Unpaid rent and rent arrears are a constant concern for landlords as they can cause major financial problems.
To help safeguard landlords from losing out on rental yield, various insurance providers offer a rent guarantee service that pays out if tenants are unable to pay the rent.
Rent guarantee insurance will often see a landlord reimbursed for any unpaid rent while a tenant or ex-tenant is still in the residential property.
A landlord can generally make a claim once the rent has been overdue for at least one calendar month, while some insurance products will also contribute to the cost of repairing damage once the landlord has regained possession of the property.
“The guarantor covers all aspects of the tenant’s liability, not just a rent guarantee,” said Terry Mason, group operations director of Housing Hand, which has seen a sharp rise in tenant applicants over the last 12 months.
The company reports that it has seen an 80% rise in the number of tenant applicants over the past year, owed in part to rising numbers of international students and working professionals looking for UK guarantors.
The rise also comes as a result of the fact that Housing Hand has significantly increased its landlord, letting agent and university partners this year, with the firm now working with more than 4,000 accommodation providers.
Mason commented: “Landlords and letting agents are unable to purchase rent guarantee insurance for tenants who fail their referencing checks, such as those that are on a zero-hour contract, self-employed, contractors, international working professionals and individuals with poor credit history.
“Accommodation providers that work with us have access to a wider pool of tenants and we have seen a huge increase in applications for our UK guarantor service. We have also received great feedback from landlords and letting agents who have used Housing Hand, as it offers protection for the whole period of the tenancy.”
Housing Hand’s service as the guarantor also covers legal costs for tenant eviction and damage to the property.
Mason added: “Housing Hand fees are paid by the tenants and there is no additional cost to the letting agent or landlord, just peace of mind.
“Over the last six years we have been standing as the guarantor for numerous tenants, many of which have defaulted. We have met all defaults and paid all monies owed to the landlord.”