Rent guarantee and legal expenses insurance: is it worth it for landlords?

Rent guarantee and legal expenses insurance: is it worth it for UK landlords?

By Craig Ryder

Rent guarantee insurance has always made sense on paper. Pay a modest annual premium, and if your tenant stops paying, the insurer covers your lost income and picks up the legal bill to get your property back. For years, many landlords dismissed it as unnecessary caution — the kind of thing you buy but never use. That calculation has changed.

The Renters’ Rights Act came into force on 1 May 2026, abolishing Section 21 and reshaping the rules for every landlord in England. With no-fault evictions gone, recovering possession now means navigating Section 8, evidencing fault, and sitting out a mandatory notice period that has just grown from two weeks to four weeks for rent arrears. Crucially, the arrears threshold for mandatory Ground 8 possession has risen from two months to three months — meaning a tenant must owe three full months’ rent both when the notice is served and at the hearing before a court can grant mandatory possession. Add court waiting times, and a straightforward non-payment case can run to several months of unpaid rent before you see your property back.

That is not a theoretical worst case. Deposit-replacement firm Reposit recorded average arrears of £2,237 in Q1 2025 — the highest in its records at that point — as reported by Commercial Trust. The figure eased to £1,861 in Q2, so the picture is not uniformly worsening, but arrears remain elevated. Separately, Propertymark data reported by Letting Agent Today showed the average proportion of tenancies in arrears jumping from 2.2% in April 2025 to 2.9% in May — almost a third higher in a single month. The legislative safety valve landlords previously relied on, meanwhile, is gone.

What does rent guarantee insurance actually cover?

Rent guarantee insurance (also called rent protection or tenant default insurance) typically covers:

• Lost rental income — commonly up to £2,500 per month, for up to 12–15 months, from the point the tenant stops paying
• Legal expenses — often up to £50,000–£100,000 for eviction proceedings, Section 8 notices, and court costs
• Post-eviction void rent — some policies (such as Alan Boswell’s) pay 75% of monthly rent for up to three months while the property sits empty after eviction

The better policies carry no excess on claims and include a legal helpline for the duration of cover. Some now include a formal mediation service — Alan Boswell, for example, encourages notification from 21 days of the first late payment so mediation can begin before arrears compound into a full possession claim.

Legal expenses insurance can also be bought separately, typically from around £80 per year on a standalone basis, if your concern is primarily the court process rather than income replacement.

What does it cost?

Premiums vary by property, location, and insurer, but the figures are more affordable than most landlords expect:

Cover type	Typical annual cost
Standalone rent guarantee	£195–£300
Combined with landlord building insurance	From £195 (Alan Boswell)
Monthly equivalent	From around £8–£25
As a percentage of annual rent	Roughly 2.5%–5%

At £195–£300 per year, cover on a £1,000/month property costs roughly 1.6%–2.5% of your gross annual rent. On a property yielding £1,200/month, a single month of covered arrears alone pays for two or three years of premiums.

The referencing condition — and why it matters

Here is the part every landlord needs to read carefully: most policies will not pay out unless tenants were satisfactorily referenced before the tenancy began. This is not small print designed to catch you out — it is the core underwriting logic. Insurers price rent guarantee cover on the assumption that risky tenants have been screened out.

Typical referencing requirements include:

• Two forms of ID, one of them photographic
• A credit check clear of CCJs, bankruptcies, or IVAs (commonly for the last three years)
• Household income of at least 2.5× the monthly rent (3× for the self-employed)
• A signed, legally compliant tenancy agreement

Many policies also impose a waiting period — Alan Boswell, for instance, provides no cover for disputes arising in the first 60 days unless the policy was bought within ten days of the tenancy start (or comparable cover was already in place). Check the specific terms before you sign.

The practical implication: a cursory reference check will not make a rent guarantee claim stick. A comprehensive tenant reference from PropertyGoose — covering ID, credit history, affordability, employment, and previous landlord checks — gives you the documented evidence an insurer needs. At £14 per reference (less at volume), that referencing cost is a tiny fraction of a policy, and it is the prerequisite for the policy paying out at all.

What rent guarantee insurance does NOT cover

• Void periods — an empty property between tenancies needs separate void cover
• Arrears that pre-date the policy — you cannot take out cover after problems begin
• The excess/waiting period — many policies require a month or two of arrears before a claim can be made, so the first stretch of arrears can fall to you
• Non-compliant tenancies — missing gas safety certificates, an invalid EPC, or unfiled deposit prescribed information can void your claim entirely

The compliance point is worth dwelling on. Insurers regularly reject claims where landlords have not served the required documentation — the “How to Rent” guide, a valid EPC, gas safety record, and deposit prescribed information. These are legal requirements anyway, but they double as your insurer’s checklist.

Is it worth it?

For most landlords with one to five properties, the answer is yes — particularly now. The Renters’ Rights Act has lengthened the window between a tenant stopping payment and a landlord recovering possession. During that window, your mortgage, insurance, and maintenance costs continue. Rent guarantee insurance turns an open-ended financial risk into a fixed annual premium.

The caveat: the insurance is only as good as the referencing behind it. A policy built on a weak reference check is expensive paper. A policy backed by a thorough, documented reference check is genuine protection.

If you are self-managing and comparing your options, the maths are straightforward. A £195–£300 annual premium, underwritten by solid referencing, is worth considerably less stress than a multi-month possession saga with no income.

PropertyGoose’s rent and legal protection cover is available through Alan Boswell Group. Referencing from £14 per check satisfies the evidential standard most insurers require. Run a reference, then price the cover — in that order.

Craig Ryder is co-founder of PropertyGoose, a tenant referencing and tenancy management platform for UK landlords and letting agents.