Protect your Assets with our Rent Guarantee Protection

With Section 21 going, rent in advance banned, and Section 13 disputes on the rise, protecting income is getting harder.

Landlords are more cautious, tenants are more stretched, and agents are expected to do more.

No rent guarantee insurance? You're driving without a seatbelt

In an increasingly unpredictable PRS, the question isn't: 'Is rent guarantee insurance worth it?' It's 'Can you afford not to have it?'

Due to the upcoming abolition of Section 21, evicting a tenant will become more complex, time-consuming, and expensive. Plus, with the legal system already creaking under pressure, delays will be longer and more common than ever. 

As a result, landlords are becoming uncertain about how:

• They can reclaim their property, and how long it’ll take 
• They’ll recover unpaid rent 
• They’ll pay their mortgage 

So the question isn’t just “Is rent guarantee insurance worth it?” 

Can you afford not to have it? 

In this guide, we’ll explore what rent guarantee insurance covers, the benefits it can deliver, and the importance of choosing the right policy.

What is rent guarantee insurance?

Rent guarantee insurance protects you from the financial risk of tenants falling into arrears. These policies typically cover unpaid rent until:

• Tenants start repaying rent
• Tenants vacate the property
• The policy hits its payout limit

Many rent guarantee policies also cover legal expenses, so you can take ‌‌‌action against a tenant, such as applying for a court order, issuing a notice of eviction, or recovering the expenses incurred from damages.

Depending on the policy and provider, rent guarantee insurance could cover:

• Rent arrears for a defined number of months, often capped at 12 to 15 monthly payments
• Legal support to help regain possession of the property
• Expenses related to taking legal action against the tenant
• Property damage caused by the tenant

Pros and cons of rent guarantee insurance

You don’t get into a car expecting to crash, but if you do, you’re glad you had your seatbelt on. Rent guarantee insurance works in the same way. Here are several reasons why it's worth considering.

Pros

1 - Peace of mind

Knowing that ‌rental income is protected, even if the tenant falls into arrears, it provides peace of mind to landlords.

2 - Financial protection

When a tenant falls into arrears and remains in the property for months, the costs can quickly mount, including lost income and mounting legal costs. Rent guarantee insurance provides a safety net by paying the monthly rent and covering legal fees.

3 - Easier re-letting

Evicting a tenant can be extremely ‌complicated and time-consuming, and the upcoming abolition of Section 21 makes it even more so.

A robust rent guarantee policy doesn’t just cover missed rent; it also includes legal support to help landlords through the eviction process.

This streamlined process means quicker property repossession, allowing you to get it back on the market sooner and with less hassle.

Cons

The main downsides of rent guarantees include the costs and limitations of the policies available.

1 - Added expense

While rent guarantee insurance can be affordable, landlords may not consider it a priority, especially if they haven’t previously experienced tenants falling into arrears. Costs can also reach thousands of pounds for landlords with larger portfolios.

But like servicing a car, a small, upfront cost can prevent a major breakdown later.

2 - Most policies have a cap

Most insurers cap their payments at 12 to 15 months. So if it takes longer than that to vacate a property, the payments will stop, even if the tenant remains.

That’s why it’s essential to check what the policy covers and whether payments continue until you achieve vacant possession — something that Our rent guarantee provides.

3 - Conditions and exclusions

You must meet specific terms and conditions to make successful claims. For instance, the items must be listed in the tenancy agreement to receive a payout for damage caused by a tenant.

It’s also important that notices are served on time or takesthe required steps before making a claim. If not, the policy may not pay out.

At Abacus Homes we will be looking to offer our landlords an upgraded fully managed package which includes the rent guarantee protection,

this can be added to the majority of existing tenancies.

Once we have details of the package we will inform you hopefully in the next few weeks.

We feel this is essential now with the banning of section 21, leading to much slower eviction times and further debts, no rent in advance, which effectively means a tenant can move into a property

without paying the first rent, and appealing against a rent increase causing delays in the increase, can all mean loss of valuable income for the landlord.

The rent guarantee would protect against all 3 of these instances.