continue receiving rental income during the period of arrears and, when legal expenses are included on the policy, can also cover the eviction costs incurred through the courts. As this can be a lengthy and costly exercise, having cover in place to

protect your pocket can ensure that the damage on your business is minimal. Recent research by a specialist student-only lettings portal even suggests that it can cost landlords up to £2,000 and take around nine months to evict a tenant – and this doesn’t include the cost of missing out on rent. However, rent guarantee insurance shouldn’t be an excuse for landlords to become careless in their tenant vetting. | HMM July 2017 | 43

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