Landlord rent guarantee insurance

What isn’t covered by rent guarantee insurance?

It’s important to read the details of your policy carefully to check what’s excluded. There are a few common exclusions:

• Deferral periods – you’ll typically find that you won’t be covered for the first month of rent arrears. You may also be unable to make a claim for a set period after taking out your policy. You should check details of any deferral periods before taking out insurance.
• The defaulting tenant leaves – if you manage to evict the tenant who’s defaulted on their rent, or they leave willingly, your payments will normally end. This may be regardless of whether you’ve found a new tenant, so it’s important to check carefully.
• You decide to sell the property - if you reach the point that you decide to put the property on the market, rather than try to find a new tenant, you’ll likely find that your rent guarantee insurance will stop paying out.
• Types of tenants – you may find that insurance providers will exclude certain types of renters. For instance, people who are unemployed, are on state benefits, or students, may be excluded from your cover, as they’re seen as a higher risk for defaulting on their rent. You should also make sure that you get a tenant reference, when possible, as there may be exclusions for tenants who fail to provide one.
• Commercial properties – if the property is used for business, you’ll need to arrange another type of cover.
• Contract disputes – you won’t normally be covered for any legal costs if you and your tenant enter a dispute over the terms of your rental contract.

How can I protect my income if I can’t rent out my property?

Although landlord insurance policies vary between different insurance providers, most will offer optional cover to protect rental income. This comes in the form of both rental guarantee and rent protection.

Rental income protection could cover the amount of rent you would’ve received during an unoccupied period, if you’re unable to rent out your property for an insured reason. These may include incidents like flood or fire damage. This is separate, and should not be confused with rent guarantee insurance/tenant default insurance, which can protect you when a tenant is unable to make their rental payments.

Before you apply for rent guaranteed insurance, ensure:

• You have a tenancy agreement in place and the tenants have been successfully referenced
• Your policy provides sufficient cover - check the maximum number of months and the total value from which you can claim unpaid rent from your tenant

What other types of insurance can I get as a landlord?

Landlord insurance can include cover for many other things, including:

• Buildings insurance – – this covers damage to the structure of the building and built-in features like fitted kitchens, wardrobes etc. This insurance can protect you against flooding, storm damage, subsidence, fire and more
• Contents insurance – while your tenants may want to arrange this type of cover for their possessions, you should consider it to protect any furniture, carpets and curtains included in your rental agreement.
• Unoccupied property cover can offer a replacement income while you’re in-between tenants.
• Liability insurance can help you cover expenses if you’re taken to court because of your property.
• Landlord home emergency insurance gives you 24/7 cover and access to emergency building services if your property needs urgent plumbing, electrical or heating work, or emergency work to secure it.
• Legal expenses insurance can protect you for any legal expenses that you may face as a landlord. For example, the cost of taking a tenant to court over unpaid rent.

What to look out for as a landlord

Whether you’re already a landlord or you’re thinking about investing in your first buy-to-let property, there are lots of things to consider. As well as protecting your income, it’s important to think about the location of your buy-to-let property, how you’ll maintain it and how you’ll find the right tenants.

Finding the right tenants

Some areas are more popular than others with different types of tenants, whether that’s families, young professionals or students. There are pros and cons to renting your property to these different types of people, and tenant type can also affect the cost of your insurance, with professionals generally seen as lower risk than students, so think about who your ideal tenants are before you decide on a location.

To identify the best places to be a landlord to families, young professionals and students, we’ve taken the top 20 locations to be a landlord and added different ranking factors for different types of tenant.

Best places to be a landlord to young professionals

Young professionals can be attractive to rent to because their steady, permanent jobs mean they’re likely to pay their rent on time each month. Generally, this group looks for good transport links, modern, minimalist style and fast internet, especially with more and more people working from home.

To rank the top places to be a landlord to young professionals, we looked at BT Hub Wi-Fi hotspots – which are useful when people are out and about for work – and average broadband download speeds.

Cambridge, Birmingham and Renfrewshire have the fastest average broadband speeds, and South Lanarkshire, North Lanarkshire and Birmingham have the largest number of BT Hub Wi-Fi hotspots. But overall, Birmingham, South Lanarkshire, North Lanarkshire, Coventry and Cambridge are the best places to invest as a landlord to young professionals.

How to make your property more attractive to tenants

From décor and cleanliness to space and eco-friendliness, there are things that can have a big influence on how attractive your property is to potential tenants. And certain aspects, such as the type of property and the size of it, can affect the cost of your landlord insurance.

We surveyed 2,000 renters to find out which property features are most appealing – and unappealing – to UK renters, and what people would be willing to pay more for.

15 things about properties that put UK renters off

Certain property features – such as the type of property and how big it is – can impact your landlord insurance. But which features can affect someone’s decision to rent your property?

Lack of a shower is enough to put off 50% of renters – it’s particularly unappealing to people in Edinburgh. Single glazing is a no-go for 47% of renters, and no outdoor space would deter 45% of people.

Looking at the top 15 features that would put renters off, two big themes are lack of space and lack of modernisation.

“Avoid older HMOs (houses in multiple occupation) and refurb properties unless done to a good standard,” advises Dale Anderson, Managing Director of property investment company, Fabrik Invest. “Older houses come with a variety of potential issues, which could cost you in potential unforeseen service and repair costs.”

These are the features that put renters off, but there also a whole host of features that are hugely appealing to prospective tenants, and that they’re even willing to pay extra for.

Methodology

Best places to be a landlord – Google searches for ‘room to rent in X’ and ‘house to rent in X’ were sourced from Google Keyword Planner between November 2018 and December 2020. Average House Price and Average Monthly Rent were sourced from ONS, Gov.scot, Gov.uk and Stats Wales. Yield was calculated by dividing the average annual rent by the average house price. A weighted rank was used to determine the overall top 20.

This process was repeated for families, professionals and students.

• For families – Ofsted, Education.gov.scot and Gov.wales were used as sources to determine number of schools and the percentage of outstanding schools.
• For professionals – Ofgem and BT Wi-Fi were used as sources for average download speeds and Wi-Fi hotspots.
• For students - The Complete University Guide and official university websites for each local authority were used as sources.

Features that attract/deter renters – Censuswide survey of 2,000 renting adults across the UK in December 2020