Your Guide to Rent Guarantee Insurance
In an ideal world, your tenant will pay the rent on time each month. No problems. No-fuss. Things don’t always go to plan, though, and sometimes tenants can’t afford to pay their rent. If such a scenario arises, you need to be well prepared to avoid losing out on income.
Rent Guarantee Insurance
Landlords protect themselves with rent guarantee insurance, which safeguards against unpaid rent from your tenant and pays out the monthly amount due. As a result, you can enjoy peace of mind knowing that you will receive the rent even if your tenant is unable to pay.
If you’re new to the world of rent guarantee insurance, you’ve come to the right place. In this guide, we’ll tell you everything you need to know about the cover so that you can make an informed decision about whether it’s right for you.
What is rent guarantee insurance?
Situations can arise where a tenant is unable to pay their rent. Their reasons for not being able to pay may vary, from losing employment to suffering an injury and not being able to work. It’s at this point where rent guarantee insurance kicks in and covers your monthly rental income.
Sometimes rent guarantee insurance is referred to as “rent cover” or “rent protection”, but they all do the same thing: pay your rent when the tenant can’t. The cover typically pays your rent for between six and 12 months.
What does rent guarantee insurance cover?
You can protect your monthly rental income up to a certain figure, which is typically up to £4,000 per month. Rent guarantee insurance can last for 12 months, meaning you will receive payments for up to a year.
Rent guarantee insurance also covers:
- Your tenant defaulting on the rent for up to £4,000 per month or £50,000 per year
- Cost of repossessing the property
- Legal proceedings if you need to evict tenants
- Pursuing the rent owed by the tenant
- Alternative accommodation if you need the property back to live in it
Who is eligible to get rent guarantee insurance?
As a landlord, you need to meet a few requirements to qualify for rent guarantee insurance. Most cover types require you to have an Assured Shorthold Tenancy (AST) between yourself and the tenant. You will also need to have carried out tenant referencing and credit checks before they moved into the property.
Landlords should also have the tenant’s deposit stored in a tenancy deposit scheme, whether it’s through a traditional scheme or under the zero deposit scheme. While requirements vary between insurers, these three elements tend to be the most common for qualifying for rent guarantee insurance. In terms of a time frame, you are eligible for the cover once the tenant defaults on the rent for more than one month in a row.
Why should landlords get rent guarantee insurance?
Fifty-eight percent of landlords say reasons for evictions are down to their tenant failing to pay the rent. Some 67% of landlords have experienced an issue with tenants over a non-payment. Sometimes, unfortunate circumstances can arise for even the best tenants.
You aren’t legally required to get rent guarantee insurance, but it’s something you should definitely consider. Whether your rental income is your primary source of earnings or a top-up, you’ll want to protect it and enjoy greater stability.
Rent guarantee insurance with Mashroom
At Mashroom, we provide rent guarantee insurance for landlords who want to protect their investment. For more information, check out our rent guarantee insurance page.