Every landlord’s dream is to ensure a steady, reliable cash flow from their rental properties. But unfortunately, this isn’t always possible. From void periods to rent arrears, there are many risks that come with private lettings.
If you’re looking for financial stability as a landlord, rent guarantee insurance and guaranteed rent schemes can help. Both rent guarantee measures are designed to prevent or reimburse you for unexpected losses of rental income.
But what is the difference between guaranteed rent and landlords’ rent guarantee insurance? In this guide, we’ll compare these two rent protection methods and explore their pros and cons.
Rent guarantee insurance is a type of insurance policy designed to protect your income if your tenants don’t pay rent. This is a scenario that most private landlords are familiar with, and it can’t always be predicted. Even the most reliable tenants may fall into arrears if they’re faced with unexpected financial hardship (e.g. redundancy).
If you have landlord insurance with rent guarantee, you can claim back missed payments from your insurer. Most guaranteed rent insurance policies will cover you for a period of 6 to 12 months. This will give you enough time to go through the formal eviction process and find new tenants. There are a wide range of providers offering different levels of cover, so it’s worth exploring your options.
A guaranteed rent scheme, also known as ‘rent to rent’, is a service offering landlords a steady, risk-free rental income. It involves signing a contract with an agent, such as a property management company, who then sublets the residence. They may use it as a holiday let or rent it out to long-term occupants.
Most guaranteed rent agreements last from 3 to 5 years. During this time, you will receive fixed, regular payments, regardless of how much income the property is generating. This applies even during void periods.
Throughout the contract, the guaranteed rent company is typically responsible for all aspects of property management and maintenance. Each company’s policy will differ, so read the contract carefully before you sign it.
What Is Rent Guarantee Insurance for Landlords?
Rent guarantee insurance is a type of insurance policy designed to protect your income if your tenants don’t pay rent. This is a scenario that most private landlords are familiar with, and it can’t always be predicted. Even the most reliable tenants may fall into arrears if they’re faced with unexpected financial hardship (e.g. redundancy).
If you have landlord insurance with rent guarantee, you can claim back missed payments from your insurer. Most guaranteed rent insurance policies will cover you for a period of 6 to 12 months. This will give you enough time to go through the formal eviction process and find new tenants. There are a wide range of providers offering different levels of cover, so it’s worth exploring your options.
Pros and Cons of Rent Guarantee Insurance
The main benefit of guaranteed rent insurance for landlords is the peace of mind it provides. Most policies cost less than £200 per year – a small price to pay to guarantee rent for 12 months. However, there are several downsides:- It’s not instant – claiming on insurance takes time and effort. Typically, you must serve your tenant a Section 21 or Section 8 eviction notice before your provider will pay out
- You will have to pay an excess when making a claim (usually equal to one month’s rent). This means you won’t be compensated for the full amount of lost income
- Claims made within the first 90 days are typically not covered. So, you have no protection if your tenants stop paying within the first 3 months
- There is a time limit – you must usually start your claim within 60 days of the first missed payment
- Claims may be rejected if the tenant has a history of rent arrears, or if you fail to inform your insurer of changes to your circumstances
- Rent protection insurance does not typically cover void periods – you will have to take out unoccupied property insurance for this
What Is a Guaranteed Rent Scheme?
A guaranteed rent scheme, also known as ‘rent to rent’, is a service offering landlords a steady, risk-free rental income. It involves signing a contract with an agent, such as a property management company, who then sublets the residence. They may use it as a holiday let or rent it out to long-term occupants.
Most guaranteed rent agreements last from 3 to 5 years. During this time, you will receive fixed, regular payments, regardless of how much income the property is generating. This applies even during void periods.
Throughout the contract, the guaranteed rent company is typically responsible for all aspects of property management and maintenance. Each company’s policy will differ, so read the contract carefully before you sign it.
Pros and Cons of Guaranteed Rent for Landlords
Guaranteed rent schemes offer many key advantages over rent guarantee insurance policies. For example:- With your rent guaranteed, you’re assured long-term financial security – with no reductions during void periods
- No need to make an insurance claim if a tenant falls into arrears – you are paid by the agent (guaranteed rent company), not the occupants
- The agent will handle all tenant issues, including emergencies, inspections, repairs and evictions – reducing the hassle and stress of being a landlord
- No maintenance fees – the property management company will cover all costs associated with cleaning, servicing and refurbishment
Start Your Guaranteed Rent Journey with 53 Degrees Property
At 53 Degrees, we provide landlords with a secure, reliable and hassle-free way to earn a guaranteed rental income. With our guaranteed rent service, you can enjoy stable monthly payments with no void periods, rent arrears or agency feeds. Our guaranteed rent contracts range from 3-5 years, with the opportunity to extend if desired. We’ll keep your property serviced and maintained to the highest standards throughout. To find out how much guaranteed rent your property could make, contact 53 Degrees Property today. Fill in our online form or call 0330 058 0165 and we’ll get back to you with a quick estimate.Get a FREE Guaranteed Rent Valution
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