A landlord popped into our office the other day , who has a managed portfolio and wanted to know how we deal with rent arrears .
We told him about two landlords , two very similar tenancies. Both fully referenced however one landlord decided to take out Rent and Legal insurance and one didn’t.
Both tenancies commenced without any hitch. However after a couple of months due to a change of circumstance the tenants got into rent arrears.
This is where it changes:
Landlord A : had paid approximately £140 rent and legal insurance
When the tenant got into 2 months of arrears , we informed the insurance company. And they commenced paying the rent. And also commenced legal action at no extra cost. They served the appropriate notices and also attended court. And whilst this process took place the rent still got paid.
Eventually the tenants vacated before a bailiff was called and at this point the insurance company offered the following support :
Once the property is ready to be re-marketed, there will the potential to claim extra rent guarantee The policy also provides cover for the pursuit of a property damage claim against the former tenants. We will need to provide the solicitors with any evidence we can, in relation to the same. The solicitor will need to then investigate whether the claim has reasonable prospects of succeeding. Presuming that they believe it does, the insurers shall continue to indemnify the costs of pursuing the claim. The solicitor will also continue to pursue the former tenants for recovery of the rent.
Landlord B : hadn’t taken any insurance
The landlord had to instruct a company to act for him
- Their in-house legal team serve notice on the tenant cost £117.00
- Choose Section 21 for Accelerated possession only (£802 includes court fee, solicitors fee and VAT)
- Choose Section 8 for rent arrears and possession (£859 includes court fee, solicitors fee, advocate fee and VAT) Checking your notice, proceedings issued, court date set and advocate instructed. He appears before a judge to get a possession order.
- If the tenant doesn’t leave by a date set by the court. Arrangement for officials to remove the tenant. Cost between £227 and £780.00 Don’t forget that during this time the tenant may still not pay any rent so this could still be accumulating.
- And this process could take up to 2 months, if the rent was £600 per month this could add up to £2400. And there may be additional costs for dilapidations.
Landlord A : total cost £140.00
Landlord B : approx total cost £4156.00 possibly more
I know which Landlord I would prefer to be !!!! If you want to know more about our rent and legal insurance call the office or pop in and see us.