With the size of the private rental sector on the decline and a lack of suitable housing on the market, competition for a landlords’ business is strong and, subsequently, Agents are looking at how they can make their management offering stand out against their competitors.
The cost-of-living crisis is stretching tenants’ incomes more than ever, leaving many unable to sustain their rental payments; leaving landlords without the financial income they rely on, and agents risk losing their management fee in the process. While, undoubtedly, landlords will try to be flexible and sympathetic to their tenants’ situation, this can leave many with no choice but to go through the lengthy process of regaining possession of their property.
However, it is possible for landlords to continue to receive their rental income even once a tenant has stopped paying. Rent guarantee insurance is a policy available for Agents to provide to their landlords as part of an enhanced service offering, which protects landlords against loss of rental income should a tenant be unable to pay, and also covers the cost of regaining possession of the property. This also guarantees continued payment of the agents’ management fee.
How does Rent Guarantee Insurance work?
Once the tenant has missed two full payments, you can claim. Usually this triggers the start of the eviction process and solicitors are appointed to formally regain possession of the property. The associated legal costs and the missed rent payments are covered by the policy (up to limits set out below). If the tenant has already left the property, you can still claim for lost rent up to the point you regained possession of the property.
Rental payments are made for a maximum of 15 months, with up to 3 months of payments (at 75% of the rental amount) paid after eviction while a new tenant is sought.
Including rent guarantee in your managed service gives you the ability to maintain rental payments to the landlord, and your management fee, while receiving legal assistance to regain possession of your landlord’s property.
Are there any terms to Rent Guarantee Insurance?
For a claim to be successful there are a few terms and conditions that we require policyholders to comply with:
These include:
- A valid tenant reference check.
- Claims reported within 60 days of the insurable incident.
- Legal requirements and documents relating to the rental property must be fulfilled (e.g. proof of ID, EPC certificate, written tenancy agreement etc)
- The tenant needs to have missed two full months’ payment
How can I provide this benefit to my landlords?
Many agents offer their landlords a guaranteed rent solution, for which the agent takes on the financial risk of the tenant failing to pay rent. By purchasing rent guarantee themselves, the agent can protect against this financial risk and effectively insure the guaranteed rent solution they have offered to the landlord.
It is also possible to refer landlords to purchase rent guarantee themselves, for which the agent would receive a commission.
What are the benefits of the policy?
- No excess
- Legal expenses up to £100,000 (including eviction costs)
- 24/7 legal advice helpline
- Rental payments up to £5,000 a month, for a maximum of 15 months*
- Vacant possession cover at up to 75% of the rental amount for a maximum of 3 months
- Section notices served
- In-house claims service
- 60-day claim reporting period
- Manage your policies online through our lettings portal
- Backed by one of the UK’s largest insurers, Aviva
*This level of cover only available to agents with over 50 properties insured.
How can I purchase a Rent Guarantee Insurance?
Rent guarantee can be purchased through the agent portal https://agents.alanboswell.com/login.
Once the policy has been purchased your policy documents and contract of guarantee will be emailed to you. Invoices will be generated and sent to you at the time of purchase, which you can pay for immediately. You will also receive a monthly statement on the 15th of each month listing your unpaid policies.
How do I make a claim?
Claims can be reported by the agent portal within 60 days of the first missed rent payment. Claims will be validated once the tenant is in arrears of two full payments, at which point we pass the documentation to our solicitors to issue a section notice. Rental payments will be made monthly in arrears for a maximum of 15 months.
Our solicitors will continue to work on the case until possession of the property has been regained. Once possession has been taken rental payments continue for a maximum of three months, at up to 75% of the value of the monthly rent, while a new tenant is sought.
