1. What Does Rent Guarantee Get You As A Landlord?
1. Protection Against Rent Arrears
If tenants fall behind on rent due to financial struggles, the policy covers unpaid rent for a set period, typically six or twelve months.
2. Legal Expenses for Eviction
Evicting a tenant can cost thousands in solicitor fees and court charges. Many rent guarantee policies cover legal costs up to £50,000, helping landlords reclaim possession of their property without excessive expenses.
3. Reliable Cash Flow
For landlords with mortgages or regular outgoings, having guaranteed rental payments ensures financial stability even if a tenant defaults.
4. Cover for Vacant Possession
Some policies provide continued rent payments for a limited time after eviction, giving landlords financial support while they find a new tenant.
What We Have Covered In This Article?
- What Does Rent Guarantee Get You As A Landlord?
- What Is Rent Guarantee Insurance And How Does It Work?
- Do London Landlords Need Rent Guarantee Insurance?
- What Are The Benefits of Rent Guarantee Insurance?
- What Are The Downsides of Rent Guarantee Insurance?
- What Does Rent Guarantee Insurance Cover?
- How Much Does Rent Guarantee Insurance Cost?
- Alternative Ways To Protect Rental Income
- Should London Landlords Invest In Rent Guarantee Insurance?
- FAQ’s From London Landlords We Get About Rent Guarantee Insurance
2. What Is Rent Guarantee Insurance and How Does It Work?
Rent guarantee insurance ensures that landlords receive rental income even when tenants miss payments. The policy covers unpaid rent for a set period, usually between six and twelve months, and can include legal costs if eviction becomes necessary. To qualify, tenants must pass affordability and referencing checks before the policy takes effect. If a tenant defaults, the landlord follows a claims process to recover the lost income.
3. Do London Landlords Need Rent Guarantee Insurance?
Rental arrears are a growing concern, especially as London tenants now spend around 33% of their income on rent. A recent Molo survey found that 60% of UK landlords have experienced an increase in late rent payments, with an average of 2.9 missed payments per year. Rising eviction costs and lengthy court processes make it harder for landlords to recover losses. For those relying on rent to cover mortgages and maintenance, rent guarantee insurance can provide peace of mind and financial stability.
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Worried about rent arrears and difficult tenants? Our expert property management service ensures reliable rent collection, tenant vetting, and full legal compliance.
4. What Are the Benefits of Rent Guarantee Insurance?
1. Makes a Property More Desirable
Recent research from Rightmove shows that ‘bills included’ is now one of the most popular search terms for renters, surpassing searches for ‘pets’ and ‘garden’. This indicates that including bills can help landlords attract more tenants, reducing vacancy periods.
2. Attracts Different Types of Tenants
Offering rent with bills included may appeal to a wider range of renters, including students, young professionals, and first-time renters. Many prefer a simple, all-in-one payment to avoid the hassle of setting up accounts and managing fluctuating bills.
3. Less Risk of Unpaid Bills
If utilities are included, landlords can ensure that all payments are made on time. This avoids disputes at the end of the tenancy over unpaid energy bills, meter readings, or account transfers.
4. Fixed Income and Predictable Expenses
Landlords can estimate utility costs and factor them into rent. This can provide a more stable cash flow compared to tenants managing their own bills.
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Finding reliable tenants is key to avoiding missed payments. Our professional lettings team secures high-quality tenants and handles everything from contracts to rent collection.
5. What Are the Downsides of Rent Guarantee Insurance?
1. Policy Costs
Rent guarantee insurance typically costs 3-5% of annual rental income. For a property renting at £2,000 per month, this could mean £720-£1,200 per year.
2. Exclusions and Restrictions
Policies may exclude certain tenants, such as students or those on benefits. Some policies have waiting periods before claims can be made and require landlords to follow specific legal procedures.
3. Claim Processing Time
Most insurers take 30-60 days to process claims, meaning landlords may need to cover short-term financial gaps before payouts begin.
6. What Does Rent Guarantee Insurance Cover?
Missed rent payments (usually for up to six or twelve months)
Legal expenses for eviction (often up to £50,000)
Ongoing rent payments during legal proceedings
Some premium policies also include:
Cover for vacant possession periods (a percentage of rent for a few months after eviction)
Property damage caused by tenants
7. How Much Does Rent Guarantee Insurance Cost?
The price depends on:
Location – Properties in high-rent areas like London may have higher premiums.
Tenant type – High-risk tenants increase the cost.
Coverage level – More comprehensive policies are more expensive.
Rental amount – Higher rents mean higher insurance costs.
On average, landlords pay £60-£120 per month for rent guarantee insurance, depending on the insurer and policy details.
8. Alternative Ways to Protect Rental Income
1. Tenant Referencing
Carrying out thorough credit and affordability checks before signing a tenancy agreement reduces the risk of rent arrears.
2. Larger Deposits or Rent in Advance
Requiring a higher security deposit or several months’ rent upfront provides a financial buffer against non-payment.
3. Using a Letting Agent or Property Manager
Professional property management companies screen tenants carefully and handle rent collection, reducing the risk of arrears.
Secure Reliable Tenants and Steady Rental Income
Late rent and tenancy issues can be stressful. We find fully vetted, reliable tenants and manage your rental property so you can enjoy stress-free income.
9. Should London Landlords Invest in Rent Guarantee Insurance?
For landlords who depend on rental income to cover mortgages and expenses, rent guarantee insurance can be a valuable safeguard. While the cost is a consideration, the risk of rent arrears, legal fees, and eviction costs can make the investment worthwhile.
Landlords with tenants on long-term contracts, strong references, and stable financial backgrounds may feel comfortable without it. However, those renting to higher-risk tenants or managing multiple properties may benefit from the added security.
10. FAQ's From Landlords we get about Guarantee Insurance
How quickly does rent guarantee insurance pay out?
Most policies have a waiting period of 30-60 days before claims are processed and payments begin.
Can I get rent guarantee insurance if my tenant is already in arrears?
No, most insurers do not cover existing rent arrears. Tenants must pass referencing checks before the policy starts.
Does rent guarantee insurance cover property damage?
Some premium policies include damage protection, but standard landlord insurance is usually required for full coverage.
Is rent guarantee insurance tax-deductible?
Yes, landlords can claim the cost of rent guarantee insurance as a business expense when filing tax returns.
What happens if a tenant refuses to leave?
Rent guarantee insurance covers lost rent and legal costs for eviction proceedings, ensuring landlords do not face financial losses while regaining possession of the property.
Rent guarantee insurance can help landlords protect their rental income, avoid financial disruption, and cover legal costs. Whether it is worth it depends on individual risk tolerance, tenant profile, and financial situation.
