I am going through a situation presently which will be of great interest to you as it will answer directly your queries when the claim is concluded, hopefully successfully!!?

When you think that RGI can cost as little as £7.42 per month per property but could provide cover for up to £50000 including legal expenses  per claim,  that is peanuts.

So let's say you have 50 properties with RGI on them all.

That is £371 pm for coverage of up to £2500000 in extremis including legal costs.

47% of tenants are apparently in arrears,

It can take 10 months or more to evict a tenant.

Let's say the rent is £1000 pcm and it takes 10 months to evict all the tenants from the 50 properties.

That is £500000 of rent losses.

Plus the legal costs

Plus loss of the properties to repossession

Bankruptcy and loss of livelihood and homelessness.

All for the sake of £371 pcm which is offsettable against tax.

Referencing which does not qualify for RGI is useless which is why LA referencing is useless unless it is qualified by the RGI company as acceptable, but of course we have the thorny question of whether the LL will see and have access to all the referencing details!

If they don't then a LA reference is useless for the LL if he wants RGI.

Would you wish to take a massive risk for the sake of such a small amount of money?

The RGI I use accepts the referencing that the broker carries out.

This is in the insurance conditions.

So I have a supposed guarantee that NO further referencing is required.

Remember £600000 of rental income per year which costs £4452.00 to protect is peanuts.

Remember home owning guarantors are useless unless they qualify for the RGI policy.

Having a guarantor is no indication that they have no other debts or that the property is in negative equity and may fall in value further.

They could lose a job and be on state benefits.

Just to give you an example which is to my knowledge.

A former tenant of mine who was OK needed a guarantor.

The guarantor used was a tenant of mine who was also an associate of the former tenant.

The guarantor was in full time employment and paying my rent on time.

The guarantor was accepted by the LA;  the one that advertises heavily on property tribes.

This guarantor stopped paying rent 5 months ago and was either sacked or resigned from her job 5 months ago.

So what happens if the former tenant defaults on rent and the LA comes to the guarantor for payment!!!?

Simple she is on the social and hasn't got a bean to her name.

As a guarantor therefore she is useless.

So you see RGI is the only way things will work properly, the rest is rubbish, it means nothing.

A RGI policy, however, CANNOT be disputed.

It is there to be claimed on and is the ONLY way of as near as dammit to guarantee you don't end up out of pocket for rental arrears.

Lot's of LL say they carry out all sorts of due diligence and the extreme circumstances I have quoted will never happen and they have sufficient resouces to cover rent losses whilst evicting a tenant.

47 % of tenants are in arrears.

Surely that concentrates any LL mind, no matter how good they think their referencing is!?

LRS should of course always be used in conjunction with RGI use.

I believe the economy is going to worsen, there will be a massive impact with UC being introduced and I think LL need to start laying plans to have tenants that qualify for RGI and get rid of those that don't, RGI can be obtained on incumbent tenants.

Remember with most RGI policies once they have been checked there is no requirement for the tenant to be checked again if  the policy is renewed.

This is very useful if a tenant's circumstances change and they cannot meet their rent from normal sources but do so from a myriad of assistance; like LHA/UC; parents, friends etc.

Providing the contractual rent is paid then the RGI policy still stands.

Paul R is there anything on this site which actually goes through the process that would be required.

I suppose I am thinking of a situation where the tenant says yes I'll take the property and I say, not until you have passed an RGI check.

Do your 2 affiliates have a process which can be managed to obtain an answer either way for a tenant or a guarantor.

An answer within say 45 mins is useful to a LL rather than days of forms etc.

Having a clearly explained process for these 2 RGI companies would be useful for LL looking at possibly obtaining RGI for the first time and perhaps not appreciating the nuances of certain RGI policies.

Many LL arene't even aware of RGI.

For the price  for say 4  properties it can be so cheap as to be considered a gamble in addition to normal referencing.

If it pays out yoyu are quids in and if it fails you are only in the same position as if you hadn't bothered with a RGI policy.

For about £99 I think it is worth the gamble of taking out a RGI policy.

It is so little to lose if it doesn't work; but with so much to gain if it does!

The proverbial no-brainer for the little LL who cannot cover things from other rentals from larger portfolios that other LL have.

Keep us informed of the issues Paul, it'll definitely be a huge factor in whether a lot of us decide to take out the insurance . . . It all sounds very good in principle.

Follow me on twitter @cpglettings

Just a quick question Paul, can you get RGI once a tenancy has commenced.

I have various long standing tenants however, I am conscious that welfare cuts will bite many tenants sooner rather than later and just want to be prepared with RGI.

thanks

RGI is dirt cheap at present; though I take your point that  RGI premiums may harden in light of claims experience; it is NOT expensive  presently unless you CHOOSE to use an expensive provider like H—let who provide the RGI to most LA, which says it all.

I can obtain RGI for £7.72 per month , that is NOT expensive.

However your plan is definitely of merit and fills a position where a tenant can't pass RGI checks.

There are millions of tenants who cannot obtain RGI and most LL would prefer to have some sort of cover on their tenants.

Rental arrears are increasing exponentially and will get worse over the coming years.

With eviction so difficult to achieve within the present legal system LL face massive losses if they do not protect the rent income.

Mortgages need paying; no rent, no  mortgage payments, followed by repossession and loss of own home and homelessness.

All caused by 1 non-rent paying tenant.

Not having a rent protection policy in place on a tenant means a LL is on a knife-edge!

Rent protection is really only needed by small LL as large ones can cover their arrears out of their large profits.

They offset those losses against tax.

Small LL can offset such losses aswell but it is academic if the property has been repossessed due to the mortgage not being paid!