Landlords risk rent guarantee claim rejection



Landlord insurers may reject rent guarantee claims if buy to let investors fail to follow tenant deposit protection rules.

Rent guarantee insurance is specialist cover for buy to let landlords that pays out if a tenant falls in to rent arrears.

The insurance not only pays the lost rent but generally includes legal expenses cover for evicting the tenant.

Most rent guarantee insurers want landlords to show they have followed their legal obligations before taking a tenant to court.

This includes providing copies of key documents like:

●        The assured shorthold tenancy agreement

●        Gas, electric safety and energy performance certificates

●        Proof of tenant deposit protection

Since April, landlords in England and Wales have had to protect deposits within 30 days – and from July, deposit protection becomes compulsory in Scotland.

Failing to protect the deposit restricts the landlord’s right to go to court to evict a tenant in rent arrears.

Now, landlord insurers are booting out rent guarantee claims without proof of deposit protection because they are unlikely to win the case in court.

Not only do landlords have to prove that they have provided the tenant with copies of all the documents required by law, they also have to credit check and reference the tenants before they move in to their rented home, otherwise rent guarantee cover is void.

A recent survey by Mydeposits, a tenant deposit protection scheme, found 49% of tenants in England and Wales were not provided with details of the scheme protecting their deposit by their landlord or letting agent.

Another survey by Mydeposits last year showed 98% of 528 landlords claimed to protect deposits.

“However, although the overwhelming majority of landlords are protecting a deposit, it seems more can be done to explain to the tenant that the deposit has been successfully protected,” said a spokesman.

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