Agents fight shy of advising landlords on insurance

News Category: Industry News

Only half of all letting agents discuss rent guarantee insurance with their landlords and under one-third offer to arrange it – thereby passing up an opportunity to earn extra commission for themselves whilst also safeguarding their clients' interests.

The agents’ reticence was uncovered in a survey by Let Insurance Services.

While most of the letting agents who took part agreed that non-payment of rent is the single biggest risk facing today’s landlords, not all tackled the subject in a conversation. Most agents did not even recommend that landlords make their own insurance arrangements.

This is despite growing calls for such insurance to become mandatory.

Michael Portman, managing director of Let Insurance Services, said: “There may not be a legal duty of care to advise clients of the existence of insurance, but there is a professional obligation. It is best practice among regulated agents to warn landlords of the various risks and how they can mitigate them.

“References taken out on tenants can only assess the risk of default at the start of a tenancy, but changes in circumstances can lead to difficulties over paying the rent.”

He added that insuring the rent is also in a lettings agent’s interest as it protects both the landlord’s income and the agent’s fees.

Property Ombudsman Christopher Hamer said: “I cannot understand why every landlord is not covered by rental guarantee and legal expenses insurance, and this is particularly important for ‘accidental’ landlords who are often as much potential victims of the recession as their tenants.”

Although arranging insurance falls under FSA regulations, letting agents can become appointed representatives or be directly authorised to arrange cover.

www.letinsurance.co.uk



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