Landlords Warned to Check Rent Guarantee Policies

Earlier on today financial website This is Money revealed that even though most landlords now invest in some sort of landlords insurance, not all policies will cover them in the event that they lose money due to tenants falling into rental arrears. They note that most landlord policies include building and contents, emergency assistance, and legal cover, but not all protect landlords against tenants that can’t, or won’t, pay their rent.

This comes after Templeton RPA has reported that the number of tenants that are in ‘severe’ arrears are the highest since their records began back in 2008. They claim that there are currently almost one hundred thousand tenants that are in severe arrears, whilst the Landlord Panel from the National Landlords Association (NLA) found that almost one in two landlords (47%) have experienced rental arrears within the past twelve months. The head of the policy at the NLA, Chris Norris has stated that “whilst 98 per cent of landlords have some sort of insurance in place, this is most commonly simple buildings cover, which would offer little support if a tenant were to stop meeting their rental commitments, despite thorough tenant checks”.

It is important to note that rent guarantee can differ from what some policies call ‘rent cover’, which does not pay out if tenants fall into arrears. This type of cover may only pay when a landlord loses rent due to the fact that a property has become unoccupied and/or uninhabitable due to another insured event such as a fire, which shows how important it is for landlords to closely check their policies and the extent of the cover they have.

Rent guarantee has other benefits including the fact that it gives landlords time to think about what to do with tenants that fall into arrears without losing money. This means landlords can choose whether to have the tenants evicted through the courts or try to resolve the matter themselves. Furthermore, rent guarantee is a generally cheap investment considering how much money landlords could lose if tenants don’t pay their rent, with Norris stating that “The NLA recommends landlords protect their businesses and ensure they have sufficient insurance in place; unpaid rents could mean that they are unable to meet their mortgage payments”.

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