In theory, renting out a buy-to-let property should run smoothly. After all, you’re a good landlord and you do your best to provide a decent home for your tenants, which is worth the regular rent they pay in return. If they have any problems, they can talk to you or the letting agency and everything gets resolved with minimum fuss.
Unfortunately, as any experienced landlord knows, it doesn’t always work that way. Even with the best intentions, situations can escalate and, before you know it, you have to go to court. There are many reasons that this might happen. A tenant might refuse to pay the rent they owe, or have left the property with unpaid utility bills that exceed the amount covered by their deposit. Alternatively, their behaviour might have reached the point where you’re forced to begin eviction proceedings. But one thing is for certain, once the courts get involved the costs begin to escalate.
It’s an insurance policy that pays out if you have to meet unforeseen legal expenses relating to your property
This is what landlord legal expenses cover is for. It’s an insurance policy that pays out if you have to meet unforeseen legal expenses relating to your property, including court costs and legal representation. It’s usually bought as part of a wider landlord insurance package, alongside buildings and contents insurance and liability cover, but it can be purchased as a standalone policy. The better legal expenses policies also include access to expert legal advice whenever you need it.
It’s not just tenant disputes that could land you in court, though. You may unwittingly find yourself in breach of current health, safety or fire regulations, or be investigated by HMRC for tax irregularities. You could even be involved in a legal dispute with a contractor over work done at your property. Landlord legal expenses cover is designed for those situations as well, so you can manage your costs while the dispute proceeds.
Rent guarantee cover
Landlord legal expenses insurance is often purchased in combination with rent guarantee cover. This offers all the benefits of legal expenses cover but also pays out the equivalent of the rental income you should be receiving if this is being withheld. The maximum amount and maximum term will be established in the policy in advance and will be reflected in the premiums you pay. Rent guarantee insurance is usually dependent on thorough tenant referencing being undertaken.
Legal expenses may not be the first thing you think of when you first become a landlord, but if or when they come up, they can be costly. Like all insurance policies, legal expenses cover is a safety net. If you don’t need to use it, you have peace of mind. If you do need to us it, it may help you survive a difficult situation without financial disaster.