Most landlords know they need to protect their investment and will immediately purchase landlord buildings insurance, quite often it being a requirement of the buy-to-let mortgage. But how many of you think about rent protection?
If you are a landlord with a buy-to-let mortgage in Chorley, please take a few minutes to read on.
With the cost of living crisis and dare we say higher energy bills affecting the whole country we know all too well how our monthly budgets are being squeezed to the max. This includes renters who are most likely paying a larger proportion of their income on rent compared to those who have bought their home with a mortgage. The Department for Levelling Up, Housing & Communities stated in their A Fairer Private Rented Sector Report released in June that private renters spend on average 31% of their income on rent.
With this in mind, how would you cope if your tenant fell into arrears? Even the best tenants may find themselves in a difficult situation and unable to pay you the rent you rely on. Could you afford to go months without any rent at all, could you still pay your mortgage in full?
If you could, that’s great news! If not, then you could be faced with months and months of no income plus additional costs to reclaim possession of your property.
Unless a tenant with rent arrears, and who can no longer afford the rent, voluntarily gives notice to vacate the property your last resort will be to serve notice on the tenant to vacate the property. The reality of this is if your tenant can no longer afford to pay your rent they are unlikely to be able to afford any other property, plus the fact they have fallen into arrears will make it extremely difficult to pass references on another property. They will have nowhere to go and therefore will remain in the property until a court order is issued.
Yes, we said court order. This is the eventuality if your tenant doesn’t leave your property. If you have to go through the courts to gain possession this could take months before a hearing is even heard let alone getting the court order for possession. If the tenant still refuses to leave then you will need to apply for a bailiffs warrant. This can take anywhere from three months up to around six months but with recent court backlogs possessions have been taking much longer. You will have court fees, solicitors fees and possibly bailiff fees to pay. That lack of income from rent is now turning into a large debt you owe.
We take you back to the question ‘Could you afford to go months without any rent at all, could you still pay your mortgage in full?’. This is something we ask all our new clients so they have a full understanding of the process should this occur. It’s not about scaring you but making you aware of all the possibilities of being a landlord and providing the best advice for your circumstances.
If you cannot afford your mortgage payments without the rental income, then your best contingency is to purchase rent protection. It is not the huge dent in the pocket as you may think and it provides a blanket of security for your investment. It also takes the hassle out of you having to arrange everything.
Most rent protection policies include, in some variation, the following:
- Cover of up to £2,500 in rental income
- Up to 15 months’ rental cover prior to eviction
- Up to 3 months’ rental cover following eviction
- Full landlord legal expenses up to £100,000 (including eviction costs)
- Landlord legal expenses helpline 24/7
From our experience of seeing rent protection policies used and how beneficial they were we urge you to re-evaluate your circumstances and whether you can take the risk of not having rent protection, especially in the current and unpredictable financial climate in the UK.
If you would like further advice on rent protection policies for your rental property in Preston, Leyland, Chorley or the surrounding areas please give us a call on 01772 284606 and speak to one of our lettings specialists. We are always happy to offer help and advice on your rental property.