Hi All, I have a 3 bed semi which has been rented out to a family for the last 4 years or so via an agent.
The agent recently contacted me and suggested that tenants are going to be financially stressed and therefore putting rent guarantee in place would be a good idea, however there is a guarantor in place and the tenants have been paying the rent without issue so far.
The agent provided their own quote from Let Alliance which costs around £500, this seems quite a lot to me, although the cover is good.
I got an online quote from Direct Line for legal assistance and rent guarantee cover which was much cheaper at around £15 per month.
There are restrictions in the Direct Line policy such as they wont pay out in the first 3 months from taking out cover. I’m sure there are other restrictions as well, but Direct Line do get good ratings and the price is good.
I was wondering if anyone else has used Direct Line for rental guarantee and if they were any good. Alternately can anyone recommend a rental guarantee supplier.
He may have a point about them being financially stressed, as many now are. I certainly wouldn’t be buying cover through that agent at an inflated price.
Get a price direct from let alliance if you can to see how much he’s ripping you off.
Just realised as Colin mentioned if there’s a guarantor in place I wouldn’t bother, but call the agent and ask why he feels insurance is necessary if there’s a guarantor. Dont say a word until he answers!
The Agent confirmed that there is a guarantor in place for next years tenancy. However his view is that the guarantor may not accept their responsibility or contest it, hence the suggestion of rent guarantee insurance.
To be fair to the Agent, they are very professional and perhaps are taking a belt and braces approach, as in their view some tenants will be financially stressed in the next few years.
He wasnt too keen on the Direct Line Landlord insurance I mentioned, claiming that they let a lot of landlords down during the pandemic.
Did the agent supply the guarantor agreement and complete the guarantee process? If so then ask him why he doesnt have confidence in his own work. Was a mistake made?
The Agent did separate checks on the Guarantor using HomeLet and there is a separate section in the tenancy Agreement (schedule 7) relating to the guarantors obligations, its signed by the guarantor and myself.
I thought I could get rental guarantee insurance from let alliance using an online quote, but they don’t have that on their website so will have to call.
My BTL house insurance is due next Feb, so I might wait until then and bundle all the insurances up in one go.
It sounds like the guarantor agreement was not executed as a deed. This may weaken its effectiveness. If he just signed the tenancy agreement and there was no “consideration”, then he may not be bound by the contract.
In the tenancy agreement it says the guarantors obligations are as shown below. It seems to me that there is a “Consideration” in place and that the guarantor is legally liable for outstanding rent.
Schedule 7
Guarantor
1.1. In consideration for the Landlord granting the Tenant a tenancy of the Property, the
Guarantor agrees to pay the Landlord and the Landlord’s Agent for any reasonable losses
suffered as a result of the Tenant failing to fulfil any of his obligations under this agreement or
failing to pay Rents or other monies lawfully due.
1.2. The Guarantor agrees to pay, on demand and in full, any overdue Rent or other monies
lawfully due under this agreement for the full Term and until vacant possession is given to the
Landlord.
1.3. The Guarantor agrees to make payments lawfully due under clause 1.1 or 1.2 even
after the Tenant has returned possession of the Property to the Landlord
Im not convinced that the grant of the tenancy would count as consideration for contractual purposes. I would suggest you get a legal opinion if you ever need to sue the guarantor.
Is it possible that the tenancy agreement itself was signed as a deed? Is there a witness signature/name and address?