Do I Need Rent Protection Insurance?

This is a very common question, not just from Landlords in London & Essex, but all over the UK.

So in short the answer is YES! Here are a few reasons why we advise our landlords to take out rent protection insurance, also known as rent guarantee insurance.

Ultimately the reason is peace of mind. If there is an issue and for any reason a tenant cannot pay their rent then things can become quite complicated and possibly expensive for the landlord.

Here is a scenario:

A tenant loses their job at no fault of their own (The pandemic was a prime example).

They may find the money to pay the rent for another month or so and then their pot runs dry and they start falling into arrears. However genuine and lovely the tenant may be, as a landlord there will not be much you can do other than start action to evict the tenant which comes at a great expense. Not only are you losing the rental income each month which may be used towards your mortgage repayments, but now you will also have to  potentially find £1000's to pay for court and legal costs as well as potential high court and bailiff costs. It soon mounts up to a hefty sum.

With Rent Guarantee Insurance the costs are paid by the insurers. Generally most tenant rent insurance companies pay landlords after two months rent arrears. this means your losses will not amount to more than two months rent. That is much more palatable than 6 months rent and thousands in fees.

For this very reason we advise that all our landlords have some sort of protection in place. It's very common for landlords to take out a policy when the tenant first moves in but not renew after the initial fixed term (which is usually 12 months).

This is a false sense of security - just because everything has been going well for 12 months doesn't mean that the tenant cannot find themselves in a helpless situation in the future. Therefore this would be false economy to try and save a couple of hundred pounds by not renewing the policy.

You cannot put a value on peace of mind and its very reassuring to know that you would be covered in the event of this type of crisis.

All insurance companies put up their prices for rent protection insurance during the pandemic. Not only did the costs more than double and in some cases nearly triple but some providers significantly reduced the package and level of cover as well. As soon as this happened in March 2020 we worked very hard in sourcing a new provider that offered an expensive cover to ensure our Landlords had one of the best protections in place.

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