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A Tenant Referencing UK landlord member has helpfully sent in this latest article from The Times:
The reason the landlord sent this in is because of the the advice that The Times ‘Experts’ have provided isn’t exactly the most proactive guidance.
Lets start from the beginning!
The featured landlord’s own home has a mortgage on it, with 10 years still to pay; not very tax efficient for starters!
Of her two rental properties: the London property, at approximately £900k value, makes her 2.5% gross and her Bristol property returns 4.5% gross. So with a mortgage on it she probably clears around £800 pcm gross.
Question: Nice enough, but is this rent guaranteed?…
Anyway, if she re-mortgages the London property for £500,000 to enable her property purchase in Majorca (rather than sell) her best asset could be the one she loses first if she doesn’t obtain Rent Guarantee Insurance (RGI) on it.
The Experts, which includes advice from The Association of British Insurers, concludes: Get appropriate insurance.
Well yes, of course get appropriate insurance – but why stop at one category of risk???
This landlord knows that she doesn’t qualify for income protection in her current salaried position, meaning that she’s already exposed to some risk on her main residence with 10 years more to pay down on it.
“Great that there are other savings and investments about, etc,” says our landlord member.
“But I guess if she was intending to pay the mortgage off with them she could have done that before now. Hope is that she stays well. Hope?! She’s already taken her prized pension and is relying on both rental properties for her future life, as currently being mapped out. See the article in full for all the romantic things she has in mind; nice pad in Majorica with pool, views, logfire, biking about, playing golf, etc…
How very fluffy and lovely! Seems like she should be weighing up a lot more than learning Spanish!!
Therefore The Times haven’t given her the best advice, and I guess they don’t know about RGI either. So on the strength of this article, you should become one of their experts, Paul!”
The Times landlords response:
‘Even as someone who works in the financial sector I hadn’t considered the implications of not having proper health cover’.
For her future to stack up, and any other landlord that might be contemplating this route, she needs it ASAP! Wise landlords employ RGI as a strategy to reduce this risk, where the cost is also an allowable business expense.
If you manage to house a non paying ‘professional’ tenant, before long your bills can be astronomical. Gain an understanding of the possible cost of this by adding up eight months rent minimum (it takes most Landlords at least 2 months to decide to evict), add court fees, bailiffs fees, your time, stress and energy. Don’t forget to add in the out of pocket expenses such as damage to the property, removed boilers, copper piping amongst a whole host of other damage that can be done. Environmental health visits and other activities can also delay the process by at least 12 months.
Having protection against this, in association with LandlordReferencing.co.uk’s unique Tenant History reports , is one of the best methods of insuring against misfortune.
Perhaps Paul R could prepare a press release to be added as an appendix to this supposed informed Times reply to this poor ignorant LL
I’m sure the ignorant LL would be no more!!!?
This LL has very expensive properties which do presumably attract tenants who would easily qualify for RGI and yet she doesn’t have it!!!
This story just confirms my belief that many LL are just thick!!
When their whole livelihood depends on the precariousness of some stranger paying rent; to not have an insurance policy to cover rent arrears etc, which is just too cheap for words is plain bonkers!!!
How this dopey LL has survived this long I just don’t know
Would it be possible to find out from her why she has never considered RGI?
Why do these stories seem to persist??
Surely it would make sense for the major RGI providers to market their policies more vigorously to the LL customer base
Surely any LL who does have tenants who can qualify for RGI a LL would be bonkers not to have a RGI policy
There are some strange LL out there that think that just because things have always been OK in the past and that their LA is pretty good that they don’t need RGI!!!!!!!!
Talk about setting yourself up for a fall
I could possibly understand the argument against if RGI was expensive
I have 2 gas checks which cost me £100 every year, or rather I have 4 so £200 per year
I have thought they were unnecessary!!
My RGI has saved me losing £10500
Had I lost this I still wouldn’t have earnt sufficient to cover those losses
At no time did I ever suspect that I would need to claim on the RGI policy
RGI is just so cheap you have to be mad not to have it if achievable!!
I really don’t understand the logic of a LL not prepared to pay £100 to guarantee being paid £50000 in the event of what would be a very protracted eviction
RGI companies tend to be very quick in evicting as it means less claim monies being paid out
You could almost look on RGI as paying for all eviction costs should they ever occur
LL Action which provides a well publicised and apparently very effective eviction service charges quite a bit
Why bother with using such an expensive service when for the sake of £100 per year all that is covered!?
Whilst we have such a useless eviction process £100 per year to make up for that major deficiency makes sound business sense to me
The alternative if you can’t pay a mortgage whilst eviction is being processed doesn’t bear thinking about
I have nearly been bankrupted by non rent paying tenants, thank god for credit cards
But that is before I knew about cheap but very effective RGI!!!
This woman clearly needs to be told a few realities about how poorly she is managing her business
Hopefully once informed she will become a LRS member and regale us with all issues which will be very informative and helpful for all those other LL that either haven’t heard of RGI or that don’t believe it is worth £100 per year!!!!!!!
We shall see!?
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