If you are landlord, you might well want to ensure that your property provides you with an income in any unforeseen circumstances. You might have a buy-to-let mortgage to pay, or perhaps you really rely on that money coming in. Even if not, who wants to miss out financially?
You may thus have wondered about signing up for guaranteed rent – or even rent guarantee -schemes. What exactly are these, and what is the difference between them?
Guaranteed rent schemes are offered by property letting companies. When you agree to let your property, the firm will pledge to provide you with a regular income right from the start. This generally applies no matter how long it takes to find a tenant. These schemes are attractive for obvious reasons, but the lettings firm is a business and it’s worth bearing in mind that they will make sure their own income is covered just as much as the landlord’s.
Rent guarantee is an insurance policy that can be purchased by a landlord. It can be taken out to cover rental income in the event of tenants failing to pay. Some other landlord insurances may include this cover, but it often must be bought separately or for an additional premium. Policies normally pay out once the rent is a month or more in arrears, and usually cover a fixed period of time such as six months or a year. If you rely on your rental income or have reason to believe your tenants won’t pay, then such a policy is certainly worthy of consideration.