Paul Pearce is intermediary sales director at Let Alliance
Ask any landlord what are their biggest worries when renting property? You would more than likely receive the following answers; Rent arrears, damage to property and void periods.
Therefore you might expect Rent Guarantee Insurance to be a pivotal discussion point for any Mortgage Adviser when dealing with their Buy to Let landlord clients, yet this doesn’t seem to be the case.
The reason being… Rent Guarantee is either purchased online by the landlord themselves or maybe the landlord receives it as part of their management package provided by their letting agency.
Either way, most Mortgage/Financial Advisers will leave this area of protection alone to concentrate on the mortgage and protection advice and potentially the specialist landlord Buildings & Contents insurance.
Why is this when the number of tenants in severe arrears (more than two months behind) rose by 3.4% in the final quarter of 2013, as revealed by the latest Tenant Arrears Tracker by LSL Property Service. According to LSL’s latest Buy-to-let Index, overall tenant arrears in November 2013 stood at 6.6% of all rent late or unpaid.
What can be done? For landlords using the service of a letting agency they could ask the agent if they include rent guarantee protection within the management of their property. Letting Agents who utilise Let Alliance for our tenant referencing can opt for our Nil Excess Rent Guarantee.
For landlords who “self-manage” they currently think there are two options… the first is no cover in place and to risk it. The second is to purchase a policy directly from the internet which is a risk in itself.
Now there is a third option for Landlords… speaking to their Mortgage adviser who can provide specialist landlord buildings & contents insurance.
Average rents across the UK are hovering around £700 per month. If an eviction took four or five months and the landlord had no protection, they could be looking at a loss of over £4,000 including legal fees, if not more. This is not ideal for any landlord, let alone the ones who have mortgage payments.