Loss of rent guarantees during COVID-19 outbreak

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    Loss of rent guarantees during COVID-19 outbreak

    Hi all,

    With so many people recently being asked to work from home coupled with Boris’ recommendations for people to stay away from certain establishments I am concerned a number of my tenants who work in bars/restaurants or own small independent shops will struggle to pay their rent in the coming months.

    I am therefore considering purchasing rent guarantee for each of my properties (particularly via RentGuard).

    I’m wondering if anyone knows whether there will be any mitigating terms that may effect any potential payout should my tenants fall into arrears during the coming months and whether the provider may put this down to the rare conditions of the COVID-19 outbreak.

    Perhaps they may even be suspending new policies during the economical uncertainties the last few days have presented?

    Before shelling out hundreds I was wondering if anyone can provide any answers on whether RentGuard or any other provider of loss of rent guarantees would still pay out over the next few months or whether there will be any special terms buried into their T’s & C’s.

    Furthermore I am sure I’m not the only landlord concerned for their rental income recently, do you have any contingency plans in place for potential arrears?

    Thanks,

    Nick

    #2
    It’s worrying times a head. Not sure what the answer is

    Comment


      #3
      But what on earth's the point, even if you can get cover?

      The cover only pays out for a month or so pending s8 eviction. Then you have no rent and no tenant. You'd be better off letting him go in arrears for a few months, and gradually paying it off.

      I think that's all you can do really.

      Comment


        #4
        Originally posted by nick_noal View Post
        Hi all,

        do you have any contingency plans in place for potential arrears?


        Assess the likelihood of your tenants being affected. (Full time workers in large organisations will have sick pay for example).
        Monitor rent dates closely.
        Contact immediately there is a late payment. Get them to confirm there are no disrepair problems.
        Get all your ducks lined up ready.
        React to their response and each tenant's circumstances.
        Act promptly.

        Reactions could include;
        Agreed late payment. Flexible payment plan. Use of deposit. Guarantors. Early release from tenancy. Starting MCOL. Starting the eviction process. Possession order but not acted on. Full eviction. (6 years to claim back arrears.)
        It all depends on the tenants willingness to cooperate, most will IME.

        N.B Landlords are still be responsible for repairs even when the tenant isn't paying the rent.

        -Taking out RGI now is like whistling in the dark. Use any premiums for building reserve funds.

        Edit; Reposted, flagged as spam (again).

        Comment


          #5
          As above - very sensible.

          Rent guarantee insurance would be hard / impossible retrospectively.

          It's going to be hard for everyone.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            I would doubt if any Insurer would provide Rent Guarantee cover in the current climate but I may be wrong. Does anyone know what the position is here: I signed a 6 months Shorthold Tenancy Agreement for new tenants for my studio, accepted a deposit which I put in DPS scheme. However the tenancy agreement is effective from 31/03/20. Can I pull out at this stage. I would of course give them their deposit back.

            Comment


              #7
              Originally posted by JK0 View Post
              But what on earth's the point, even if you can get cover?

              The cover only pays out for a month or so pending s8 eviction. Then you have no rent and no tenant. You'd be better off letting him go in arrears for a few months, and gradually paying it off.

              I think that's all you can do really.

              My understanding was that when the tenant goes into two months rent arrears, this is when you can claim back any loss of rent

              Comment


                #8
                Originally posted by nick_noal View Post


                My understanding was that when the tenant goes into two months rent arrears, this is when you can claim back any loss of rent
                I believe I have summarised the cover fairly accurately. Payment is suspended in the event of a defence to the s8 application, so the most you will get is a few weeks worth while papers go back & forth.

                Comment


                  #9
                  Just received this from my letting agent who charge 3.5% extra for 'rent guarantee'.

                  In light of the current unprecedented COVID-19 crisis, we have received questions from customers around the Premier Service and whether it covers them for pandemics. To clarify, the Premier Service does not provide indemnity directly or indirectly related to a pandemic and/or epidemic or the fear or threat of a pandemic and/or epidemic, notably at this time Coronavirus (COVID-19). This includes related or similar conditions and any mutation of these.
                  Typical!

                  Comment


                    #10
                    Originally posted by Mikemul View Post
                    I would doubt if any Insurer would provide Rent Guarantee cover in the current climate but I may be wrong. Does anyone know what the position is here: I signed a 6 months Shorthold Tenancy Agreement for new tenants for my studio, accepted a deposit which I put in DPS scheme. However the tenancy agreement is effective from 31/03/20. Can I pull out at this stage. I would of course give them their deposit back.
                    My understanding given the current situation is that the Rental Guarantee remains effective for all existing guarantees and tenancies but not applicable to any new tenancies.

                    Comment

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