Rent Guarantee after 12 months?

cmdenny

Hi, I have 2 rented flats (BTL's) both with tenants in. For one property the estate agent provided a rent guarantee. For the other property I had to pay for the rent guarantee myself. The first property (rent guarantee provided by letting agent in that instance) has it's 12 month lease come up in July. I am guessing I should speak to the agent to see if they can extend the rent guarantee and pass on cost to me? I should point out that for both flats I manage the tenants, but used a LA to find tenants.

The question is, are rent guarantees valid and applicable if the tenant's rent agreement moves onto a rolling notice period after 12 months? I believe this is the case for the July renewal. The rent agreement is actually kept on file at the LA's.

The 2nd property I sorted the rent guarantee myself, and have looked through the policy but can't seem to see any points in regard this. I will give them a call.

Essentially I want to have rent guarantee's in place to minimise risk on the BTL investments. In fact, following on from this I am guessing that in preference to a rolling contract it's better to ask tenants to sign another 12 month contract to offer further protection to the rent (so I can make sure mortgage is covered)?

G_M

Is the EA rent guarantee an insurance scheme or an agreement with the agent? If the latter, you probably have a commercial tenancy (not AST) with the agent as your tenant (and they then let via an AST to the occupant).

If so, make sure you fully understand the implications.

If both are insurance schemes, read them carefully and check you understand. Personally I have never thought they were worth having. Too many limitations and exclusions - better to rely on good tenant vetting, and good tenancy management.

However, regarding your Qs I suspect they would only pay out in a case where rent stopped during a fixed term. However they may continue to provide cover in a SPT. Only the policy document will tell you! If you ring for advice, get the answer confirmed in writing!

Since you are dispensing with the agent's services, I would rely fully on your own insurance thereafter. (as an aside, get the deposit sorted!)

A new 12 month fixed term woud provide both you and the tenant security, but the tenant may not wish to commit (depends on their circumstances) and canot be forced to.

* Ending/renewing an AST: what happens when a fixed term ends? How can a LL or tenant end a tenancy? What is a periodic tenancy?



* Letting agents: how should a landlord select or sack?

AdrianC

cmdenny wrote: »

Essentially I want to have rent guarantee's in place to minimise risk on the BTL investments.

Remember, the only reason these policies are on sale is because they're profitable since the providers pay out (claims, running costs, marketing, everything) far less than they receive (premiums).

Basically, you're betting that your tenant is considerably more likely than average to default on rent, because that's the only way that you'll be better off paying for the policy.

Seems like a very negative approach to me. I think I'd prefer to find tenants that were less likely to default, not least because they're far less likely to give me problems in other areas, too.