Tenants can very often appear perfect at the outset, however during the period of tenancy this can quickly change.
The first thing a landlord notices is non-payment or late rent. The reasons for not paying rent are numerous but mainly related to loss of earnings, relationship breakups or other changes in personal circumstances.
So is it worth taking out rent guarantee when letting your property?
An example of a few things current policies can cover:
• Late payment of rent
• Court fees
• Repossession
A few of our landlords have already taken out policies as they see the cover offered provides real value and peace of mind, especially for those landlords new to buy-to-let.
A recent case of one of our landlords showing how it can go wrong is as follows:
A tenant stopped paying rent because of a change of circumstances. The appropriate legal notices were issued and we are now four months’ down the road. Having gained a repossession order from the courts and the tenant still refuses to move out, we are now faced with another court order for bailiffs to attend to evict the tenant.
Even after the eviction order has been obtained, there can be more delays. The tenant can apply to the court to delay the eviction, or can simply resist the reasonable force the bailiffs are entitled to use to remove them obliging the bailiffs ask the police to attend the eviction. In this instance, the tenant did get an initial stay of eviction but failed to meet the commitments they had made to the court and when the courts ordered the bailiffs to go in they conceded defeat and moved out.
All in all, the cost to this landlord was five months’ loss of rent plus the legal costs. That came to more than £5000, even before we checked the property for damage.
So is rent guarantee worth it? I would suggest it is, as a good rent guarantee product would have covered the landlord in this case for most of the rent arrears and the cost of court action for as little as £120.00 subject to adequate tenant referencing.
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