Insurance claims because of unpaid rent have soared to their highest ever, with one firm saying they are just over a third up on six months ago.
FCC Paragon, part of the Paragon Advance group of companies, said that one-quarter of claims are resulting in evictions and warned that landlords should not cut corners on referencing or rent warranties.
Kerry-Anne Dowdell, who runs the credit management department for all FCC Paragon’s warranty products, said: “Defaulting tenants are a big problem for landlords and letting agents at the moment.”
She said that too many landlords don’t believe in paying for ‘unnecessary warranties’ and are opting for the cheapest tenant referencing service they can find: “As a result, many are finding themselves out of pocket as tenants who were previously comfortable with their rent are now struggling to meet the payments,” she said.
“With rent warranty claims, we try to mediate wherever possible in order to resolve the problem and get payments back on track, endeavouring whenever possible to keep the matter out of court. However, the recent increase in claims has left us processing evictions for a quarter of our live claims.”
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Comments
The landlord is under no obligation to let the tenant know that they have taken out such a product and even if they do, the tenant is actually pursued for the rent arrears which if anything means that they are less likely to default with the knowledge that a debt collection company will be pursuing them!
Could it be that taking out such insurance makes it easier for tenants to default knowing the landlord is protected by claiming on the insurance policy!!!
By not having insurance might create a greater moral obligation on the tenant to maintain rent payments.