Buy-to-let landlords are being urged to review their insurance cover following the introduction of the Renters’ Rights Act (RRA) amid warnings that recovering possession from tenants in rent arrears could become a lengthier and more costly process.
Karis Insurance says landlords should consider taking out Rent Guarantee Insurance as the new legislation is expected to increase the time it takes to deal with rent default cases through the courts.
The warning comes after the first phase of the Renters’ Rights Act came into force on 1 May, abolishing Section 21 no-fault evictions and moving landlords onto a fully court-based possession process.
Under the new rules, tenants can now build up three months of rent arrears before landlords are able to begin possession proceedings, compared to two months previously.
RENTAL VOIDS
Karis Insurance says this could expose landlords to longer periods without rental income, particularly if court backlogs delay possession cases.
The firm says Rent Guarantee Insurance can provide up to 12 months’ rental cover if a tenant stops paying, while also helping landlords manage legal costs linked to eviction and arrears recovery.
Ravi Sejpal, Director of Insurance at Karis Insurance, says: “If landlords can’t recoup lost rental income, then that can quickly erode any returns they are making from that property.
“Reviewing insurance now is not just sensible – it could prove essential once the new rules take effect.
“It’s not clear how long a repossession will take under the new system so landlords can take out a Rent Guarantee Insurance providing them with the security of a 12-month indemnity period. It’s accepted that many other parts of the civil court system in the UK suffer from delays and backlogs.”
Sejpal also highlights the potential cost of legal disputes under the new regime, with policies often including cover for legal expenses linked to tenant eviction, mediation and pursuit of rent arrears.
OUT OF POCKET
He adds: “Legal disputes can quickly cost thousands, especially if cases drag on under the new Act. Without the right cover, landlords risk being substantially out pocket just to regain control of their own property.
“At Karis Insurance, we help landlords get the right specialist cover in place fit for new complexities in the rental market.
“With Rent Guarantee Insurance typically costing £295 a year, it provides excellent value for money for landlords looking to mitigate the risk of renting in a changing legal landscape.”
