Rent guarantee insurance should be taken out by more buy to let landlords
Published: 20 February 2009 By MoneyhighStreet Staff Leave a Comment
More buy to let landlords should be considering rent guarantee insurance as an increasing number of tenants fail to pay their rent.
As the recession deepens an increasing number of landlords have contacted the National Landlords Association (NLA) for advice about how to deal with tenants who do not pay their rent. The NLA has received more than 30,000 calls from landlords seeking advice during the last 12 months.
Rent arrears and re-financing difficulties are placing an increasing burden on landlords and according to the Council of Mortgage lenders (CML) around 2.5% of buy to let mortgages were 3 months or more in arrears in the last quarter of 2008.
With landlords facing these difficulties, there are calls for a greater awareness of rent guarantee insurance which can protect against the threat of repossessions and mortgage arrears.
Keshav Thukaram from Smartlandlord.co.uk says “Mortgage arrears in the private rented sector are rising, particularly as a result of tenants failing to pay their rent. In uncertain times, landlords need to protect themselves against this.”
“We are working closely with landlords across the UK to develop solutions that can help the buy to let sector weather the storm. Next month, we will launch a comprehensive range of innovative products and services, including rent guarantee insurance.”
Rent guarantee insurance covers landlords from rent arrears arising from many factors such as redundancy, accident, divorce and illness. It can also cover legal costs incurred from disputes between a tenant and the landlord.
Premiums for rent guarantee insurance depends on the risks involved for each landlord, however they are generally reasonable. Landlords should note, however, that a rent guarantee insurance policy usually does not cover a let property until the first month rental and dilapidation deposit has been paid.