Hello,
I am wondering if anyone has used 'rental insurance or rent proection / Guarantee and whether its actuallyworth getting as a landlord?

I have a flat which I rent out, and most of the time, the tenants I've vetted myself or by the agent don't cause too many problems. However there is always the odd case where the tenants refuse to pay rent. I just had some tenants who refused to pay rent and left me with a whole load of debt which I cannot recover.

Has anyone used any sort of rent insurance and which one would you reccommend? Has anyone had to make a claim and how easy or difficult was it to reclaim your money?
Is it even worth getting? If the reference checks are all done thoroughly then is it even worth spending the money?

Are there any clauses which make it difficult to claim etc? I know there is a company called 'Homelet' but they charge quite a bit and its per applicant. If there are more than a few applicants, the cost can add up quickly.

I am currently in the process of getting references from the prospective tenants' employers and landlord. Should that be sufficent enough or would you actually reccommend getting the insurance?


I'd be grateful if anyone has any advice on this matter and any reccomendations would be appreciated.
Thanks

Hi

The agency I use insists all landlords use an insurance company called 'letsure' which costs about £80 per year. I have never had anyone default on rent so don't know how straightforward it is to recover lost rent - perhaps a waste of £80.

On the other hand my parents have been letting through an agent for several years to the same person - references were taken and all was fine until about 6 months ago when he not only stopped paying but also moved other people in. They have finally got rid of him after going through the courts but the chances of recovering any lost rent look slim - and anyway they are so busy cleaning up the mess he left and redecorating the place that they probably won't have the time or energy to pursue him!

Insurers make a lot of money out of this form of insurance (akin to payment protection insurance on loans) so that means premiums are much higher than claims. Ergo it's a waste of money if looking at it in general terms. Of course in certain situations it may be cost effective.
Huw

Hi

My personal take on rent protection insurance is it's generally a very worthwhile element and the cost should be tailored into the annual yield calculation. As with all insurance policies, they seem expensive until you actually need them - then they are worth every penny! I always have rent guarantee attached to my tenancies and, from experience, I can tell you they save a huge amount of time, effort and cost, when a tenant defaults. Continuity in rent payments is often crucial to a buy-to-let investment, and rent guarantee protection is one way of ensuring such continuity, regardless of problem tenants. Forum rules prevent me from recommending a particular insurer. Be aware that if you take out rent protection insurance, you ordinarily need to follow the insurer's application process (with regard to employer and bank references, etc), so always check with the provider before starting the process.

I have written a number of articles on rent guarantee insurance over the last year or so. Check through the archive and also Landlord's Clinic for more info on specific insurance providers.

Tony B