Now, more than ever, insurance cover has become crucial for landlords. Insurance is there to cover people when the worst happens, and in the last 12 months everyone has faced the complications and consequences of a global pandemic.
Covid-19 has affected all parts of life and all industries, including the lettings sector. While demand has remained high for rental homes, mortgage payment holidays and other loans have been on offer to landlords, and the majority of renters have been able to continue paying their rent through the crisis, there have been definite issues to face.
There has been a rise in rental arrears, increased financial uncertainty for both tenants and landlords, an effective ban on most evictions for more than a year, and the introduction of more new legislation for landlords and letting agents to come to terms with.
With all this in mind, there are huge benefits to providing cover for landlords against the backdrop of Covid, recession, rising unemployment and the planned end of furlough.
The importance of rent protection and legal expenses insurance
In the current environment, protecting rental income and having cover for possible legal proceedings are sensible moves for you and your landlords to take. To protect yourself and your landlords from loss of income – which is a much greater possibility at present, given the current situation – it’s important that you have comprehensive cover in place.
Here at Canopy, for example, our Rent & Legal Protection Insurance protect agents for up to 12 months, for the loss of rent on a property under management. We offer this in partnership with DAS Insurance, which has been helping individuals and businesses for more than 40 years.
As well as protection against loss of income from rent, letting agents can also cover themselves and their landlords with legal expenses insurance, for those rare situations where legal action is required. While it’s not the norm, tenancies do sometimes require mediation or even court action. In these circumstances, legal costs can be significant, which means it’s good to be prepared in advance.
While you may never need to use it, it provides good peace of mind in the background for both you and your landlords.
As an agent, you can also look to make money – more crucial than ever currently – by offering tenants financial products suited to them, ranging from deposit insurance to bike, car and income protection. The deposit protection insurance offers landlords eight weeks’ deposit at no extra cost – a win-win all round.
Why is rent protection so vital right now?
Rent protection – or a rent guarantee, as it’s sometimes known – provides landlords with stability and security when everything right now is unstable and insecure. This is hugely important in giving them peace of mind, and ensuring that rental arrears or void periods don’t cause them financial bother.
Many landlords own only one or two homes which they use to generate a second income – typically for retirement. Not every single landlord is a multi-millionaire with a huge portfolio, quite the opposite. Many landlords will have been financially affected in their day-to-day lives by the Covid crisis, as much as tenants.
They may have lost their jobs or be self-employed in an industry which is currently suffering or closed. They may not be eligible for furlough. With this in mind, financial security through their rental property will be hugely appealing.
Recession, unemployment, the possible end of furlough in only a few months, and the continued shutdown of large parts of the country could all lead to financial problems for both landlords and tenants. In the case of tenants, they may not be able to afford their rent in full through no fault of their own. Here, some kind of rent protection – to ensure landlords are protected against loss of income - has considerable merit.
By working closely with a provider such as Canopy, you can ensure you and your landlords are protected in what is currently still a volatile environment.
What is happening with the eviction ban?
The desire or need to evict is the most likely thing to lead to legal disputes between a landlord and tenant, so it’s important for landlords to be aware of the current situation.
The ban on bailiff-enforced evictions was recently extended again by the government for a further six weeks until March 31. The ban was due to expire on February 21, but was widely expected to be extended with the country still in lockdown, and so it proved.
Housing Secretary Robert Jenrick said the move will ensure renters remain protected ‘during this difficult time’, adding that the ban on the enforcement of evictions by bailiffs would continue ‘in all but the most serious cases’.
The eviction ban is likely to be reviewed at the end of March and, depending on the situation then, may yet be extended further, although by that point the UK is likely to be on its roadmap out of lockdown so the landscape may start to look a bit different.
Landlords, or agents acting on their behalf, can still enforce possession orders if tenants are more than six months in arrears, regardless of when the arrears were accrued (they no longer have to pre-date Covid). Nevertheless, even though they can head to court, they cannot be enforced by bailiffs, and the courts are facing a huge backlog of cases and challenging conditions at present.
The exemptions to the ban have still been applying as before. In the small number of cases where domestic violence or serious anti-social behaviour is an issue, bailiff-enforced evictions are still allowed. But it’s not 100% clear how many of these are actually taking place at the minute.
In addition, the government has introduced a new mediation pilot to try and prevent evictions being necessary in the first place by helping landlords and tenants to reach a mutual agreement and keep people in their homes.
“Helping to resolve disputes through mediation will enable courts to prioritise urgent cases, supporting landlords and tenants to resolve issues quickly without the need for a formal hearing. The mediation pilot will work within the existing court arrangements in England and Wales,” the government said of the pilot.
Furthermore, the government’s new Debt Respite Scheme – also known as Breathing Space – will be implemented from May and could cause issues for some landlords and agents in terms of trying to chase arrears.
If eviction is a necessary evil – and sometimes it unavoidably is – it’s good to have the costs of any legal action covered, although it’s unlikely that many cases will be progressing through the courts for some time yet. If at all possible, it is still best to try and resolve things amicably, only using the court route as a very last resort