Rent Guarantee Insurance for landlords
Since the economy entered into recession what seems like an age ago, the knock on effect to private landlords has been felt across the whole country.
According to telegraph.co.uk the number of Buy-to-Let repossessions doubled over the last year as tenants experienced difficulties in keeping up with the monthly rental payments.
In the current economic climate there are no “safe industries” or “jobs for life” as was once previously considered. You only have to look at the recent spate of redundancies announced by the Lloyds Banking Group in an effort to streamline their operation. Similar steps have also been taken by many smaller companies in an effort to weather the storm and make it through the recession relatively unscathed.
Unfortunately, this has an impact on the man and woman in the street, and in certain cases they could well be tenants. Irrespective of what line of work they are in or the length of time they have been with a business, if they are seen as an expensive commodity by their employer there is a the potential for redundancy.
Only last week it was reported by the BBC that the UK economy is still officially in recession despite the Eurozone having emerged from the slump that began in the second quarter of 2008.
With mortgage lending remaining relatively static, first time buyers having to put down, on average a 25% deposit, and with the concession on stamp duty due to be removed at the end of the year the opportunities for letting a property looks positive.
As a landlord or property professional, even having taken all the financial and market data into account, you could still be affected by a tenant not being able to make their monthly payments. After all, many people will have thought they wouldn’t be affected by the recession or would have one of the jobs for life mentioned earlier and how many of those will have their income protected by a suitable policy?
Rent Guarantee insurance is becoming increasingly popular among landlords to provide protection and peace of mind when the tenant is unable to pay. This cover is not usually found in most standard landlord insurance cover.
Most policies will provide cover for the amount of monthly rent stated in the Tenancy Agreement as well as a level of Legal Expenses cover which will pay up to the insured amount for Legal Fees associated with the eviction of the tenant should that be the course of action required to resolve the dispute.
Rent Guarantee can typically provide cover for up to £2500 per month as well as £10,000 of Legal Expenses, with cover starting from as little as £45 for a 6 month policy covering a rental income of £450.
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