Rent Guarantee Insurance?

macgirl

We are in our second year of letting our former home.
First year went well with a good tenant. Second tenant moved in a month ago and we've just been informed by the agent that her DD has not been set up.
The reason sounds reasonable to us, but the way the email was worded has made me feel the agency think the tenant is giving us the run around.
So far we have not had rent guarantee insurance, but now I feel there's an urgency for it.
A search threw up loads of companies I've never heard of and LLZone quotes with LL insurance -which we already have.

The agency offered cover at £150pa, but a friend said his was £60 - but can't remember who with. Can anyone offer any recommendations please?

I know Martin advises against this, but I'm more likely to take a balanced view of the knowledgeable peeps on this site, than take a punt on an unknown co.

Thanks in advance

poppy10_2

These policies are generally worthless, and it will probably be too late to get insurance against the current tenant in any case.

G_M

The DD would have to be set up by the agent, not the tenant - so you have either misunderstood, or your problem is your agent!

Rent guarantees almost always have to be set up at the start of the tenancy, and the tenant has to be 'approved'/ vetted/accepted by the scheme.

It's a bit like waiting till your car breaking down and then trying to call out/join the AA!

And as poppy saya, you need to read the small print. There are many 'exclusions' where they won't pay out. There are the 1st X months of defaulted rent that are excluded; there are the limits on pay out; etc etc

As you say, there are many schemes. Use google to find them, get quotes, and read the precise terms of each one.

macgirl

Thank you two.
Yes Poppy, I think there's a reason we decided to swerve it in the first place, it must have been after I read as such on here.
Don't know whether on balance it's worth having for "worst case scenario" (ie: going through the courts to evict someone) - as I guess that's what insurance ultimately is....

I realise it's shutting the gate after the horse has bolted, but wondered if it's worth getting in future. What does everyone else do?

Thanks again, I really value and appreciate people's input on here :beer:

tbs624

macgirl wrote: »

We are in our second year of letting our former home.
First year went well with a good tenant. Second tenant moved in a month ago and we've just been informed by the agent that her DD has not been set up.
The reason sounds reasonable to us, but the way the email was worded has made me feel the agency think the tenant is giving us the run around.

There may be a perfectly legitimate reason why the T has not sorted out the paperwork (SO if coming from them to LA, DD if LA is requesting from Ts bank). What is your LA doing about it?

Anything to stop you giving your Ts a quick call to introduce yourself and just check what's happening?

Many LLs manage without rent guarantee insurance and its all phaff and small print.

Were the new Ts properly referenced by your LA? Did you ask to see copies of relevant info?

G_M

I never have it. I liken it to those ' 5 year warranty extension' they try hard to sell when you buy a new toaster. It costs half the price of the toaster, only applies in certain circumstances, and is likely never to be claimed, or if claimed, likely not to pay out. Hell - there's even an Act (Sales of Goods Act) that says a product must last a reasonable period of time, which for a toastr is more than a year - so you can sue after 2 years whatever the warranty says.

Save the money, put it in a high interest account to earn interest for you, and watch it grow. If the toaster breaks, which is unlikely, then make up the difference and buy a new toaster, or sue the shop. Do this with 3 or 4 electricals and your fund will always have enough to fully fund a broken item.

Same if you have 3 or 4 let properties, and even if you only have one, the odds are you'll never need it. But if tenant does default, either use your contingency fund (you do have one....?) and/or sue.

My guess is it is sold to many first time LLs for peace of mind

a) because they don't fully understand how it works (or doesn't) or
b) because they want as little risk and as little involvement in their property as possible

edit: from what you say, the tenant is not in arrears as yet, so panicking is a bit premature! I don't know what "the way the email was worded has made me feel the agency think the tenant is giving us the run around." means but
a) it could be the agent c*cked up and he's giving you the run around or
b) the tenant plans to hand over cash or a cheque on rent day. Nothing wrong with that although it's not ideal from your perspective. But provided the rent is paid, there's nothing you can do.

macgirl

tbs624 wrote: »

There may be a perfectly legitimate reason why the T has not sorted out the paperwork (SO if coming from them to LA, DD if LA is requesting from Ts bank). What is your LA doing about it?

Anything to stop you giving your Ts a quick call to introduce yourself and just check what's happening?

Many LLs manage without rent guarantee insurance and its all phaff and small print.

Were the new Ts properly referenced by your LA? Did you ask to see copies of relevant info?

Hi tbs and thanks
Yes T was properly ref'd. The agent have a good reputation (I've gathered from FA, friends who are tenants and other LL's) so am happy with their explanation. It seems that the T changed mobile companies, so the bank needed further ID checks. The T has paid by card, so it's all ok - finger's crossed!

Thanks G_M, that was my hunch - we also avoid "toaster warranties".
Thanks for your reassurance and level-headed advice, much appreciated

rock_queen

Hi,

From my own experience I would say get the insurance. My first lot of tenents were fantastic and always paid on time every month. The new tenents who are 5months into the tenency havent paid the rent for the last 3 months. Luckily the insurance kicks in after 2 months of non payment, solicitors and fees are also included in the policy should it end in court action. (it probably will)

My advice for the sake to 80 quid or so for the year is well worth it if you need it and for peice of mind.

tbs624

Always good to have different viewpoints aired rock queen but note that the OP's Ts are already in situ

macgirl

G_M wrote: »

edit: from what you say, the tenant is not in arrears as yet, so panicking is a bit premature! I don't know what "the way the email was worded has made me feel the agency think the tenant is giving us the run around." means but

"the T says they changed mobile numbers so the bank want more id checks - so she says." In hindsight, it was probably just sloppily worded email.

a) it could be the agent c*cked up and he's giving you the run around or
b) the tenant plans to hand over cash or a cheque on rent day. Nothing wrong with that although it's not ideal from your perspective. But provided the rent is paid, there's nothing you can do.

I was not panicking exactly, just wanted to be sure that WE hadn't c*cked by not having the insurance in place. I didn't want to write the exact email in order to remain anonymous. It seems all ok now - we're still inexperienced LL's and want to both do right by the tenants and protect ourselves and our investment.

Thanks anyway and have a good evening.