LOCAL HOUSING ALLOWANCE TENANTS CAUSE ARREARS CONCERNS

Landlords concerned about tenants claiming Local Housing Allowance and not paying their rent can protect their monthly income by taking out Rent Guarantee insurance.

Following reports that some landlords whose tenants claim housing benefit are finding it increasingly difficult to collect money that’s owed to them John Boyle, Managing Director of HomeLet, is encouraging landlords to seriously consider insurance.

In April 2008 the government changed the way it made payments to private landlords and instead of rent being paid directly to them to cover housing costs, it now goes straight to the tenant.

The Local Housing Allowance (LHA) was introduced so people could manage their own lives and their budgets.

However, according to research published by the National Landlords Association (NLA), a year after the new system was introduced many tenants are failing to pass on these payments to landlords which is causing major problems. In the most serious cases, landlords are facing repossession because rent money paid by the government to the tenant is never passed on to the landlord.

The research also reveals that 52 per cent of landlords surveyed have decided they would not let, or be less likely to let, to LHA tenants. A further 43 per cent of those landlords who have already tried the new system said they would now be leaving this failing market because of increased uncertainty about rent payments.

According to John, HomeLet can help mitigate the risks associated with renting a property to tenants who claim LHA.

“Under the current system landlords have to wait for eight weeks of rental arrears before the tenant is deemed unable to manage their own affairs and the rent is then paid to them directly,” he said.

“However, in reality it can be as long as three months before the landlord receives their first payment as the benefit is paid monthly in arrears. If the landlord chooses to try and reclaim the lost money, they must pursue the tenant privately through the courts.

“By letting their property through an approved HomeLet agent, landlords can safeguard their monthly income. HomeLet’s market-leading products and services cover rental payments for up to 12 months, should a tenant fall into arrears, and there are no restrictions on the types of tenants.*

“Our Prestige Rent Guarantee for example, not only covers non-payment of rent but any breach of tenancy and all legal costs incurred in evicting the tenant up to a maximum of £50,000. HomeLet also has a specialist in-house Legal and Claims team who will handle the entire eviction process from obtaining vacant procession to recovering costs for damage to the property.

“Landlords renting their properties to tenants claiming housing benefit no longer have to worry about not receiving their rent or not being able to meet their mortgage payments.”

Landlord Insurance Division Launched By Paragon

The Paragon Group has created a new landlord insurance division called Redbrick Landlords Insurance.

The new landlord insurance division provides a range of specialist insurance products for landlords,including buildings and contents, legal expenses, rent guarantee and commercial property insurance.

Redbrick’s landlord insurance offering also provides a portfolio insurance product, which helps portfolio landlords to keep their insurance cover simple by taking out one insurance policy for their whole portfolio of properties.

Redbrick's Tony Armitage, commented "Through both its mortgage and insurance operations, Paragon has developed a detailed understanding of what professional landlords want and how they operate. We have a great insurance proposition for them and we are looking forward to extending this to the wider market for the first time.

"Being a residential landlord can be a stressful business, but ensuring you have adequate insurance from professionals who understand the market can make life much easier."

Landlords Face High Risk of Flood - Landlord Insurance Concerns

Landlord insurance provider Direct Line for Business is giving landlords free advice on the problems of flooding, whilst carrying out research on the impacts of flooding on small businesses.

Results show that in three regions more than a fifth of the business people surveyed had been affected by issues from flooding in the last year.

The areas were the North -East, East Midlands and the worst hit Wales, with a rate of 23 per cent of respondents affected by floods.

The national average was 11 per cent of respondents had been affected by flooding.

"Flooding poses an increasing threat to all businesses and householders, as last year's storms and severe weather have demonstrated," observes spokesperson Kate Syred.

Our advice is that landlord should take the risk of flood seriously and make sure they are fully covered with whichever landlord insurance policy they take out.

Sainsburys offer landlords a discount on their landlord insurance

Sainsbury's is feeling so sorry for landlords that it is giving a discount of 20% on landlords home insurance, plus 3,000 Nectar points.

The retail giant that now is a major player in the insurance industry believes that poor old landlords have seen a collective drop in value on their portfolios of £118.4 billion over the past year.

The landlord insurance policy covers landlords against loss of rental income of up to £20,000 and contents cover of up to £40,000. It also offers unlimited buildings cover.

Sainsbury's Finance commented that landlords had been suffering real difficulties in the economic crisis.

Improved rent guarantee insurance launched

Leaseguard are delighted to announce the launch of their improved ‘Rent Guarantee with Legal Expenses Plus’ policy with immediate effect.

The policy now provides a 6 month cover option and additional cover for Identity Theft at no extra cost.

Leaseguard has continued their successful partnership with DAS, Europe’s largest Legal Expenses Insurer, and created a policy which meets the demands of landlords and provides excellent value for money.

There is now the option for the cover to be taken on a reduced 6 month basis. The 6 month option allows up to 12 monthly payments of rent provided that the Insured Event occurs within the period of insurance. This provides wider cover in comparison to most of the products offered by our competitors.

The policy has also been upgraded to provide additional cover for Identity Theft and defending the insured’s legal rights in an appeal against their decision not to adapt their property following a request under various disability and housing acts. Identity Theft cover will provide assistance for the insured to restore their identity and credit status via a personal caseworker as well as covering communication, court attendance and legal costs incurred. This is especially appropriate when correspondence for the landlord is often sent to the property that they let rather than their home or correspondence address.

Whilst we obviously hope that the landlord does not experience any problems with payment of the rent, it is impossible to foresee the future. A change in circumstances for the tenant such as relationship break-down, illness or redundancy could all impact on their ability to meet their rental obligations. With a large percentage of today’s landlords still having financial obligations to their lender this could have very serious consequences for the unfortunate landlord.

If the landlord is unlucky enough to find themselves in a situation where rent arrears are incurred by the tenant they may find themselves not only out of pocket for the rental arrears but also facing a lengthy and costly legal battle. This would undoubtedly be a stressful and time consuming experience for the landlord which could be considerably reduced with the correct insurance cover.

In addition the policy offers the following benefits:

∑ £25,000 indemnity limit;
∑ Legal rights in trying to get possession of the property;
∑ Legal rights following physical damage to the property (amount in dispute must be more than £1,000);
∑ Legal rights for recovery of rent owed (one month’s rent excess applies);
∑ Hotel expenses up to £75 per day for a maximum of 30 days. This is payable whilst the insured tries to get a possession order for them to live in the property;
∑ Up to 50% of rent owed following vacant possession of the property provided that the property is available for re-letting for up to 2 months;
∑ Prosecution defence costs – to defend the insured’s legal rights if they are prosecuted in a criminal court following events arising from the letting of the property;
∑ 24 hour helpline services for Eurolaw Tax Advice, Tax Advice and Domestic Assistance;

This represents only a summary of the cover applicable. A full policy wording is available on request.

Rent Guarantee with Legal Expenses cover is relatively inexpensive to buy and the premium represents only a small percentage of the rental whilst minimising the risk and providing much need peace of mind. Premiums for the 12 month option are 2.6% of annual rent plus a £10 policy fee and Insurance Premium Tax, and the 6 months cover option starts at as little as £80.00 plus Insurance Premium Tax .

Leaseguard's Landlord Insurance team will be pleased to answer any queries landlords may have in relation to this.

Telephone 0845 3450315
E-mail – insurance@leaseguard.co.uk
Website – www.leaseguard.co.uk

£508 million in excessive property insurance premiums

Loyalty is not rewarded when it comes to property insurance.

Research shows that £508 million pounds a year are wasted by UK consumers who continue to pay excessive property insurance premiums.

By renewing their policies rather than shopping around for the best deal, home owners are throwing away an average of £180 each a year.

Read more in the Telegraph