Have you ever thought about what might happen if your tenants stopped paying their rent? How much do you rely on that income? How many months of arrears could you stand before you would be in trouble?
If you’ve avoided thinking about it, you’re not alone. It’s not pleasant to think about potential losses and their consequences. Besides, we’d all like to believe that we’ve got the necessary judgement to spot a reliable, financially secure tenant. But while it’s true that for some landlords, non-payment will never be an issue, they are the lucky ones.
The five-figure risk
We live in a very uncertain world. Even a wonderful tenant could fall ill, face redundancy or split with a partner. One month the payment into your bank account – the money you rely on to pay the mortgage – is late. The following month it doesn’t arrive at all. You’re still facing the same costs on a depleted income level and if the problem persists, it can affect everything from your current lifestyle and ability to settle your debts to your long-term financial security.
Let’s put some figures on this. The average rent is £850 per calendar month. The average tenancy duration is 30 months. That’s rental income of £25,000. If you ignore the risks, you risk losing that much. While that’s a worst-case scenario, when you can protect yourself for a relatively small sum, it’s worth asking why more landlords don’t take out rent protection cover.
Most likely, it’s a combination of factors. They don’t want to think about the risk, don’t know they can insure against it or believe that the cost will be prohibitive. It’s also likely they don’t realise that cover can also be included for associated legal costs.
The essential option
At LegalforLandlords we don’t just consider rent protection insurance as an optional extra. We consider it an essential. Why? Well, simply because we’ve seen the devastation caused when rental income isn’t on track or dries up altogether. We’ve helped people through the legal process of regaining control of their property, but without insurance, once that income’s gone, it’s gone. Only a tiny proportion of rent arrears are made good once a tenant has been evicted.
For a very modest premium, you get something unbeatable: peace of mind. We use Markel, a top-class underwriter with high standards and a range of policies with options to suit. Add to that our Legal Services Team with all their experience and understanding of ever-changing property law and you’ve got a winning combination.
If you’ve been avoiding thinking about what would happen if your tenant stopped paying, we urge you to take five and give it some thought. Nasty, isn’t it? But remember this: the reassurance of simple, affordable Rent and Legal Protection is only a phone call away.
Find out more here.