What is rent guarantee insurance?

What’s the difference between rent guarantee insurance and loss of rent cover? We help landlords by looking at the finer points of each policy

A landlord’s worst fear is often not receiving an income for any of the buy-to-let properties they own. But letting agents in Croydon, Harrow, Greenwich, Hounslow and many other of London’s 32 boroughs report that many investors are not clear about the difference between landlord insurance and rent guarantee cover.

According to North London-based rent guarantee specialist Assetgrove, many landlords believe a rent guarantee scheme is a policy that works in a similar way to standard landlord insurance.

But it’s more than this. Assetgrove operations director Neil Jennings says it is the ultimate way for a property entrepreneur to establish a hassle-free lettings business.

Neil explains: “A rent guarantee scheme can take the stress out of managing your property and ensure a landlord receives fixed monthly payments even if the property’s not rented out.

“Assetgrove offers up to five years guaranteed rent and will manage every single aspect of the tenancy during this period – with no monthly fees, commissions or hidden surprises to pay for.”

 

How does this differ from loss of rent insurance?

Loss of rent insurance covers income lost if your property becomes uninhabitable because of, say, fire damage and your tenants are forced to move out while repairs take place. This is usually included as part of your buildings cover, but it will not pay out if tenants either hand in their notice or fall behind with their rent.

The majority of policies that cover loss of rent have a clause forcing landlords to wait three months before a landlord can make a claim – especially if the policy is taken out after the tenant moves into the rental home.

This stops insurers losing out if landlords take out a policy only when an existing tenant appears to be presenting problems.

Are there any other benefits to taking out rent guarantee insurance?

With property prices in London and many other parts of the UK rising, many landlords are content to benefit from the rising value of their property without gaining any extra income from tenants.

But a home’s value can go down if it is unoccupied for any length of time, and it becomes a target for vandals or squatters – putting the value of your property asset at risk.

Some of the larger rent guarantee scheme operators not only provide landlords with a fixed monthly income, they maintain the property and allow landlords to benefit from its rising value.

Assetgrove, for example, has a maintenance team that will fix, decorate or refurbish any property on its books. And because the company has access to a wide range of suppliers, the costs can work out less than if an individual arranged the work.

The cost of finding reliable tenants – and the time this can take – is also covered, as are the increasing number of legal loopholes a landlord must now negotiate.

West Hampstead lettings agent Paramount Properties says these now cover a wide range of areas, from protecting a tenant’s deposit by placing it in a government-backed tenancy deposit scheme to ensuring rental properties have both smoke and carbon monoxide alarms installed.

Landlords seeking a hassle-free way of running a profitable property empire are, therefore, advised to sign up to a guaranteed rent scheme.

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