The National Landlords Associations (NLA) has advised landlords to consider taking out a rent guarantee insurance policy at the start of every tenancy.
The insurance provides income protection to landlords if tenants fail to pay the rent.
The NLA says that although economic conditions appear to be slowly improving, rent arrears present a real risk to landlords. In the second quarter of 2013, rental arrears remained the most common problem experienced by landlords, with 39% of NLA member landlords who participated on a recent NLA Landlord Panel stating they had experienced rental arrears during the past twelve months.
These landlords said they had on average 2.2 tenants in arrears, with the total owed by tenants in arrears to their landlords working out at an average of £1,890. Furthermore, a full 45% of landlords who let to tenants in receipt of Local Housing Allowance had recently experienced rental arrears which averaged £969.
The NLA provides its own rent guarantee insurance which covers landlords for up to £2,500 per month in unpaid rental income subject to the tenant having been credit referenced.
It is paid up to the point that the property becomes vacant up to a maximum of £25,000 or ten months’ rent.
The policy also incorporates legal expenses cover of up to £100,000 per claim (with a maximum of £1,000,000 in any one year). For example, legal fees would be covered when seeking to regain possession of the property as well as for recovery of costs for damage and repair to the property.
There are a few common sense criteria that landlords must meet to be eligible for NLA Rent Guarantee Insurance cover. Most important is that landlords need to have copies of two forms of identification relating to the tenant, one of which must contain a photograph.
Landlords also need to have carried out either a Basic NLA Tenant Check showing no County Court Judgments in the immediate preceding three years and no outstanding County Court Judgments or a Full NLA Tenant Check with a ‘pass’ rating.
Those that opt for the Basic NLA Tenant Check will also need a written employer’s reference confirming that the tenant or guarantor (if applicable) is in current and permanent employment.
The NLA is not the only provider of rent guarantee insurance so landlords should shop around for the best policy for their needs, comparing both price and policy details.
.jpg)
.png)
Comments