Insurance Pays When Tenants Don't
31st March 2015
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Most people seek regular income from their investments and landlords are no exception; the promise of monthly rental income on top of increasing property values is what attracts people to the sector.

But along with occasional void periods where properties are between tenants (very much minimised by a good letting agent of course!) landlords may at some point encounter a tenant who fails to pay their rent for whatever reason.

Most pre-vetted tenants are genuinely keen to keep up their rent payments and often non-payments are sorted out fairly swiftly by the letting agent, but sometimes the tenant can simply refuse or become unable to make the payments. In these cases it can become and expensive problem for the landlord because:

  1. It can take 3-4 months before any action can be taken and in most cases the landlord will end up not receiving the unpaid rent
  2. If you need to go as far as evicting the tenant the average cost of legal expenses relating to eviction is £1200

The number of tenants in arrears is increasing every year and the National Landlords Association (NLA) report that 47% of landlords have experienced rental arrears in the past 12 months.

Standard landlord’s insurance does not generally provide insurance for unpaid rent during a tenancy or legal expenses connected with eviction, so in order to protect against this kind of situation Newlife Lettings in Farnborough offer Rent Guarantee Insurance which ensures their landlords get paid even when tenants default.

This insurance will pay out if a tenant fails to pay, subject to various limits such as the maximum monthly rent, maximum total claim etc. Newlife can tailor a policy to suit you; but a typical policy might cover:

  • Payable until vacant possession subject to:
    • Monthly rent limit of £2,500 per month
    • Total claims limit of £50,000
  • No policy excess
  • Full legal expense cover
  • Free legal helpline

The terms and conditions of any Rent Guarantee Insurance policy will require that tenants have passed credit and reference checks, have their deposits held in an approved protection scheme, and have an Assured Shorthold Tenancy Agreement – all of which are covered by default when dealing with Newlife Lettings.

As well as the financial protection having this cover in place gives landlords time to consider their options when a tenant defaults, rather than rushing to start eviction proceedings. A little negotiation at the early stages can result in a better result for everyone; this is just one reason for tenants as well as landlords to always deal through a reputable letting agent.

About the Author

Carly B

Member since: 8th May 2013

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