What is Rent Guarantee cover?
Landlord’s Rent Guarantee insurance or rent protection insurance is an insurance that will pay the landlord rent each month, should your tenants be unable. Most policies also include protection for any Legal Expenses.
What does the cover, cover?
• Missed rental payments – this ranges up to 6 to 12 months depending on the type of policy you take out.
• The average time to evict non-paying tenants is 6 months, including seeking assistance from bailiffs.
• Some policies include cover after vacant possession been successful, providing 50% of the rent, for three months and as long as you are actively seeking to find new tenants.
• Legal support up to £100,000, including a representative in court. While property managers may often be called as a witness, they can’t represent the landlord in court. Legal support will ensure there is someone in court, qualified to represent you.
There may be an excess to pay, so it is good to check terms thoroughly, so you know what to expect.
Do I need Rent Guarantee cover?
If you can’t afford to be without rental income to cover your mortgage and bills, it is seriously worth considering.
On average 88% of landlords, who evict their tenants due to non-payment of rent, fail to get a penny back from the arrears.
What is the criteria for edibility to get cover?
• Each tenant is required to go through a referencing process to a standard that is acceptable to the underwriter of the policy.
• The tenants may also be required to submit their ID and proof of address. What is the criteria for edibility to claim?
• Proof of references.
• You must be in possession of a valid tenancy agreement, which is either the original (not scanned) or an electronically signed copy (through trackable software options such as AdobeSign or DocuSign).
• The tenants must complete the Right-to-Rent checks at the beginning of the tenancy and every time there is a change in their tenancy. All visas must be checked and monitored.
• The property must be compliant with all certificates to hand and evidence a copy of the certificates have been sent to the tenant, prior to the start of the tenancy and during the tenancy.
• There must be no significant outstanding maintenance issues.
• You must be able to demonstrate all the required documents are served at the beginning of the tenancy.
• You must be able to provide evidence the deposit registered in an insured or custodial scheme and was registered within 30 days of the start date of the tenancy.
• You must be in arrears by 2 months.
• You must inform the underwriter of the arrears within 30 days of the first missed payment. Although terms vary depending on your policy.
• Evidence that you have attempted to contact the tenants in an attempt to get the arrears back. Again terms may apply.
These are the main points to watch for but it is best to read the terms and conditions carefully to ensure you approach this proactively.
What if I already have tenants in my property?
You may still be eligible if your tenants have been referenced to an acceptable standard.
Due to the nature of insurance, it is best to be thorough with information and double check everything.
Some underwriters will accept tenants already living in the property and terms may apply.
Some terms may mean you can’t make a claim for a 90 period or you may have to get your tenants referenced again.
Or you may need to provide a history of payments from the tenants, as evidence they are not in arrears.
You may also be expected to confirm that the tenants have not encountered a change of circumstances.
In areas where this cannot be checked thoroughly, referencing your tenants again, may the best option to help make any claim watertight.
How much does Landlord Rent Guarantee cost?
The cost of Rent Guarantee premiums varies hugely, depending on type of cover, rental income, and underwriter.
It will also depend on the monthly rental amount for the property and the amount of excess you are willing to pay.
Our landlords have the option to include Rent Guarantee protection as part of their management service, so if you would like to know more, please contact us, to see if we can help.
