One of the most significant implications for landlords under the Renters’ Rights Act 2025 is that it is now more difficult to evict tenants for issues such as non-payment of rent following the abolition of Section 21 evictions in May 2026.
However, landlords can protect themselves by taking out rent guarantee insurance to minimise financial losses if tenants stop paying rent.
Rent guarantee insurance is a type of landlord insurance that covers you if your tenant defaults on their rent. It’s a form of income protection insurance that’s popular because rent arrears can happen to any landlord, even if you’ve done everything possible to choose the right tenant. Remember that evicting a tenant for arrears can take a substantial amount of time – the best part of a year in some cases. Without rent protection insurance, you will not receive any rental payments during that period.
Being a landlord in London can be confusing. There are over 170 Acts & Regulations to consider, so, how do you know if you are compliant?
Since the introduction of the Renters’ Rights Act 2025, more landlords have been turning to the added protection of rent guarantee insurance. With Section 21s abolished, landlords dealing with missed rent payments have new eviction processes to follow, which are longer and more structured. Rent guarantee insurance provides peace of mind that there will be financial support if rent is not paid.
If you’re new to renting out property in Bermondsey, Borough, London Bridge, Lower Marsh, Shad Thames, The Cut or Waterloo one of the many decisions you will need to make is whether rent guarantee insurance will be worthwhile. This landlord insurance product means that you should be covered if your tenant falls into arrears or even if you are left with no tenant at all for a time. This is particularly reassuring if you’re a buy-to-let landlord in SE1, reliant on rental payments to meet your mortgage costs.
The downside is that rent guarantee insurance is another cost to factor into your budget, and you need to be sure you choose the right landlord insurance product. You also need to ensure that you meet all the terms and conditions. To help you weigh up the options, we answer our most frequently asked questions about rent guarantee insurance.
This will vary, so check your insurance policy carefully. Most rent guarantee insurance covers unpaid rent for up to six or twelve months and the legal expenses of evicting the tenant. Landlords can now only evict tenants using a Section 8 with a specific ground and legal costs will include serving notice and pursuing possession orders through the courts.
Most policies will cover some level of legal expenses, which may go beyond eviction proceedings to other legal disputes – over damage to the property, for example. Some policies also cover legal costs that are related to new rules under the Renters’ Rights Act, such as court costs if a tenant challenges a pet request refusal or a discrimination complaint.
Again, always check the finer details of your policy – if legal cover is important to you, you may be able to add it as an extra.
Some policies will offer the option of protecting your rental income if you can’t rent out the property because of flood or fire damage or some other reason, aside from a tenant defaulting on the rent.
You can also find policies which cover a proportion of rent after eviction. They typically apply for a limited period after you repossess your property while you seek a new tenant.
The Renters’ Rights Act 2025 has provided greater protection for private rented tenants, with landlords potentially facing higher financial and legal risks. The key changes under the Renters’ Rights Act that affects rent guarantee insurance include:
The main implication of these changes is that it will take longer to resolve non-payment issues and the potential financial exposure will be greater, so rent guarantee insurance is becoming a popular solution for landlords worried about the new risks.
Want to be a more informed landlord? Insurance is only one part of protecting your rental income – it’s worth understanding the full picture of how much it costs to rent out a property and what can go wrong if a tenant reference check fails.
Again, you need to read the small print. For example, some policies won’t cover the first month or 90 days of arrears. Others may have specific rules about the level of tenant referencing you need to complete or even the type of tenant you can accept.
Some insurers will refuse to pay out on a claim if tenants have not been screened thoroughly to assess their risk level. So, it is important to always read the conditions of the policy and make sure you carry out adequate tenant screening to avoid this situation. Many insurers have updated their terms to require evidence of robust referencing as a policy condition. Landlords who are unable to provide adequate evidence could face non payment for missed rent claims.
Also, the legal costs for rental contract disputes may not be covered in some insurance policies, so legal expenses cover is another detail to check with the insurer. It is also worth noting that many policies will not pay out for arrears that occurred before taking out the policy, so it is important to have insurance in place prior to encountering issues.
Shop around and compare different policies to find the right cover for you and your rental properties.
Rent guarantee insurance premiums vary depending on the level of cover you want and factors such as size, location, number of tenants and whether the property is a house in multiple occupations (HMO).
Larger properties will usually cost more in rent guarantee insurance and the insurance company will also assess the risk level of your tenants. If they determine that your tenants are at higher risk of missing rent payments, your insurance will be more expensive.
The typical cost of rent guarantee insurance is around £100 to £250 per year in addition to standard landlords insurance premiums. Larger properties, high-rent amounts and HMOs will be at the higher end of the price range.
Your insurance premium will also be calculated based on your rental payments, so a property with a £1,600 monthly rental income will cost more to insure compared to a property with a £900 rental income. If you are prepared to pay a higher excess on the policy, you can reduce your insurance payments, but you will receive a smaller payout if you claim.
It is worth getting a few quotes based on the same level of cover. Use a comparison site and get personal recommendations. However, don’t go on cost alone – look at what each policy offers and whether it is right for you.
This depends on the policy you take out and how much of an excess you are prepared to pay. As with most insurance products, your premiums may be lower if you accept a higher excess.
Landlord insurance could be worthwhile if you would struggle financially without your rental income or want greater reassurance. Having cover for loss of rental income gives landlords peace of mind that they will be able to cover mortgage payments if there is no monthly rental income.
These are common reasons why landlords take out rent guarantee cover.
Rent guarantee insurance may be a high priority if the monthly rent payment covers your buy-to-let mortgage or if it’s an essential part of your income.
Would you struggle to pay your bills if eviction takes many months? That’s not a situation any landlord wants to find themselves in, but it can happen. Your insurance cover will ensure you can meet your financial commitments, even if a tenant fails to pay rent.
Rent guarantee insurance can ease the stress of accepting new, unknown tenants. Glowing references are a good sign, but there’s no substitute for a longstanding relationship.
It can take months to feel confident that your tenants will be reliable, and even then, circumstances can change. You can’t guarantee they will be model tenants, but insurance can at least lessen the financial risks of a new tenancy.
Life as a landlord doesn’t always run smoothly, but insurance covering the rent can alleviate some of the stress. Some landlords decide to take the chance rather than subscribing to another cost. After all, you may never need to claim on your policy.
But it’s hard to put a price on the reassurance factor. Many landlords prefer paying a bit extra to know they’re covered if the worst happens.
Landlords’ rent guarantee insurance will only be approved after the tenants have passed a strict referencing process. Formal referencing looks closely into a tenant’s background and will treat red flags cautiously. There’s no temptation to run basic referencing or look on the positive side because it won’t be an option.
Due to Section 21 evictions being abolished, all possession claims must now go through the courts via Section 8. Before a Section 8 can be served, the tenant must have accrued at least three months of arrears compared to the two months’ notice previously required under Section 21.
There is also a backlog in cases going through the courts system, which means landlords could face considerable delays of over six months before the eviction process is complete. The financial impact of not receiving rent for this period of time would be significant, so taking out rent guarantee insurance is even more worthwhile in the new landscape.
Referencing and credit checks are vital safeguards for landlords to ensure they have done everything possible to vet their tenants. Your insurer is likely to expect you to have carried out a certain level of referencing – if you haven’t, you may find they won’t pay up later.
Since the introduction of the Renters’ Rights Act, many insurers have tightened up their policy conditions to require enhanced referencing checks. Some providers specify the type of referencing that needs to be completed for insurance to remain valid.
Landlords should also be aware that if a tenant fails a reference check, this cannot be used as a reason for declining tenants who receive benefits, as discrimination is illegal under the new rules. If an insurance provider will not provide cover for benefits recipients, landlords should explore alternative insurers who do not restrict these types of tenants.
You will also need a written tenancy agreement, adding another layer of formality and protection.
If you’re weighing up cover for lost rent, it’s also worth knowing how to effectively manage void properties and how much you can increase the rent to keep your investment profitable.
There are several types of insurance which are important for landlords to consider when letting property. Here are the main options:
TThe process for finding rent guarantee insurance is similar to other types of insurance policy, you can use a comparison site, search online or use a broker. Some estate agents also offer rent guarantee schemes, including here at Garrett Whitelock.
If you already have landlord insurance, you may have the option to add rent guarantee cover for an additional premium. However, the eligibility criteria for rent guarantee insurance can be strict, so you will need to meet certain conditions, such as:
Once you have found the right level of cover for your needs, and provided any required documents, your policy can be set up with a monthly or annual payment.
Taking out rent guarantee insurance has become even more important to protect landlords against the wider risks that have emerged through the new Renters’ Rights Act legislation.
If you’re a landlord in SE1 areas including Vauxhall and Wapping, talk to us. We offer packages for landlords that include rent guarantee insurance, and we’d be happy to talk you through the pros and cons for your property or portfolio.
We’re here to help with any property-related queries you may have
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Lee Whitelock
Director
Being a landlord in London can be confusing. How do you make sure you are compliant?