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The introduction of the Renters’ Rights Act has changed the way landlords need to think about risk. With Section 21 no-fault evictions now abolished in England, landlords must rely on specific possession grounds if they need to regain control of their property.
For many responsible landlords, day-to-day management will continue as normal. Most tenancies run smoothly, and many rent issues can be resolved through early communication. However, the new rules do mean that when a tenancy does go wrong, landlords may need to place greater reliance on the courts, clear evidence and the correct legal process.
That is why more landlords are reviewing their insurance cover, particularly legal expenses and rent protection insurance, also known as rent guarantee insurance.
Recent national press coverage has highlighted rising demand for this type of cover following the introduction of the Renters’ Rights Act. Total Landlord has also seen enquiries more than double, suggesting that landlords are becoming more aware of the financial impact of rent arrears, possession delays and legal disputes.
Steve Barnes, Head of Broking at Total Landlord, recently told The Telegraph:
“While the market has been evolving for some time, the removal of Section 21 and greater reliance on the courts is clearly making some landlords more conscious of financial risk and the potential impact of arrears or prolonged possession cases.”
The Renters’ Rights Act introduces significant changes to the private rented sector in England. The most widely discussed reform is the abolition of Section 21, which previously allowed landlords to regain possession without having to give a specific reason.
Landlords now need to use a valid possession ground, such as rent arrears, anti-social behaviour, breach of tenancy, wanting to sell, or needing to move back into the property.
This does not mean landlords cannot regain possession of their property. It does mean the process is now more evidence-led. Where a tenant does not leave voluntarily, landlords may need to go through the court process and show that the relevant ground has been met.
The rules around rent arrears have also changed. Government guidance says the mandatory rent arrears threshold is increasing from two months to three months, with the notice period increasing from two weeks tofour weeks. This gives tenants more time to repay arrears, but it also means landlords may ne ed to carry a higher level of unpaid rent before they can rely on a mandatory possession route.
For landlords with mortgages, maintenance costs, service charges, insurance and tax obligations, even a short period without rent can put pressure on cash flow.
Rent arrears rarely start as a legal issue. In many cases, a tenant misses a payment because of a short-term financial problem, a change in employment, illness or an unexpected cost. Early communication can often stopthe situation from becoming more serious.
However, where arrears continue and the tenant does not engage, the financial impact can build quickly.
Research from the High Court Enforcement Officers Association found that average unpaid rent at the point of eviction was £12,708 nationally and £19,223 in London. The same research reported an average County Court eviction waiting time of six month safter a judge had already ruled that the tenant should be evicted.
Not every arrears case will reach this stage. Many are resolved well before court action. But the figures show why landlords are paying closer attention to the potential cost of prolonged possession cases.
A landlord may still have to cover the mortgage, repairs, insurance, ground rent, service charges and letting agent fees while rent is not being paid. If a court case takes several months, the loss can become substantial.
Rent protection insurance, sometimes called rent guarantee insurance, is designed to help protect a landlord’s rental income if a tenant stops paying rent.
It is not a replacement for good tenant referencing, proper tenancy management or a strong landlord and tenant relationship. Instead, it acts as an added layer of protection if things go wrong.
Total Landlord’s legal expenses and rent protection insurance is available as an add-on to buildings and contents insurance. The cover can help with missed rent payments, subject to policy terms, conditions and eligibility criteria. Total Landlord’s current cover provides up to £2,500 per month for up to six months of missed rent, alongside up to £100,000 in legal expenses cover and access to 24/7 legal advice.
This combination matters because rent arrears and legal action often go hand in hand. The rent protection element helps reduce the financial impact of unpaid rent, while legal expenses cover can help with the legal cost of resolving a tenancy dispute or possession issue.
Legal expenses insurance can support landlords when a dispute becomes more serious and legal advice or action is needed.
Depending on the policy, this may include help with issues such as:
The value of this type of cover has become more apparent since the abolition of Section 21. Landlords now need to be more confident that they are using the correct grounds, serving the right notices and keeping the evidence needed to support their case.
Mistakes can delay the process and increase the financial loss. Having access to legal advice at an early stage may help landlords avoid missteps and take the right action sooner.
No. Rent protection insurance and a rent guarantor are not the same thing, although both are designed to reduce the risk of unpaid rent.
A rent guarantor is usually a person, often a family member, who agrees to cover the rent if the tenant does not pay. This can be useful, particularly for students, younger renters or tenants who do not meet affordability criteria on their own.
Rent protection insurance is an insurance policy. Rather than relying on an individual guarantor, the landlord has cover in place that may pay out if the tenant falls into arrears, provided the claim meets the policy conditions.
Some landlords may use both. Others may decide that one option is more appropriate depending on the tenant, property, rent level and their own financial position.
The important point is that landlords should understand the difference before deciding what level of protection they need.
Some recent media coverage has referred to squatters insurance, but landlords should be careful with the terminology.
Legal expenses and rent protection insurance is primarily there to help with rent arrears, legal disputes and the cost of taking action when a tenant stops paying or a possession issue arises. Squatting is a different legal situation, particularly if someone has entered a residential property unlawfully and is not a tenant.
That said, the wider concern is understandable. If a landlord cannot sell or re-let a property quickly, or if a property is left empty for longer than expected, the risk profile can change. Empty properties may be more vulnerable to break-ins, damage or unauthorised occupation.
Landlords should check the terms of their landlord insurance carefully if a property is empty, as unoccupied property conditions often apply. They should also speak to their insurer or broker if their plans change, particularly if a property is going to be vacant for an extended period.
Insurance can provide valuable support, but it should sit alongside good property management.
Landlords can reduce the risk of rent arrears and disputes by having strong processes in place from the start of the tenancy. This includes:
These steps matter because they can help prevent problems from escalating. They can also provide important evidence if a landlord later needs to make a claim or take legal action.
The Renters’ Rights Act does not mean every landlord will face rent arrears or a possession dispute. Many tenants pay on time, look after the property and stay for the long term.
However, the risk landscape has changed. The removal of Section 21, the greater reliance on specific possession grounds and the potential for court delays mean landlords should take a fresh look at how well protected they are.
This is particularly important for landlords who:
For some landlords, rent protection insurance may provide reassurance that they have support in place if a tenant stops paying. For others, legal expenses cover may be just as important, particularly if they are concerned about navigating the new possession process correctly.
Landlords have faced rising costs for some time, from higher mortgage rates and increased regulation to tax changes, maintenance costs and compliance requirements. The Renters’ Rights Act adds another layer of change.
That does not mean landlords should leave the sector or assume the worst. But it does mean they should run their rental property like a business, with a clear plan for managing risk.
Rent protection insurance is one part of that plan. It cannot prevent arrears from happening, and it does not remove the need for responsible property management. But it can help reduce the financial impact if a tenant stops paying rent and the situation takes time to resolve.
As the private rented sector adjusts to the new rules, landlords should review their current cover, understand what is and is not included, and consider whether legal expenses and rent protection insurance is right for their circumstances.
Total Landlord’s legal expenses and rent protection insurance is available as an add-on to buildings and contents insurance. It includes rent protection cover, legal expenses cover and access to 24/7 legal advice, subject to policy terms, conditions and eligibility criteria.
Find out more about Total Landlord’s legal expenses and rent protection insurance, or get a landlord insurance quote today.
