Landlords flocking to take out rent insurance

Landlords are increasingly taking out renters insurance in response to spikes in tenant arrears.

During the pandemic landlords were unable to evict tenants and notice periods were lengthened, leading to some renters exploiting the system to not pay.

Now landlords are changing tack and prioritising reliable income over big gains, as lettings platform Mashroom saw sales of rent insurance surge by 400% month-on-month in In February.

While landlords can now technically evict problem tenants there is an extreme court backlog, resulting in some landlords waiting nearly a year to recover their properties.

The Telegraph reported one case where the landlord took pity on his tenants by allowing them to stay in the property rent-free for three months, after the breadwinner lost their job.

However the tenants said they weren’t moving after the three month period, while they were advised by local authorities to remain in the property, or they wouldn’t be given another council tax.

In the end the landlord handed the tenants £2,500 as a deposit for another property so they would leave, bringing his total losses to £7,300.

Unsurprisingly he said: “I no longer rent without insurance in place, which erodes my gains.”

The growing popularity of renters insurance was underlined by David of Votta Sales & Lettings in Kent.

He said: “We have seen a huge increase in landlords taking out rent insurance. Before the pandemic I would say 40pc took a guarantee option. Now it’s 95pc of my listings.”

Oliver Sherlock of Goodlord, a lettings company that offers rent insurance, told The Telegraph: “For many years such products were peripheral for many landlords, as they saw the risk as minimal. Previously, average claims would take around five months.

“However, the pandemic and the lengthening of the legal process have resulted in claims lasting up to 17 months.”

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