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Property Tribes recently reported on the increasing popularity of rental protection products.Rent guarantee insurance is an insurance "add on" that can be taken out for a nominal sum.If you have a rent guarantee insurance policy in place from our insurance partner, Alan Boswell Group, they will actually cover the rent money you are due while your solicitor pursues the tenants for the money they owe.It can be purchased as an extension to other legal expenses cover and will pay out up to a maximum of £25,000 or 12 months’ rent, whichever is reached soonest.
We spoke to Robert Guy of Alan Boswell Group to find out more about RGI:You can contact the Alan Boswell Group team on 01603 649736 for service.SEE ALSO - A beginner's guide to landlord insuranceUP NEXT - 3 types of personal protection for landlordsDON'T MISS - Increasing popularity of rental protection productsNOW WATCH:
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Landlords are being warned that rental arrears are likely to rise in the coming months.According to Your Move, the number of tenants in arrears increased for four consecutive months between January and April, with the proportion of its tenants in arrears up from 8.4 to 9.4 per cent during this time; meanwhile, Belvoir recently reported that a fifth of its offices had four to 10 tenants in arrears during the first three months of the year.In addition, new research shows landlords are having to wait an average of 6 months to gain possession of a property.Average of 17 weeks to evict a tenantBoth of the above factors show why rent guarantee insurance is well worth considering.
What is the underwriting criteria? Would this encourage landlords to take on poorer quality tenants/put less importance on referencing etc?
The referencing criteria is mentioned in the video. They would only offer RGI on tenants who passed their referencing and that would not include tenants in receipt of LHA, for instance.
RGI only works for the cream of tenants.
Very few tenants can qualify for RGI.
This means LL take a massive financial risk.
Hopefully robust referencing will prevent taking on on a dud tenant.
But every year 150000 tenants are evicted.
Takes about a year to relet having factored in the eviction process; redecorating and re-letting.
Not many LL could afford to support a mortgage for a year without rent.
The question then is
Do you want to take on tenants who can't qualify for RGI?
If you do just be aware that the costs involved with a rent defaulting tenant can be enormous.
Does that BTL investment look so good now if you can't source RGI qualifiable tenants?
You need very deep pockets as a LL if you wish to risk taking on tenants who can't qualify for RGI.
Good luck with any relevant business decision
I am struggling to wrap my head around this one. I think I will have to see numbers around what proportion of tenants make the cut. I cannot see how this can work for the average tenant. This will likely increase the competition for the qualified tenants who incidentally you are less likely to need the insurance for.