The insurance policy that might save struggling landlords

Telegraph

3 days ago

It's a worrying time for landlords. Among the forthcoming rule changes under the Renters' Rights Bill, the abolition of Section 21 no-fault evictions will make it more difficult to evict tenants, with some predicting that courts will become clogged up with cases of landlords using other means to get their properties back. If you're facing a tenant who won't pay the rent, that's a huge problem.
However, there are ways to manage and reduce the risk of losing your rental income, including rent guarantee insurance.
Nathan Blackler, of Go.Compare, said: 'With changes to the Renters' Rights Bill in England set to abolish a landlord's right to end tenancies without reason, there is a growing awareness around insurance products that are available for landlords that protect their interests, as well as those of their tenants.
'While the proposed changes to the bill won't prevent landlords from taking action if tenants breach their rental contract, for instance if they stop paying rent or cause damage to the property, we expect to see an increase in landlords exploring more ways that they can protect themselves in case there are any issues with their tenants.'
Rent guarantee insurance is one such policy. Here, Telegraph Money explains how it works and whether it's worth paying for.
What is rent guarantee insurance?
This type of insurance specifically deals with unpaid rent. It can also be referred to as 'rent protection insurance'.
It protects you as a landlord from potential financial hardship if your tenants don't pay their rent while you seek repossession of the property. This process can take several months, which can mean a lot of lost revenue – and the chance that you can't make the mortgage repayments.
What does rent guarantee insurance cover?
These policies cover the rent that is owed, as well as some extras that are related to this kind of situation. Policies typically cover:
Unpaid rent: usually you are covered for rental payments for up to 12 months with a limit on the amount paid out.
Landlord legal expenses: your policy can pay out between £50,000 and £100,000 to cover legal costs associated with eviction, including court costs.
Expert support: you can get access to a legal advice helpline for guidance on property disputes.
Pros and cons
These policies won't suit everyone, so it's a good idea to weigh up the pros and cons before you pay out.
Pros
Peace of mind that rent might be covered if tenants stop paying, protecting you from potential losses.
It could help pay for legal and court costs to achieve eviction.
Some policies pay a proportion of the rent even after eviction, for example if your property needs repairs before it can be let out again.