Although an overwhelming majority of the letting agents recently surveyed by Let Insurance Services stated that non-payment of rent is the biggest single risk for landlords in the PRS, only half said they discuss insuring against this with their clients. Less than a third offer to arrange insurance for loss of rent and legal expenses or even to advise landlords to make their own insurance arrangements.

“There is no legal duty of care to advise clients of the insurances but there is a professional obligation. It is best practice to warn landlords of the risks and how they can mitigate them through specialist insurance policies,” said Michael Portman, MD of Let Insurance Services.

“References taken out on tenants can only assess the risk of default at the start of a tenancy. “Good agents take great care with this process but changes in circumstances can lead to difficulties over paying the rent. When there is no insurance, there is an uncomfortable conversation with the landlord.”

Insuring the rent is also in a lettings agent’s interest as it also protects the agent’s fees; it makes sense for them to discuss their landlords’ attitude to risk.

Property Ombudsman Chris Hamer concurs, “It must be best practice for agents to give landlords all the information available. 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.”

Michael Portman pointed out that, although arranging insurance falls under FSA regulations, “This is not a barrier to letting agents advising clients of the risks in lettings. Agents that are Appointed Representatives, RICS exempt or directly authorised can arrange cover. All other agents should be able to provide details of specialist insurance providers.”

www.letinsurance.co.uk