Rent Guarantee Insurance is more important than ever for landlords as it offers rent cover for up to 12 months if a tenant stops paying their rent. Under the new Act, many evictions are expected to take longer than under previous legislation as they must now be approved by the courts.
Rent Guarantee Insurance can tide the landlord over until they can replace the tenant that has defaulted on their rent with a paying tenant.
Under the Renters’ Rights Act an eviction for rent arrears will have to go through the court system. Even though there is an online court service that landlords can use for rent arrears repossessions this could be subject to backlogs and delays. A tenant will now be able build up three months of rent arrears before the landlord can start the process of evicting them (up from two).
Ravi Sejpal, Director of Insurance at Karis Insurance, says: “If landlords can’t recoup lost rental income, then that can quickly erode any returns they are making from that property. Reviewing insurance now is not just sensible - it could prove essential once the new rules take effect. It’s not clear how long a repossession will take under the new system so landlords can take out a Rent Guarantee Insurance providing them with the security of a 12-month indemnity period. It’s accepted that many other parts of the civil court system in the UK suffer from delays and backlogs.”
Rent Guarantee Insurance also covers landlord’s legal costs
Legal expenses under the policy can cover legal advisor’s costs so landlords can pursue or defend a claim for Tenant Eviction, Mediation and Pursuit of Rent Arrears amongst other areas
Ravi Sejpal says: “Legal disputes can quickly cost thousands, especially if cases drag on under the new Act. Without the right cover, landlords risk being substantially out pocket just to regain control of their own property.”
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