Landlords are being urged to review their insurance arrangements following the introduction of the Renters’ Rights Act, with concerns growing that changes to eviction rules could leave property owners exposed to longer periods of unpaid rent and rising legal costs.
According to Karis Insurance, the new legislation, which came into force on 1st May, is expected to make it more difficult and time-consuming for landlords to remove tenants who fall into arrears, increasing the importance of Rent Guarantee Insurance within the private rented sector (PRS).
Under the new rules, landlords seeking possession due to rent arrears must now go through the courts, with tenants able to build up three months of unpaid rent before eviction proceedings can begin, up from the previous two-month threshold.
Karis Insurance warned that although landlords can use an online court process for rent arrears repossessions, wider delays and backlogs within the civil court system could significantly extend timelines before properties are recovered and re-let.
The insurer said Rent Guarantee Insurance can provide landlords with up to 12 months of rental income protection where tenants default, helping property owners manage mortgage payments and ongoing costs while possession proceedings are ongoing.
The cover can also include legal expenses protection, helping landlords meet the costs of eviction proceedings, rent recovery disputes and mediation.
Karis Insurance said the changes introduced by the Renters’ Rights Act increase the financial risks associated with managing rental properties, particularly for landlords without sufficient financial buffers to absorb prolonged periods of lost income.
Ravi Sejpal, director of insurance at Karis Insurance, said: “If landlords can’t recoup lost rental income, then that can quickly erode any returns they are making from that property.
“Reviewing insurance now is not just sensible – it could prove essential once the new rules take effect.
“It’s not clear how long a repossession will take under the new system so landlords can take out a Rent Guarantee Insurance providing them with the security of a 12-month indemnity period. It’s accepted that many other parts of the civil court system in the UK suffer from delays and backlogs.”
Sejpal added: “Legal disputes can quickly cost thousands, especially if cases drag on under the new Act.
“Without the right cover, landlords risk being substantially out pocket just to regain control of their own property.
“At Karis Insurance, we help landlords get the right specialist cover in place fit for new complexities in the rental market.
“With Rent Guarantee Insurance typically costing £295 a year, it provides excellent value for money for landlords looking to mitigate the risk of renting in a changing legal landscape.”