An Introduction to Rent Guarantee Insurance 2022

What is Landlord’s Rent Guarantee Insurance?

In a nutshell, Rent Guarantee Insurance protects your rental income. Landlords love it because it’s the best way to protect themselves against the dangers of rent arrears and any subsequent legal action needed. 

Without a Rent Guarantee Insurance policy in place, a landlord will have to take the full weight of the missed rent and any legal costs, which can become a huge financial strain.

What is legal protection for landlords?

It’s important for landlords to get the protection they need against financial issues. Mortgage payments do not stop if your tenant stops paying. Thanks to the pandemic, landlords have an even more urgent understanding of the need for RGI. 

Due to the loss of jobs during the pandemic, many landlords struggled to make their mortgage payments on time. RGI was also taken off the shelves at this time, so when it came back landlords invested, in order to futureproof their income.

Rent Guarantee Insurance also protects landlords during times of economic uncertainty. As rent prices and debts increase due to the Bank of England’s interest rates rising, protection like Rent Guarantee Insurance becomes all the more important.

Know your legal obligations

As a landlord, there are widespread responsibilities for you to be aware of. Among those responsibilities are several legal obligations:

Cover yourself

At Mashroom, we offer two essential types of insurance – Home Emergency Insurance and Rent Guarantee Insurance. 

Looking after your property in the event of an emergency can become very costly without the help of insurance. At Mashroom, our Home Emergency Insurance includes the following: 

  • Loss of keys
  • Bathroom leaks
  • Roof damage (as a result of adverse weather conditions or even fallen trees) 
  • Ceiling repairs
  • Electrical issues
  • Sudden boiler breakdowns
  • Pest control

This insurance is reserved for those unforeseen circumstances, like adverse weather conditions. Broader concerns like global warming and its impact on the environment are causing issues for landlords, such as flooding due to storms. Winter months can also cause issues, so insurance is a must! 

  • The contractor we provide is always fully vetted and managed by our claims supplier CPA
  • We provide a nationwide 24/7 helpline service all year round, so that claims can be registered without delay
  • The authorised repair personnel will carry out the emergency repairs within the time scale provided, weather and traffic permitting, including emergencies that take place over the weekend. 

For more details or if you have questions about the specifics of what our Home Emergency Insurance service covers, please get in touch.

Check in with your agent

If you’re not a self-managed landlord, it’s still your ultimate responsibility to maintain your property or you will be fined. It’s vital to know exactly what your legal obligations are and check in to make sure they are being fulfilled. If not, you could be fined or possibly even jailed.

Here are some important points to look out for: 

  • Are all your certificates up to date? Make sure that your Gas Safety Certificate, EICR and EPC are all in date
  • Does your tenant have a copy of the prescribed information (including copies of all the above certification)?
  • You should also make sure that your tenant has a copy of their tenancy agreement

Prescribed Information

The prescribed information has to be given to your tenant within 30 days of receiving the deposit and should include:

  • The amount of the deposit
  • The address of the property
  • The name, address and contact details of the administrator of the tenancy deposit scheme you’ve placed the deposit with
  • Name, address and contact details of the landlord and tenants. This should also include any third parties who contributed to the deposit
  • What will happen to the deposit at the end of the tenancy

Deposit Protection

Deposit protection is essential to safeguard a tenant’s deposit. Whether you need to keep some of the deposit or not will depend on the condition of the property at the end of the tenancy, hopefully you won’t need to deduct from the deposit!

If the landlord also fails to pay the tenant their deposit back, the protection policy will pay them and claim the money back from the landlord. This option will appeal to landlords with more expensive properties, large portfolios or long term contacts as it allows them to accrue interest on the deposit funds.

Your obligations

On 20th March 2019 a new law came into force to make sure that rented houses and flats are ‘fit for human habitation’, which means that it’s the landlord’s responsibility to make sure they are safe, healthy and free from issues that could cause serious harm.

But for those who don’t reach these standards, their tenants could be living in potentially dangerous or unhealthy conditions. The Homes (Fitness for Human Habitation) Act 2018 will help these tenants and make sure irresponsible landlords improve their properties or leave the industry altogether. 

According to GOV UK, there are 29 issues that a landlord should identify to ensure that the property is fit for human habitation. These are: 

  1. Damp and mould growth
  2. Excess cold
  3. Excess heat
  4. Asbestos and manufactured metal fibres
  5. Biocides (chemicals that treat mould)
  6. Carbon monoxide
  7. Lead
  8. Radiation (from radon gas, which is airborne or in water)
  9. Uncombusted fuel gas (leaks in gas appliances)
  10. Volatile organic compounds (chemicals which are gases at room temperature)
  11. Crowding and space
  12. Entry by intruders (such as not having a lock on your front door)
  13. Lighting
  14. Domestic hygiene, pests and refuse (including inadequate provision for disposal of waste water and household waste)
  15. Noise
  16. Food safety
  17. Personal hygiene, sanitation and drainage
  18. Water supply
  19. Falls associated with bath or shower
  20. Falls associated with stairs and steps
  21. Falls on the level (danger of falling on a flat surface)
  22. Falls between levels (danger of falling from one level to another, for example, falls out of windows)
  23. Electrical hazards
  24. Fire and fire safety
  25. Hot surfaces and materials
  26. Collision and entrapment
  27. Explosions
  28. Physical strain associated with operating amenities (i.e. very heavy doors)
  29. Structural collapse and falling elements

Stay up-to-date

Making sure that you are aware of changing regulations and requirements is important. If you aren’t up-to-date and miss a legal requirement, you could be fined or jailed. 

You can keep a track of updates via our social media channels as well as by signing up to our newsletter. You’ll hear all the news from the new 12 Missions to Level Up the UK by 2030 to the abolishment of Section 21 in 2022.

What are the costs of Landlord Rent Protection?

Mashroom’s RGI will cost you £299 per year, covering you for 12 months and takes only a few minutes to arrange.

You should apply for RGI sooner rather than later, as if you wait for an issue to arise before completing your application, you won’t be able to make a claim against that particular issue. 

Other Rent Guarantee Insurance policies can vary depending on: 

  • The type of property being rented out
  • The location of the property
  • The number of tenants in the policy

Please bear in mind that with other policies you may need to wait 90 days before you can make a claim. 

While RGI can feel expensive, it’s pretty inexpensive considering what you get back in return, so be sure to book a call to find out more.

What does Rent Guarantee Insurance generally cover?

  • Rent arrears. Should your tenant fall into rent arrears, RGI will step in to cover this and pursue the arrears
  • Legal considerations. Breach of Tenancy agreements, legal defence, and pursuit of rent arrears are also just a few legal elements that RGI will cover 
  • Evictions. Cover the costs of eviction and the legal expenses with RGI

Even the most perfect tenant can hit hard times, as we saw during the pandemic. No landlord wants to see their tenant going through difficult times, but they also don’t need to feel the sting in their pocket either. However, if the worst were to happen, it’s Rent Guarantee Insurance to the rescue for everyone. 

What does Mashroom’s Rent Guarantee Insurance generally cover?

At Mashroom, we have the benefit of offering our product at a fixed price, for the property not the tenant. So if you get a new tenant halfway through your 12 month policy, you’re still covered.

Our own FCA-regulated product means our policy is ultimately a cheaper option for landlords, removing a lot of additional fees. 

Our RGI is also one of the most comprehensive available: 

  • Breach of tenancy agreement. We cover the costs to pursue the tenant following a breach of any of their obligations under the tenancy agreement. 
  • Rent arrears guarantee. We cover the rent arrears owed by the tenant. 
  • Pursuit of rent arrears. We pursue rent arrears which began during the period of insurance. 
  • Eviction. We cover the eviction costs, so you don’t have to. 
  • Legal defence. We cover legal costs around eviction.
  • Legal helpline. Free access to legal advice and guidance. 

With Mashroom, you can also claim as long as the payment has not been made in full, while other policies won’t kick in if a contribution – however small – has been made. We’ll cover you up to £2,500 a month or £25,000 annually.

What doesn’t Rent Guarantee Insurance cover?

Now that you understand the ins and outs of what’s covered, let’s talk about what isn’t. There are a few exclusions when it comes to RGI, and we’ll walk you through those loopholes.

Of course, policies may vary depending on which insurer you decide to go with, so be sure to check all the small print when you get your policy. For example, if your tenant is a student, unemployed or they were accepted without providing a tenant reference, it can prevent your policy or claim from paying out. 

  • Referencing. Without a thorough tenant reference your policy could be void. Mashroom policies exclude claims if you cannot provide a tenant reference
  • Update all details. Let your insurer know any changes to your circumstances, new tenants, or a change of employment
  • Cover everything. If your property is split into two apartments, it’s unlikely one policy will cover both, as they tend to either cover per tenancy agreement or per flat 
  • Qualifying period. If a tenancy agreement started before the tenant reference was obtained, you will not be able to make a claim for events taking place within the first 90 days of the first period of the insurance
  • Timely notification. You will need to notify your insurers or policy brokers within 30 days of a missed payment, as after that, the insurance will not cover it
  • Selling up. If during the 12 months of your Rent Guarantee Insurance policy you opt to stop renting the property and put it on the market, your policy will become void and if any payments are being made

When looking for a Rent Guarantee Insurance Policy, it is important to consider how many months of missed rent it covers. In some cases, even if the policy is for 12 months, it may only cover up to 4 months’ rent. In other instances, you will find the policy covers the entire duration of the contract or the eviction of the tenant. 

If you have a question about what is covered in our policies, our team is on hand to answer any questions you may have. 

How do I get Mashroom’s Rent Guarantee Insurance?

The process of applying for Rent Guarantee Insurance with us is quick and easy, it’s all done online and takes a matter of minutes. Please just ensure you have a copy of your tenant’s reference and Assured Shorthold Tenancy (AST) on hand as you will need these in order to be eligible. 

If you still have any questions, you can always book in a call to talk to us before you take the plunge.

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Mashroom is an appointed representative of Adelphi Insurance Brokers Ltd. Adelphi Insurance Brokers Ltd is authorised and regulated by the Financial Conduct Authority (FCA). Their Financial Services Register number is 594620, with permitted business activities being introducing, advising, arranging, dealing as agent, assisting in the administration and performance of general insurance contracts and credit broking in relation to insurance instalment facilities. You may check this on the Financial Services Register by visiting the FCA’s website, or by contacting the FCA on 0800 111 6768