Why Rent Guarantee Is A Must
Updated: Nov 11, 2018
Last week I saw a post about tenants who had abandoned a property and left a car on the drive which the local council wouldn’t help the letting agent to remove due to the car being on private land. This reminded me of a case I’ve previously had dealings with where tenants stopped paying rent fairly quickly after moving into a substantially large house, the rent being around £1500 per calendar month, so as you can imagine the rent arrears on a property of this price mount up pretty quickly.
After several months of no rent and the landlords patience starting to wear thin of broken promises of rent they had no option but to instruct a solicitor to serve a section 8, 10 & 11 upon the tenants to gain possession of the property, which are for rent arrears and persistent rent arrears. This was the landlords only option to gain possession as the Tenancy Agreement all parties agreed and signed was a fixed 12 months term.
The short version of this story is the landlords were awarded possession of the property via a court hearing and a date was set for the tenants to vacate. The date came and the tenants had vacated but the downside was the state the property was left in. There were possessions left meaning notices had to be served to try to locate the tenants to give them the opportunity to collect their remaining possession, therefore causing further delays for the landlords to be able to put right any damage, clean the property and re-rent the property to avoid any lengthy void period where no rent was being achieved.
The total cost of this case to the landlords in respect of repairs to any damages, fees and rent arrears mounted to over £10,000, in this case the landlords had no insurance policy meaning all fees and repairs etc had to be paid from their pocket. If they had a rent guarantee insurance policy in place the loss amount to them would have been substantially less.
The name rent guarantee can be slightly confusing; most people believe this cover can only be used when tenants fall into arrears. Depending on the insurance company and the terms, most will have a legal cover that can be purchased separately or included with the rent guarantee policy. This will cover landlords up to a set amount to enable eviction of a tenant who has breached the Tenancy Agreement as well as cover the rental payments for a set period of time. The insurance company normally have a claims team in-house or who they use to deal with the case on a landlords behalf taking most of the stress away. You will need to check individual clauses on individual insurance policies to see what is and isn’t covered.
Based on this case when I initially speak to landlords about renting out their property I always strongly advise landlords to take out or just look at the benefits of a rent guarantee and legal expenses cover to protect them for if the worst was to happen. Even with the thorough references, letting agents can never envision what the future may hold. It goes back to that old saying, “it will never happen to me” would you like to leave that to chance? I know I wouldn’t!
I hope this post has been helpful and will make you think about an insurance policy if you don't have one or check the one you have to see what is included, for if that worst case scenario was to happen. If you need any help, please feel free to contact me using the details provided below.
0333 772 0718