All landlords looking to ensure they get paid each month must be aware of the difference between Rent Guarantee Insurance and guaranteed rent schemes.
Rent Guarantee Insurance
Rent Guarantee Insurance protects your rental income from loss of rent. This means that you will still get paid if your tenants fall into rent arrears.
The Just Landlords policy covers up to £50,000 worth of rent arrears and can also cover the legal expenses you incur through evicting your tenants. In addition, we will continue to pay you 50% of the rent for three months if the property is uninhabitable. It really couldn’t be easier to protect your rental income and avoid being hit by rent arrears.
Get an instant online quote here: https://www.justlandlords.co.uk/rentguaranteeinsurance#pricecheck
For more information on the ultimate peace of mind cover, read our handy guide: https://www.justlandlords.co.uk/news/landlords-guide-rent-guarantee-insurance/
Guaranteed rent schemes
Under a guaranteed rent scheme, a landlord signs over their property to a company or letting agent for a specified period of time, in return for a guaranteed monthly income. The agent then sublets the property to tenants and manages the tenancy. Most schemes also promise to cover any void periods and maintenance costs.
These firms make their money on the difference between the rent they receive from the subtenant and the rent they pay the landlord.
Traditionally, guaranteed rent schemes were offered by local authorities. However, an increasing number of letting agents and property investors are breaking into the market.
You must be aware that these set ups can go wrong if the company does not have the financial resources or inclination to back up the guarantee. In the worst case scenario, landlords can be stuck with tenants in their property, but no rent.
Paul Shamplina, of evictions firm Landlord Action, warns landlords that if a guaranteed rent scheme goes wrong, or the company offering the arrangement goes bust, it can be very difficult for you to get your property back.
In addition, if the company receives rent from the subtenants but does not pass it onto the landlord, the landlord must take legal action against the firm.
All landlords considering a guaranteed rent scheme must also be aware that you still have to comply with your legal responsibilities (including fire safety, Energy Performance Certificates and tenancy deposits).
Landlords, remember that if you want to make sure that you will get paid every month, the easiest way to protect your income is with Rent Guarantee Insurance – the ultimate peace of mind cover.