As a responsible landlord, you make every effort to maintain a smooth, civil, and professional relationship with your tenants. With the best will in the world, however, there may be times when you have little option but to seek legal redress in resolving some dispute with your tenants – or, indeed, defending your own actions as a landlord in some legal action pursued by your tenant.
Pursuing or defending any legal action may prove expensive – and those involving the relationship between landlord and tenant are no exception.
Our landlords legal protection insurance allows you to enjoy all-round peace of mind that your legal costs are covered (up to £50,000 per incident), at what we believe is a very competitive price.
Our optional rent guarantee insurance gives you the reassurance that should your tenant fall in to rent arrears or absconds owing you outstanding monies, then this insurance will step in and compensate you (up to set limits).
Benefits of our residential let legal expenses and optional rent protection insurance policies include:
- available as a stand-alone policy to an existing residential let property insurance policy
- cover for loss of rent up to the policy limits per month for a maximum number or months (or until vacant possession has been achieved)
- loss of salary or wages incurred for the time off work to attend any court or tribunal hearing as a witness or defendant. Please check the policy limits for the daily and maximum amounts
- legal costs incurred in the exercise of your legal rights to evict anyone, other than tenants who have your permission to be in the property
- cover for all tenant and residential types, including flats
- our insurance policies not only provide compensation for your loss of rental income but also generous provision for legal protection insurance – up to a maximum of £50,000 in legal costs associated with efforts to recover rental arrears from tenants who have yet to be evicted or those who have already absconded.
Legal protection insurance and the recovery of rent arrears
The basis for many disputes between a landlord and their tenants revolves around the non-payment or build-up of rent arrears.
It is essential to recognise that legal protection insurance does not cover the amount of any rent arrears owed by your tenant – but it can help cover the legal costs associated with recovering those arrears. Let’s see how that might work when allied with the related, stand-alone cover of rent guarantee insurance.
Rent arrears are the bane of every landlord’s life – they eat away at your income, and the cost of recovering those arrears is expensive both in terms of the legal expenses likely to be involved in any eviction and the time you spend in pursuing such action.
Legal protection and rent guarantee insurance cover are the twin elements designed to safeguard you against such losses in two main ways – just as the description suggests, by providing cover for the legal expenses involved in attempting to recover rental arrears when evicting tenants and compensation for any lost rental income.
Our rent guarantee insurance includes cover for landlords legal expenses as standard.
- when you have tried everything in your powers to persuade your tenant to come to some arrangement over their rent arrears – by agreeing to a payment plan, for example, by paying any housing benefit they may receive directly to you, or by calling in a guarantor upon whom the tenant may have relied – legal action may be necessary;
- if you have reached the end of the fixed term of an assured shorthold tenancy (the most common form of tenancy agreement), you may issue a section 8 notice for repossession of the let property – you will need to go to court in pursuit of the eviction and give reasons (the arrears of rent, for example) for your application to evict;
- at any other time, you may issue a section 21 notice to the tenant to quit – typically, you will not need to attend court and do not need to give any reasons for your notice of repossession;
- a section 8 or a section 21 notice to quit, however, is designed to secure your possession of the property and not necessarily any recovery of rental arrears – although these may be awarded (but might not be) during any court hearing of your section 8 notice;
- landlords’ legal protection insurance covers the expenses and costs involved in pursuing any civil dispute with your tenant or defending any claim that may have been made against you as the landlord – in other words, and as we have already noted, it covers much more than just notices to quit, evictions or attempts to recover rental arrears;
As a responsible landlord, you have a duty to take every reasonable precaution in selecting tenants to avoid both arrears of rent and the legal costs involved in recovering those arrears.
Therefore, it is a condition of such insurance policies that you secure one approved credit reference agency report and at least one adequate character reference in writing for each of your tenants. So, make sure to build in the necessary steps each time you take on a new tenant so your rent guarantee and legal protection insurance will pay out in the event it needs to.
The excess incorporated into our rent guarantee insurance is the equivalent in value to one month’s rent on each claim you make under your policy.
Frequently asked questions (FAQs)
In anticipation of just some of the queries you may have about legal protection insurance, here are some of the most frequently asked questions (FAQs) we receive on the subject.
Why buy landlords legal expenses insurance?
If you have a dispute with one of your tenants (for missed payments or damage, for example) the cost, time, and effort of pursuing any legal action against them would probably result in a financial loss to you – as well as being very time-consuming.
Landlords legal expenses insurance will provide you with security and peace of mind. So, if you need to take legal action against a tenant for eviction, repossession, damage, or whatever, then your legal costs will be covered (up to the limits outlined above).
What does landlords’ legal expenses insurance cover?
In a nutshell – and as we have seen – the insurance assists with the cost of legal expenses relating to proceedings you take against a tenant.
For example, your tenant misses a rent payment. You serve them a notice seeking possession and begin court proceedings to get a possession order.
Your legal expenses insurance will cover (up to set limits) the cost of legal help to put your claim together and legal representation at the hearing. It will also include (again, up to set limits) loss of salary or wages incurred for the time off work to attend any court or tribunal hearing as a witness or defendant.
What is rent guarantee insurance?
Rent arrears are one of the classic problems in the relationship between a landlord and his tenants. They are a serious issue since rent paid when it falls due is essential to the success of your buy to let business.
There may be times when a temporary delay in the payment of rent occurs through no fault of the tenant who might have fallen sick or recently lost their job. The fair-minded landlord might want to adopt a flexible approach and work out with the tenant a solution to such a temporary problem.
If you cannot resolve the issue of unpaid rent with your tenants, your options may be more limited – you may need to pursue legal remedies or seek compensation through specific, purpose-designed rent guarantee insurance.
Rent guarantee insurance is an optional add-on to your legal expenses insurance and gives you the peace of mind that should your tenant fall in to rent arrears or absconds owing you outstanding monies, then this insurance will step in and compensate you.
Why do I need rent protection insurance?
You might be asking yourself why you need rent guarantee insurance if the legal remedy exists of simply evicting tenants whose rent is in arrears and applying to the courts to recover the money you are owed.
Evicting your tenants from your let property on the grounds of rental arrears may, indeed, be one of the options you consider.
Although we are, of course, in no position to offer legal advice, there are certain principles governing any attempt to evict your tenants for the non-payment of rent. You may soon discover that the law appears to be heavily weighted in favour of the tenant in any eviction proceedings – which you must follow to the letter of the law. As the official website warns, you may be guilty of the offences of harassment or illegal eviction if you do not follow the prescribed procedures.
Almost inevitably, the eviction process may take time – during which the rental arrears continue to mount. Although your legal action may also include an attempt to recover the arrears you are owed, success is by no means assured – and you may still be faced with what is likely to be a rapidly escalating legal bill.
In the absence of any rent guarantee insurance, meeting those legal fees and charges comes from your own pocket.
Doesn’t my regular landlord insurance cover unpaid rent?
You might also be asking yourself whether you need specialist, stand-alone rent guarantee insurance when your regular landlord insurance policy already makes some degree of compensation for loss of rental income.
Most landlord insurance policies – including those arranged here at Cover4LetProperty – make provision for what is considered to be compensation for loss of rental income. But it is important to appreciate that this relates to compensation for rental income likely to be lost following a severe insured event which leaves your let premises temporarily uninhabitable such as a severe fire or flood – and, therefore, unlettable – pending repairs and reinstatement.
The provision for loss of rental income is typically limited – by a fixed period or by a prescribed amount, typically calculated as a percentage of the total sum insured under your principal landlord insurance policy.
Beware that these provisions for compensation do not cover your loss of rental income in the following circumstances:
- tenants who are withholding the payment of rent because of some dispute with you as the landlord;
- tenants who are running up rental arrears when they cannot pay the rent because they have suffered an accident or injury, are sick or pregnant, or redundant and unemployed;
- tenants who have absconded, owing arrears of rent; or
- your failure to recover unpaid rent from any deposit currently held by a company registered to safeguard tenants’ deposits – there may be circumstances in which you have attempted to recover funds for rent arrears or damage to your property from the deposit but where the licensed deposit holder has not agreed and refused to allow the deduction from the funds they are holding.
Your landlord insurance, therefore, does not offer any recourse for the recovery of rent arrears. Rent guarantee insurance, on the other hand, is a stand-alone product that you can buy alongside your landlord insurance. So, if a tenant slips into arrears of leaves the property, your first line of defence is likely to be rent guarantee insurance.
How do I address the problem of unpaid rent?
Unpaid rent is perhaps one of the most commonly encountered problems for landlords and although there is no solution which is guaranteed to avoid it, there are certain steps you can take to help reduce the likelihood of it arising:
- put in the effort required to build and maintain an excellent relationship – based on mutual communication – with your tenants;
- deal with any late payments immediately and do not allow the situation to drift and arrears to build up; and
- be understanding but cautious about accepting verbal excuses and promises – be polite but go into writing immediately and follow the legally-defined steps for rent arrears management.
What do I need to obtain rent protection insurance?
As with any type of insurance cover, rent guarantee insurance policies rely on you playing your part as the landlord in mitigating potential losses.
In that context, your selection and vetting of potential tenants – even before any tenancy agreement is signed – is critical. As part of your precautions when selecting tenants, therefore, our rent guarantee insurance policies require you to obtain for each tenant:
- a credit agency reference sourced from a reputable and recognised credit reference agency;
- at least one satisfactory and relevant written character reference – typically, character references from close family members would not be considered appropriate.
These steps are essential if you are to reduce the risks of letting to potential problem tenants. While these checks can never be an absolutely guaranteed method of avoiding issues further down the line, they can be extremely useful as a filter.
Please also note that an excess (the sum you will be expected to contribute towards the cost of any future successful claim) of one month’s unpaid rent applies to each claim made.
How do I get a quote for landlords’ legal expenses insurance and optional rent protection?
You can buy this insurance as a stand-alone product or add it on to your landlord’s insurance. To find out more about landlords legal protection insurance and rent protection insurance and enjoy the peace of mind it offers – or to get a quote – please ‘phone us on 01702 606 301. We’d be delighted to help.
Or click on the “Get quote” button above.
How do I reduce the risk of problem tenants?
Of course, you want the best possible tenants for your property, and so it makes sense to take pre-emptive steps before they move in. This can include tenant referencing, drawing up an inventory (with photos of the high-value items such as furnishings in case there are disputes are damage) and having a watertight tenancy agreement.
Backing this up with the most suitable landlord insurance and legal expenses insurance can help provide you peace of mind that your asset and your business is properly protected.
Why choose Cover4LetProperty for Residential Let Legal Expenses and Optional Rent Protection?
At Cover4LetProperty, we are a long-established insurance company authorised and regulated by the Financial Conduct Authority (FCA) and registered in England and Wales. We strive to offer only first-class products backed up with first-class customer service. You can get an insurance quote online anytime. Or, if you prefer to speak to us, one of our professional, dedicated team will be pleased to help you.
We are consistently rated 4 and 5 stars for our customer service by Feefo, the independent ratings website. We have also been awarded the Platinum Trusted Service Award by Feefo!