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At a time of economic uncertainty teetering on the edge of recession, hardships are rarely confined to one group of people. Renters can be disproportionately affected, as are landlords when rent goes unpaid. Can Rent Guarantee Insurance ease the burden & why are inventory reports important?

Businesses that sell products and services are just as vulnerable in an economic downturn because of falling demand and incomes. Those that serve can be hit as hard as those who can no longer afford the service.

This is an obvious phenomenon in the consumer goods industry and sectors where discretionary spending is paramount to survival, such as hospitality and leisure. 


What is not always appreciated is how commonly it affects those services and contractual relationships most of us would term essentials. Housing is one of the most significant.

The rental sector is especially vulnerable.

Social housing is supported by public money, either from local or central government, which means that the impact of tenants who fall into arrears is more easily borne by the local council. In the private rental sector it’s a very different story. 

Private landlords have virtually no protection when a tenant is seriously in default and simply cannot pay what they owe. Court action to recover the debt is only effective if the tenant has the money.

Otherwise the only option is eviction. 

Rent Guarantee Insurance 

The average eviction can take 42 weeks which means months of lost rent as well as court costs.

That’s where rent guarantee insurance comes in. 

This can be a lifesaver or at least a business-saver. Like all policies, Rent Guarantee Insurance operates on the principle that paying a modest regular premium is a sensible financial commitment to guard against catastrophic loss. 

We insure our property and our valuables, so why shouldn’t a landlord insure their income?

According to Which? magazine significant numbers of people are regularly missing important payments, including mortgages, credit card bills and rent. 

This isn’t because of any unwillingness to pay, but simply because the dramatic rises in the cost of living are leaving millions of people short of money. 

With inflation heading for double figures and interest rates rising inexorably, this position is likely to worsen especially in October when expected rises in the cost of gas and electricity are set to bite.

What Does Rent Guarantee Insurance Cover?

Policies differ, but they will generally cover unpaid rent for six to 12 months. They may also pay the landlord’s legal expenses and the costs of any disputes that arise in any action to recover rent arrears or pursue repossession or eviction processes. 

In addition, the insurance company might fund access to a panel of solicitors who can offer legal advice. It’s important to bear in mind that the level of cover you receive may be subject to prescribed limits. 

Yes a landlord, you can’t assume you’ll be automatically compensated to the full level of any loss, but the right policy could go a very long way towards achieving this.

What’s Not Covered?

Again, as with most insurance policies, Rent Guarantee Insurance cover won’t be payable for the initial period – usually the first month but potentially for longer. This is to protect the insurer from any misuse of their services.

Once you’ve succeeded in evicting the tenant or they have left of their own accord, any payments will normally stop. This is because the policy is not designed to cover any empty property, even though you may not have a tenant immediately ready to replace them. The same applies should you decide not to re-let but to sell.

Many rent guarantee insurance policies will exclude those types of tenant that the insurance company considers to be high risk, such as the unemployed and students. Commercial properties are also excluded.

It’s important to remember that the cover relates only to unpaid rent and situations arising from it. It won’t help you with any legal costs for disputes over terms in the tenancy itself.

The Landlord’s Predicament

Landlords are as vulnerable to cost of living rises as anyone else. Many are being compelled to increase rents in order to cover mortgage loans on their rental properties as well as the cost of maintenance and commercial overheads. 

Many are also leaving the PRS because of changes to tax laws, increased oversight and lack of Government support.

And there isn’t a day that goes by where landlords are either being vilified or counting the cost of unpaid rent, with some stories showcasing the appalling condition of properties handed back after months, and in some cases, years of protracted negotiations and court action.

Rent guarantee insurance is one sure way for landlords and those whose services they use to get protection from what can be a drastic loss of revenue. 

It can be added to landlord insurance policies that are already in place and can apply to existing tenancies as well as new ones and renewals. 

In comparison with the thousands of pounds that could be lost, a policy is relatively cheap, with prices starting at £150 a year when bought together with other landlord insurance.

Requirements for Rent Guarantee Insurance

All insurance companies require policyholders to meet strict conditions and this involves assiduous record keeping. 

Insurers will want to see a detailed schedule of how much rent is owed as well as evidence that all references were properly completed and that the tenant’s deposit has been correctly protected within an approved deposit scheme. 

They will also want to see all correspondence between the landlord and tenant as well as copies of every property inspection and inventory report that has been carried out during the tenancy. 

Having the right evidence, that is robust, beyond contestation and clearly showcases the changes to a property, will help insurers and despots schemes make fair and swift judgments when it comes to management of the tenancy.

Property Reports

Lettings agents are also likely to be affected by the loss of management fees and there is a corresponding risk to the livelihoods of inventory clerks who rely on regular inventory property management assignments to keep their businesses viable. So it is in everyones interest to do all we can to support the industry by proving quality services that protect the asset.

Inventory Base is a specialist supplier of software for landlords, letting agents and inventory clerks and provides an efficient, cost-effective way of keeping the thorough records that will be needed in the event of a claim against the Rent Guarantee Insurance policy. 

Not only do our services enable you to protect your property, but they also support efforts to claim compensation if faced with the nightmare of tenant rent arrears.