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With people twice as likely to break up between Christmas and Valentine’s Day compared to any other time of year, where legal advisers and psychologists have dubbed January ‘Divorce Month’, we are worried to learn how many landlords are not renewing their rent guarantee insurance policies after the first year.
Startling statistics released by our insurance partners RentSafeUK reveal that upto 20% of landlords are failing to renew their RGI policies in the last quarter. The main reason behind this is because the landlord has carried out thorough tenant referencing beforehand, the tenant has consistently paid throughout the tenancy and so they see no need to renew their policy.
The problem with ‘The Tenant Seems OK’ Scenario is that this outlook is totally blinkered. Every person on the planet has had a problem in life at one time or another and we never know when or where it will happen. So failing to renew a policy to save a paltry £1.82 per week is extremely foolhardy to say the least!
Other reasons include:
Furthermore, RentSafeUK also claim that most tenants fall into problems in year two and three of the tenancy.
With rent arrears steadily rising in the wake of welfare reform via Universal Credit, swathes of extra legislation being heaped onto landlords e.g. selective licensing, as well as tax changes due to commence from this April one of the most stressful problems a landlord can face is rent arrears.
According to the National Landlords Association, in 2016 35% of landlords experienced rent arrears, 29% had their property damaged by tenants and 13% experienced anti-social behaviour.
We all know that anything can happen in this turbulent economy post Brexit. So landlords who heavily rely on mortgage payments to stay afloat would be wise to take out a comprehensive policy. After all, when a tenant falls into arrears their rent payments will usually come to an immediate halt for several months – especially if the landlord has to go to court to evict the tenant.
An effective RGI and legal expenses policy simply provides residential landlords with extra peace of mind, eliminates stress and makes the property investment journey a much smoother and enjoyable process.
Failing to insure Rent & Legal Expenses because a tenant has paid on time for any period is exactly the same as not insuring the property because the tenant has not burnt it down yet …!
As we get older many of us understand how indispensable and fundamental life insurance is to a sound financial plan. It gives us peace of mind knowing that money will be available to protect our loved ones and estate should anything happen to us.
You wouldn’t fail to renew your health insurance because you were fit and healthy throughout the year, would you?…
Pet lovers around the world use pet insurance as a safety net to ensure protection against unexpected costs further down the line, as veterinary bills can become extremely costly.
You wouldn’t fail to renew your pet insurance because nothing happened to it last year, would you?…
This is why pro-active landlords are protecting their assets year on year, by safeguarding their yields with practical rent guarantee insurance products from RentSafeUK.
The hardest thing for a LL to source is a tenant or tenants who qualify for RGI
Once sourced you don't let go of them or the RGI policy they originally qualified for.
Irrespective of what changes in their domestic circumstances providing you renew the RGI policy you never need to reference those tenants again.
That has to be the Gold Standard as far as any tenant is concerned
Why would any LL irrespective of how a tenant performed ever wish to lose the possible RGI qualification!!!??
Renewing a RGI policy removes that risk and GUARANTEES that LL will suffer little losses if eviction for rent arrears is ever required.
If it was me I would breathe a breath of blessed relief that I had a tenant on whom I could continue RGI policy renewal with no additional referencing required.
NO WAY would I allow a RGI policy to lapse if the existing tenants remained
Not having RGI on a tenant stresses me out
I worry all the time I will be the victim of a rent defaulting tenant.
That could bankrupt me and leave me homeless!
I truly do not understand the mentality. It seems that the idea of taking a continuous insurance against unforeseen eventualities does not exist when it comes to insuring rent and legal costs and the mentality that because something never happened that year it would never happen ever is absurd.
I can't tell you how many landlords join us saying that the tenant was OK for a few years and then went totally awol. I even get landlords, and even some agents, asking if we can back-date the renewals because the tenant had turned rotten on them a few months after they never renewed "madness"
I've just paid £310 to insure my car which has a value of about £2500
I doubt I would receive that value in the event of total loss.
I can pay £80 for an insurance policy to prevent the possibility of me NOT having £10800 in rent losses whilst evicting a tenant!
Very few tenants if any pay rent when they are to be evicted.
Plus I know that if the situation continues to be absolutely nightmarish I could receive a further £40000 if it took another 3.5 years to evict!!!
Unlikely but nice to know the insurance company pays out for that length of time!!
I simply can't imagine not having that sort of insurance if possible to achieve.
I sometimes wonder whether LL know what they are doing!!
Do I need to have a deposit in place to qualify for the Rent Safe rent guarantee insurance? Thanks in advance
No, our insurances do not require a deposit.
The great thing about this is that some tenants are struggling to be able to come out of one tenancy and then find another deposit to put down for a new property, without getting total reimbursement from their previous landlord. Our insurance policies allow for landlords to take a tenant without a deposit and then (if required) the landlord can agree that the tenant, when receiving their deposit back from their previous landlord, could pass it onto the new landlord.
So if a landlord still wants to take a deposit, all be it with our policies they don't need to, this gives them
better flexibility in taking-on tenants.
I went to a local landlord meeting last week and after bestowing the benefits of rent guarantee insurance one of them literally said 'I took out RGI, but the tenant is settled and has given us no problems so we're happy to continue without renewing our policy........' I tried to explain that they were committing commercial suicide with such an apathetic attitude, but they just didn't get it !!!
So it got me thinking - I bet these sort of people wouldn't have car insurance if it wasn't a mandatory requirement.....If car insurance wasn't mandatory then I'd not only still buy insurance but I'd upgrade to the best policy I could buy. Being hit by uninsured drivers is a big enough risk already, NEVER MIND if it wasn't a requirement; it would be IMPOSSIBLE to own ANYTHING nice!
THIS is why I take out RGI on all of my properties. Just because 'a tenant is settled and hasn't given you any problems' doesn't mean they never will; in this day and age we're ALL one step away from our P45 after all.
I haven't died from Ebola in the last 30 years - doesn't mean I'm not going to renew my life insurance !!
My dog didn't get Lungworm last year - doesn't mean I'm not going to renew my pet insurance !!
IT'S NOT ROCKET SCIENCE LANDLORDS! Just ONE tenant could bankrupt you !!!
SO WAKE UP AND PROTECT YOUR INCOME AND ASSETS PROPERLY!
At my age I wouldn't have time to recover from major rent or damage losses. It makes NO business sense to risk losing thousands of pounds for the sake of an extremely cheap RGI policy!
Your rent guarantee and legal expenses insurance is second to none, why would a good landlord go anywhere else?
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