Renters Rights Act – landlord’s urged to take out Rent Guarantee Insurance to make sure they’re covered for the changes

Buy-to-let landlords should urgently consider getting Rent Guarantee Insurance as the Renters’ Rights Act, which comes into force on May 1, may lead to lengthier periods of default on rent by tenants, says Karis Insurance.

Rent Guarantee Insurance is more important than ever for landlords as it offers rent cover for up to 12 months if a tenant stops paying their rent. Under the new Act, many evictions are expected to take longer than under previous legislation as they must now be approved by the courts.  

Rent Guarantee Insurance can tide the landlord over until they can replace the tenant who has defaulted on their rent with a paying tenant. 

Under the Renters’ Rights Act, an eviction for rent arrears will have to go through the court system. Even though there is an online court service that landlords can use for rent arrears repossessions this could be subject to backlogs and delays. A tenant will now be able build up three months of rent arrears before the landlord can start the process of evicting them (up from two). 

Ravi Sejpal, Director of Insurance at Karis Insurance, says: “If landlords can’t recoup lost rental income, then that can quickly erode any returns they are making from that property.” 

“Reviewing insurance now is not just sensible – it could prove essential once the new rules take effect.” 

“It’s not clear how long a repossession will take under the new system so landlords should make sure they have insurance which covers rent for up to 12 months. It’s accepted that many other parts of the civil court system in the UK suffer from delays and backlogs.” 

Rent Guarantee Insurance also covers landlord’s legal costs 

Rent Guarantee Insurance not only covers missed rent when tenants fail to pay but it also covers landlords’ legal costs incurred in tenant eviction, mediation and the pursuit of rent arrears up to £100,000. The insurance also covers the legal costs of any disputes between the landlord and HMRC over tax payments.  

Ravi Sejpal says: “Legal disputes can quickly cost thousands, especially if cases drag on under the new Act. Without the right cover, landlords risk being substantially out pocket just to regain control of their own property.” 

“At Karis Insurance, we help landlords get the right specialist cover in place fit for new complexities in the rental market. With Rent Guarantee Insurance typically costing £295 a year, it provides excellent value for money for landlords looking to mitigate the risk of renting in a changing legal landscape.”  

How we can help

If you require Landlord’s Insurance to make sure you’re covered uner the new legislation get in touch here.