I have been offered 6 months rent in advance

Suzanne (and Paul for the last time!!)

RGI, or LERG as I prefer to call it as it better decribes what the policy does (Legal Expenses and Rent Guarantee cover) is a policy taken out by a Landlord on a property to cover the rent and other issues on that property.

To qualify a tenant must pass referencing, and if they do not then they must provide a Guarantor who does. The policy is in the Landlord's name and they can make a claim for any breach of the tenancy agreement - non payment of rent, damage etc.

Insurance company pays out (in arrear and after deducting an excess) while pursuing a possession and money order in Court. Once vacant possession is achieved payments stop, though on really good policies (12 months rent covered, up to £4000 a month and 2 months after possession at 50% while getting property up together to market) the premium will be higher.

@Suzanne - what is your agent offering you for £462.50? Will they get a professional inventory done, set up deposit protection protect your deposit for you and deal with the tenancy, RGI and any claims etc. for this fee?

If not they are expensive but you are stuck with that now so no point crying over spilled milk. If they are not including these things in their fees then you still need them and need to factor this into your calculations.

If they are providing all of these things then I'm sure there's a deal to be done with the firm I referred you to in order to reduce the £34.99 pcm.

In any event, the average tenancy length is 18 month so whilst it is still a roll of a dice as to whether you would be better off financially, it certainly makes sense to work with the business now which you will probably use next time around. I hope that helps 🙂

SAVINGS AT RISK

I am sure Mark will publish a separate article on this warning of the dangers, but when I worked for Nationwide even in 1980 there was small print on the back of every new investment account application card, and in the small print of mortgage terms and conditions, that the lender could use other credit balances to set off against debts elsewhere.

NEVER, EVER have any investments of any description in any institution where you have a debt with them.

It used to be that actual true deposit accounts were excluded, my guess is now they are all vulnerable, not that many people have true deposit accounts (they pay a lower rate of interest - if that is possible these days!! - in return for greater security.

@IO - the "better" policies you are referring to cost around 3% of rent in my experience. In comparison to policies costing less than £100 my opinion is that the extra premium does not make them justifiable. What's the cheapest you've found a "better" policy matching the terms that you have outlined?

@IO - I have indeed published a seperate article just recently about Barclays offset mortgages, see link below.

RENT IN ADVANCE

I am afraid the solicitor is mixing things up here. A clause stating no sub-letting/assignment etc may work in some instances but NOT if the tenant actually has the legal right to sublet because it is a Premium Lease. The whole issue here is where the solicitor is right, that an AST is not so affected and the prohibiting clause will stand.

Where the solicitor is dangerously wrong is in saying provided you call the payment rent and not a deposit that this OK and solves the problem. I am afraid that is very much not the case, if it waddles and quacks you can call it a dog if you like but it doesn’t stop it being a duck.

The Statute is extremely clear on this and deliberately so, specifically to prevent situations like yours where by calling money rent you deny it is a deposit. I am afraid the definition on the 2004 Act makes it very clear you can call what the tenant hands over what you like but if it is held in contemplation of a future obligation i.e. to pay future rent then it is a deposit. Seems simple common sense to me as otherwise why are you taking the 6 months up front if not for the comfort of extra security i.e. making sure the rent is paid?!!

You are still in dangerous waters if you are taking a 2 month deposit if you do not then register that 2 month amount as a deposit. If a month is held back as some sort of protection against non payment one month I am afraid you are sunk.

This is the “floating rent” the sols referred to and makes you guilty of a TDP offence.

One of only a couple of solutions is the adapted wording I suggested. Anything else will not work.

Suggest you tell agent to change solicitor

Johnson v Old may clarify this issue but I wouldn’t put money on it, though I hope it does.

GUARANTOR INCOME

Suzanne

You will be lucky if £27K a month will pass referencing for the Guarantor. Most referencing companies these days allow 35% of gross income to cover rent. On an £11000 annual rent that needs an income of around £32K a year and that assumes no other major expenses on the part of the G'tor such as their own rent/mortgage or finance commitments etc

RGI COSTS

Mark you are right in one sense, but as with everything in life you only get what you pay for.

3% was the premium LETsure and then Homelet charged for their GOLD policy which was always the best on the market.

Originally covering £2000 pcm rent ir increased to £4000 several years ago, paid out for 12 months plus the 2 months at 50%, had legal expenses up to £50K and cost 3% of rent.

I agree for many Landlords that would be too good a cover - not if you are renting in Central london though and it takes 9 months to achieve possession. Then you are glad you went the extra mile, or paid the estra 1% or so on the premium.

Horses for courses I agree. Couldn't tell you anything about cheap insurance for anything - cars, houses, rent, holidays - and so on as in my experience as I say you get what you pay for.

IO I have to disagree with your RGI contention.
For £99.00 including the RGI check it costs £99.00 for a year's policy.
This has NO policy excess if you wish cost me an extra £10!!!
Is for £50000 per claim until eviction even it takes 4 years to evict
Includes legal costs and recovery for the RGI company.
though i don't think mine covers past eviction.
Homelet and Letsure are unecessarily expensive in my opinion.
My RGI company policy works I have the £10333 as the EVIDENCE!
I could not and I would choose not to use the companies you quoted.
I absolutely concur with your last post about the workings of RGI; you said it better than me; I had been trying to state what you have succintly stated.

Paul

You pays ypour money and you takes your choice.

Suffice to say that what matters in matters insurance related, on any type of cover, is the quality of the underwriting. You simply do not get quality underwriting EVERY TIME with cheap policies. End of