Rent guaranteeLet Alliance

Rent guarantee - 100% cover, 0% worry

Non-payment of rent is probably a landlord’s biggest worry.

That’s why The Letting Co. always recommend rent and legal guarantee.

Example case

Put yourself in the worst-case scenario as a landlord - your tenant stops paying, more often than not through no fault of their own (i.e., bereavement, job loss). One missed month becomes two and before you know it, you're losing even more money for eviction notices and court applications. Even if you're 100% confident you can handle the mass of paperwork and court hearings there are for a possession (and you do have to be 100% confident, one small mistake could throw your entire case out of court), you'll still have to pay a minimum of £355 in courts fees not to mention your time and the stress in arranging all of this.

You've then got a whole host of problems if the tenant refuses to leave - further bailiff costs, the average waiting time of 5-6 weeks for an appointment, even police attendance in some situations. All the while, you're haemorrhaging cash to fund the mortgage - if you're fortunate enough to own the property outright, you're still losing hundreds a month the tenant should be rightfully paying to you.

Once a tenant owes 2 month's rent, the process is (on average) as follows:

  • 2 weeks for the eviction notice to expire (for a Section 8, 8 weeks for a Section 21)
  • 12-18 weeks to obtain a possession order
  • 5-6 weeks for the bailiff to attend

There is also the waiting time for these applications to be processed by the courts which is roughly a week in between each stage, racking your eviction timeline up to an average of 37 weeks from non-payment to possession. ‚Äč

The average rent in the UK (excluding London), as of December 2022, is £660 - at this rate, you could face losing an average of £5635 in rent alone. You then have the minimum costs of £180 for the eviction, £355 for the courts and £300 for the bailiffs. Can you really afford to lose an average of £6200 while evicting a problematic tenant?

Source - https://www.spareroom.co.uk/content/info-landlords/average-rent-uk/

 

What does it cost?
The cost of the guarantee is surprisingly cheap, as low as £25 + VAT per month – saving you not just a lot of cash, but a lot of worry too. The companies we would recommend are:

  • Let Alliance - www.letalliance.co.uk/letting-agents/rent-guarantee-insurance
  • Direct Line - www.directlineforbusiness.co.uk/landlord-insurance/rent-guarantee-insurance


Facts and figures
The figures can be scary: The Government recently revealed figures which show landlord possession claims have increased by 106% for the period July to September 2022. That’s 21,012 private rented tenants compared to just 10,202 for the same quarter in 2021.

Source - www.gov.uk/government/statistics/mortgage-and-landlord-possession-statistics-july-to-september-2022/mortgage-and-landlord-possession-statistics-july-to-september-2022


I've never experienced rent arrears - it's not worth it
So you've never had a none paying occupant. It may be that you feel that your house is in a nicer area that you don't think would attract a bad tenant, or maybe you've struck lucky up to now. So why do people stop paying? This could be absolutely anything from personal financial downfall to a grudge with the owner. Common causes include:

  • Bereavement - Suffering a major loss in life can lead to stress and depression, taking a major toll on someone's life - not to mention additional costs for funeral arrangements and legal help. This can affect their day to day lifestyle, and can even lead to job loss.
  • Job loss - People lose their jobs every day, sometimes through no fault of their own as we saw in mass during the Covid-19 pandemic; illness, accidents at work, redundancies. Often people are made redundant without any plan b - with no income and no savings, how can a tenant pay their rent? The council can take weeks if not months to authorise an application for housing benefits.
  • Delays in housing benefit payments - The council often take steps to ensure those receiving benefits are rightfully entitled, during which time a pause is put on the account. This can take weeks to resolve, all the while you're losing rent. Errors can be made too, resulting in not only the tenant's application being cancelled but the council coming to you for a refund of any incorrect overpayments made to you.
  • Disagreement with the landlord - Some tenants may not see eye to eye with their landlord, whether it be over repairs or a more personal matter, and can stop paying rent as a result. Tenants too often are mistaken by their rights to withhold rent, which normally leads to arrears building up quicker than they can repay.
  • Unforeseen financial difficulty - In some circumstances, tenants have been known to prioritise other finances above their rent. This includes council tax charges, utility bills and even TV/broadband accounts. Larger companies put the pressure on outstanding debts, which a landlord can find themselves effectively subbing the tenant for as they pay this over their rent. 

Any of the above reasons can strike at any time, and you need to be prepared for if it does. Imagine your tenant fell behind, leaving you facing thousands in legal costs and lost rent, not to mention the stress and sleepless nights.

Now imagine someone knocked on your door, offering to cover all of the lost rent and costs without you needing to lift a finger - you wouldn't think twice.

To find out more, give our team a call on 0845 838 2890 or email louise.rock@thelettingco.com.

Source: LetAlliance - http://www.letalliance.co.uk/letting-agents/rent-guarantee-insurance/
https://homelet.co.uk/homelet-rental-index

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