Is Landlord Rent Guarantee Insurance worth it?

Is Rent Guarantee Insurance worth it? This is the perennial debate that rages on, not just about Landlord Rent Guarantee Cover, but virtually every insurance product available. It has done since time immemorial. 

And, believe it or not, we as insurance providers completely understand. Paying for a product “just in case” is an abstract concept at the best of times. Even more so when times are hard, as they most certainly are right now.

However, this tumultuous period of economic uncertainty - both within the private rented sector and beyond - is precisely why the metaphorical safety net of Rent Guarantee Insurance has never been more essential. 

Our monthly Rental Index is a bellwether for the industry and has thrown up some worrying trends.

Not least the fact that market forces have driven rents up by more than 7% (7.4%) compared to this time last year and tenants are paying a third of their wages (33%) to cover these costs; a situation we’ve repeatedly warned is unsustainable.

When you consider this in the broader context of an unrelenting cost of living crisis, the risk of tenants defaulting and falling into arrears is real.

According to the latest figures from the Office for National Statistics (ONS), food and beverage inflation is down considerably from the 45-year high of 19.2% witnessed in March 2023. 

However, prices still rose 7% YoY to January 2024, it’s just that they’re rising more slowly. Furthermore, 41% of adults admitted it was “very” or “somewhat difficult” to afford to pay their energy bills. A worrying statistic indeed.

As you will no doubt already know, and it hardly needs us to spell it out, tenants are under intense budgetary pressures.

Landlords are too, and the best way to protect your interests in such a perfect storm is with the assurance that your rental income will continue to be paid, come what may. 

Keep reading to find out more about the advantages and disadvantages of Landlord Rent Guarantee Cover, and why you should choose HomeLet as your trusted provider.

One of the primary benefits of this vital form of insurance is its ability to safeguard landlords against the risk of rent default.

In the event a tenant falls into financial hardship - a situation sadly all too common in the ongoing cost of living crisis - and cannot pay their rent, Landlord Rent Guarantee Cover pays the outstanding amount for a specified period (six months in our case). Thus, relieving landlords of financial stress and ensuring a steady income stream.

By mitigating the financial impact of rental arrears, Landlord Rent Guarantee Cover helps minimise the threat of potential losses, which remain so omnipresent in today’s market.

Furthermore, a reputable Rent Guarantee product will also cover legal expenses associated with tenant eviction proceedings. This can be invaluable for navigating the complex, and costly, legal processes involved in reclaiming possession of a property.

You may also find that Landlord Rent Guarantee Cover will pay out a proportion of your monthly rental income for limited periods of vacant possession.

Ultimately, Landlord Rent Guarantee Insurance provides landlords with an invaluable layer of financial stability and reassurance, allowing you to focus on the many other aspects of property management that demand your time, without the constant worry of rental income interruptions.

The number one perceived disadvantage when it comes to Landlord Rent Guarantee Cover is cost. Premiums vary depending on various factors like the location of the property, rental income, and the level of cover required.

For some landlords, especially those with multiple properties, the added expense of insurance premiums may feel like they outweigh the benefits, particularly if rental default rates are slightly lower in their area. 

However, that leaves them exposed.

While it might be tempting to cut costs at a time when many landlords are teetering on the brink of walking away from the industry altogether, Landlord Rent Guarantee Cover provides a modicum of much-needed certainty in today’s highly uncertain private rented sector. 

This feels especially pertinent in light of findings from a small-scale representative survey of UK landlords commissioned by digital mortgage lenders, Molo, which found that more than half of landlords (60%) have witnessed a rise in late rent payments in the current climate with an average of 2.9 late payments every year.

The bottom line is that Landlord Rent Guarantee Cover is an invaluable risk management tool for UK landlords during these strange and uncertain economic times.

Tenant turnover and rent defaults are common problems up and down the country, as inflation, the cost of living, and stagnant wages bite hard into tenants’ budgets.

So perhaps the real question should be: is not having Rent Guarantee Insurance worth it? 

We don’t think so.

HomeLet's Landlord Rent Guarantee Cover offers comprehensive cover against the risk of tenant default, providing landlords with financial protection and continuity.

In the event of non-payment, our insurance will pay your rent in full for up to six months or up to vacant possession - whichever is first. It also provides continued cover once vacant possession is obtained, paying 75% of the rent for up to three months afterwards.

Our Rent Guarantee Insurance also includes up to £50,000 of cover for legal expenses associated with tenant eviction proceedings.

This can be invaluable if you need to navigate the legal complexities of dealing with a tenant who is in breach of their tenancy agreement.

Finally, our Landlord Rent Guarantee Cover also gives you access to invaluable support from our in-house Claims team and legal experts when you need it most.

With more than 30 years of experience in the rental market, HomeLet has established itself as a trusted provider of landlord insurance solutions.

Our expertise and industry knowledge enable us to offer tailored insurance products that are designed to help landlords navigate the complexities of property management and risk mitigation effectively. So if you think Landlord Rent Guarantee Cover might be worth it for you, we can help.

For more information about our Landlord Rent Guarantee Insurance, contact us on 0800 035 8258 or request a callback. Our offices are open 8:30 to 17:30 Monday to Friday and 9:30 to 13:00 Saturdays.