Tenant Stopped Paying? Why Every Landlord Needs 'Rent Guarantee Insurance'
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| Tenant Stopped Paying? |
Being a landlord in the UK has never been harder. With mortgage rates staying high and the cost of living crisis squeezing budgets, the risk of tenants defaulting on rent is at a record high.
If your tenant stops paying tomorrow, can you afford to cover the mortgage for the next 6 to 12 months while paying expensive solicitor fees to evict them? If the answer is "No," you need Rent Guarantee Insurance (RGI).
What Does It Cover?
This is not standard "Landlord Building Insurance" (which covers fire and flood). This is specifically Income Protection for your business.
- Unpaid Rent: It pays you the monthly rent arrears (up to a limit, e.g., £2,500/month) while the tenant occupies the property without paying.
- Legal Expenses: It covers the solicitor fees and court costs required to serve eviction notices (specifically Section 8 notices for arrears) and regain possession.
- Post-Eviction Cover: Some premium policies pay 75% of the rent for a short period after eviction while you find a new tenant.
The Impact of the "Renters' Rights" Reforms
With the government moving to abolish Section 21 (no-fault evictions), removing a tenant has become a strictly legal process requiring court hearings.
Even with a perfect case for rent arrears, UK courts are severely backlogged. It can currently take 6 to 12 months to legally evict a non-paying tenant via the courts. Without insurance, you are losing money every single day during this dragged-out process.
⚠️ Crucial: The "4-Step" Eligibility Check
Insurers are strict. To claim, you must have done these 4 things before the tenant moved in:
- Full Reference Check: A professional credit and employment check showing the tenant can afford the rent.
- Right to Rent Check: You must verify their legal right to live in the UK (Home Office requirement).
- Signed AST: A valid Tenancy Agreement must be in place.
- Deposit Protection: The deposit must be registered with a government-approved scheme within 30 days of receipt.
If you skipped any of these steps, your policy is void.
Is It Tax Deductible?
Yes. Just like your mortgage interest (subject to Section 24 rules) or agent fees, the premium for Rent Guarantee Insurance is a legitimate business expense. You can fully deduct it from your rental income to lower your annual tax bill.
Protect Your Investment Now
Your rental property is a business asset, not a charity. Don't leave your cash flow to chance in this volatile economy.
For a small monthly cost (often less than £30), Rent Guarantee Insurance ensures that even if your tenant runs out of money, you don't run out of yours.
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