118 days to evict a troublesome tenant: Is rent guarantee a good solution?

[Phil Brown 40]

News released today by the Ministry of Justice states that the average eviction of troublesome tenants takes 118 days (4 months). So it's an important question to landlords whether or not to take out rent guarantee insurance. 

 

Eviction in some regions of the UK have fallen, and others have risen. The number of court actions to repossess properties brought by private landlords in Yorkshire and Humberside has fallen by a quarter since 2003. In Wales, it has more than doubled.

 

Rent guarantee can be taken out for as little as £60 a year and will cover once the tenant hasn't paid rent for one month and one day. It will also cover the cost to evict, all legal expenses as well as any damage that the tenant has done to the property. 

 

With all this in mind... Would you take out rent guarantee? 

[Property Money Tree 7]

Rent insurance is part of my business strategy, but like everything in life, the devil is in the detail.  I took out a few c. £60 policies, and it wasn’t as good as it was billed when needed, such that the agent admitted there was potential miss-selling.  I am now with a much bigger insurer, and the premiums are higher, but at less than a month’s rent for a yr’s cover, it will be invaluable should I need it.  It is worth shopping around and reading the small print - as boring as it is!

[dennis hughes 60]

Hard to say. Our quote was £175. c 1.2 months net cashflow. Still not made a decision and haven't obtained comparables, but probably yes.

 Our first one is in an area with low income, low income expectations so I think we will go with some form of insurance, after spending a few (many) hours of shopping around...

[david graham 8]

It seems sensible as it is only a relatively small percentage of the income and it reduces risk significantly. Perhaps even more importantly it is a repeatable cost and therefore easy to factor in to your analysis and calculations. A possibility of missed rent for an unknown number of months and potentially unknown legal fees presents an uncertainty I would rather avoid. Particularly if your strategy includes purchase price properties which may attract lower income (and potentially higher risk) tenants. I think the reassurance is worth the cost.

[conrad_paton 105]

Hi all,

On 1/3/2019 at 3:37 PM, david graham said:

 A possibility of missed rent for an unknown number of months and potentially unknown legal fees presents an uncertainty I would rather avoid. 

Why is there a potential for unknown legal costs?

Like most insurance, you should only take this out if you cannot cover the costs of not having the insurance in place.

Remember the insurance companies are in the business of making profit. 

If you are dealing with risky tenants and/or risky areas and you cannot afford to evict tenants, is this the correct strategy for you? 

I'm not saying dont take out this cover, but you should study the small print on the policy to see exactly what is and isn't covered

Conrad