Do you really know who your tenants are?

In most cases, this will not result in financial loss but if you are saddled with tenants who turn out to be habitually bad payers, or worse are actually criminals – perhaps planning to use your property for illegal activities such as cannabis growing – you could stand to lose serious money. Our Property Insurance Specialist, Steve Cox, explains how to help avoid the perils of tricky tenants:

Appropriate tenant checks

“It is strongly recommended to arrange for tenants to be properly referenced before they move into your property,” Steve added. Tenant referencing can be easily arranged and cover not just income and a six-year credit history, including County Court Judgments (CCJs) and bankruptcy but also validation of references from previous properties they have leased and any history of arrears or repossessions.

“Having this sort of information enables you to make an informed decision regarding whether they are suitable tenants for you,” Steve explained. “Because the checks are undertaken by a professional organisation on your behalf, they are less susceptible to manipulation. It should be noted however that no system is fool proof, so there is no substitute for also conducting a personal interview either directly, or via a trusted agent.”

Taking the precaution of seeking proper references is not only good practice; failure to do so could affect your right to claim under legal expenses insurance. Having the process undertaken professionally gives you an added layer of reassurance that you have done everything possible to protect your investment.

Protecting your income

You should aim to have a written tenancy agreement in place, such as an Assured Shorthold Tenancy agreement, which sets out the amount and when the rent is due. If your tenant is constantly failing to pay and you are left with no other options you can follow procedures to evict your tenant and insurance can help you reclaim any unpaid rent.

Your tenants may not deliberately be avoiding their responsibilities of paying rent. Redundancies or relationship breakdowns can mean their lack of income impacts upon yours. In both instances rent guarantee insurance can act as a safety net, protecting your rental income by enabling you to claim back the rent you are owed.

Getting the right insurance advice

It is important to seek independent professional advice before making any decision about what liability insurance to take up in order to protect your financial obligations. As one of the UK’s leading suppliers of landlord insurance, we are perfectly placed to advice what cover you need. Steve and his team are able to provide professional, independent advice and can explain how tenant referencing, rent guarantee and legal expenses insurance can protect your investment.