The National Landlords Association (NLA) is reminding landlords to ensure they take out the appropriate cover in the event of non-payment of rent by tenants.
The reminder comes as research from the NLA shows that nearly four in 10 (38%) landlords have experienced rent arrears over the past year, with an average of £1,943 owed to them by tenants who have fallen behind on rent payments in the past 12 months.
Furthermore, the findings also show that nine in 10 (89%) landlords do not take out an insurance policy to cover themselves in the event of financial loss through rent arrears, while less than a quarter (23%) take out loss of rent cover.
Most rent arrears insurance policies protect landlords against non-payment of rent while also covering the cost of legal fees which may be required to recover unpaid rent.
Carolyn Uphill, chairman of the NLA, said: “Most landlords will be affected by rent arrears at some point and there are many different reasons why tenants could find themselves with difficulties over meeting their rental obligations.
“It’s important to be prepared as the amount of money lost through arrears can roll into tens of thousands of pounds in the worst cases. It can also be a very stressful and costly process to regain possession and claim any unpaid monies through the courts.”
The warning came in the same week financial capability charity The Money Charity revealed that increasing numbers of tenants are struggling to keep up with paying their rent each month.
Releasing its latest debt statistics, the charity found that over the past few months there has been a significant increase in the number of landlords issuing claims against their tenants in the county courts of England and Wales. The number of orders for possession, both outright and suspended, is also increasing with nearly 70% of claims resulting in some form of order.
Michelle Highman, CEO of The Money Charity said: “We know that many people feel trapped in the rental sector, unable to save the deposit required to purchase their own home. This is in part due to the high level of rents they are forced to pay. That increasing numbers are unable to even sustain their rental payments is particularly worrying.”
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