Affordability: The tenant must be earning two and a half times the monthly rent
Credit check: The tenant must have no county court judgements (CCJs) or bankruptcies in the last three years
Identification: The landlord must collect two types of identification and one of these must be pictorial.
As long as the tenant meets these three criteria, rent guarantee insurance will pay out if the tenant is unable to pay rent later on in the tenancy.
Of course, there are situations where a tenant won’t meet all three of these criteria. In these cases, a guarantor can be used. This is someone who will pay the rent if the tenant can’t. Providing the guarantor passes the same referencing criteria above, the tenant can move in and the landlord can be safe in the knowledge that full cover will apply.
What if the tenant moves out after six months?
If the tenant has an Assured Shorthold Tenancy and moves out of the property when it ends after six months, the rent guarantee cover will still apply. This is because our rent guarantee insurance policies apply to the property, not the tenant. Policies are valid for 12 months, so provided the new tenant passes the same referencing, cover will be maintained.
There is no legal requirement for rent guarantee insurance, but it’s a useful product to have. If your tenant falls into difficulties and can no longer pay the rent, it will make sure you don’t end up out of pocket. Give us a call today and find out how we can help protect your valuable investment.
Comparing insurance quotes can be hard work. Steve Cox, Business Account Manager at Alan Boswell Group, provides his top 10 tips to help you find the right landlord insurance for your buy-to-let property.
