According to the National Landlords Association, the second quarter of 2013 has seen 39% of their members (who participated in their survey) having experienced some rental arrears from their tenants over the previous twelve months, rising to 45% of landlords who let to tenants in receipt of Local Housing Allowance, the arrears averaging out at over £900. Bearing this in mind, as a landlord it may be prudent to take out rent guarantee insurance at the start of a tenancy.
At CompareCrazy our panel of brokers are able to offer this cover for your peace of mind during today’s economic climate of uncertainty. A typical rent guarantee insurance policy will offer the following cover:
‘The insured is covered for rent arrears owed by the tenant under the tenancy agreement where an insured event has occurred and the insured is, where appropriate, pursuing proceedings under this Policy.
A full month’s rent must be in arrears after deduction of the excess.
Rent will only be payable during the period of the tenancy agreement or until vacant possession has been gained, whichever happens first.
The Limit of Indemnity is the monthly rent shown in the tenancy agreement and the Policy Schedule up to a maximum of £2,500 per month. The maximum rent payable per claim is £10,000 or the equivalent of six months rent, whichever is the lesser amount. The excess of the policy is equivalent to one month’s rent.
The policy typically also covers legal expenses as follows:
‘The insured is covered for advisers’ costs (up to £25,000 per claim) in proceedings if a tenant fails to perform his obligations as set out in the tenancy agreement for the insured property. The insured event must occur during the period of insurance and the amount in dispute must exceed £250 including VAT.’
To be eligible to take out such a policy, the landlord must have carried out some basic checks:
For Professional Lets ONLY:
· Two forms of identification from the tenant, one containing a clear photograph
· Confirmation of employment
· A credit check, clear of CCJ’s, at the start of the tenancy
For Professional, Student and/or DSS Lets:
- · A full tenant reference from an approved referencing company.
The premium for rent guarantee insurance will vary according to the tenant type and the monthly rent of the property but will be relatively affordable when you consider the hassles and financial repercussions of a tenant who cannot or will not pay their rent.