Is Rent and Legal Insurance Required on your property?

Video Transcription:

Hey guys. So is rent and legal insurance required on your property? Now the short answer is no, it's not. Okay? But is it something that you should do? And I would say most definitely these days. Now you can look at the property yourself, but for around... I mean look, you can get policies from around 150 bucks, somewhere around those. I mean you've got them up to 300 and all that sort of stuff. But around about 150 bucks. Yes, you might get a few that are a little bit less than that. But the bottom line is what you're looking at in that, and what we're seeing now more is there is a requirement to have it. And what I mean there's no legal requirement, there's no technical right.

But for the sake of 150 bucks, let's just use that, if you've got 10 properties that's 1500 bucks per year, actually, the likelihood of you having a tenant default and needing to take to court or needing them to... some form of remedy. Rent and legal, I feel, and you're talking to a guy who for years and years and years really was, I wouldn't say I was against it, but I never took it out of my own portfolio. And the reason I never took it out of my portfolio was I effectively self-insured. I just used to literally per property split away 20 bucks. But then I looked at how much money was building and then I bought another property with it. And since then I hadn't really ever... I've just self-funded my insurance. But what I've noticed recently is that it's becoming more and more the norm.

And I'll give you an example. And this is an extreme example. This is possibly the worst example I've ever encountered. So let me tell you a bit of a story and this is the worst case I've ever seen so far. And I've seen some pretty bad cases and we see some regular cases. With 1200 properties under management, there's one or two going on at any one stage. But this one is quite a unique one in that what happened, boy met girl, got married. Boy had a job in London and therefore got a place in London. Wife was up there, boy met another girl and moved her in as a permitted occupier where he was a tenant. Boy then moved out. Don't know the story of why they moved out or whatever, but the permitted occupier claimed that she was a tenant.

So what ended up happening, it went to magistrate and dah dah dah dah dah. It's now with the High Court, two years on, £1800 per month that she has not been paying any rent on. So you've got two years, 1800. So work out those maths plus the number, I think it's five or six now. I think it might be six attendances at court. So travel down, travel back, half the time she doesn't turn up because she's used all sorts of excuses about ill health, mental illness, violence against her and threatening all the time. And it's amazing some of the things that you can do now if you want to totally abuse your position.

Now the challenge, my fear is, is that she is going to walk away from this with no cost whatsoever. The guy who had put her in there is going to end up with all the costs. But the bottom line is our landlord is out of pocket by quite a substantial amount. Look, should it happen? No, it shouldn't. The courts unfortunately really are, I feel, ineffective in a lot of these cases. And the unfortunate thing is with this is that had we had a proper rent and legal policy, it may have covered this, so at least they wouldn't be out of pocket. It's an extreme case. I've never seen this happen before, but we do, managing 1200 properties, we do see regular cases. And we're talking one or two.

But it's not that it's so much the one and two, the extreme cases that are the issue, it certainly covers you from that. It's the everyday cases of tenants have not been held to account and on a regular basis, tenants leave... They've got 500 deposit and it comes in at 700 and they just leave and never pay and then the landlord is left footing the bill. Now, one of the things that we're doing and one of things I'm really high on is going after them in the money claim and whatever courts so that we get that judgment against them so that it carries forward to them and they have to take responsibility for their stuff- ups. For too long, it's been too expensive or too hard to go to the courts and the courts were siding with the tenants. And we can argue that til the cows come home, but that is the case. It's just happened too many times and tenants get too many chances to put things right and then have no intention of putting things right. And all it does is it costs the landlord more and more money.

But yes, so should you have rent and legal insurance? I think now given the environment and given the environment where we're heading into, 100% I think you should. For the sake of a couple of hundred bucks, 150 bucks per property, it is absolutely worth it for the peace of mind. So guys, hopefully that sort of gives you a bit of a, well, a reality check on what can go wrong and how bad things can go wrong. But yeah, hopefully you learn the lesson from that and you get it. A lot of... I mean I know with our gold package, we have the insurance included and we can also tack it on to with the other packages as well. But I think, now really you do need it.

All right guys. Have a great day. Live with passion. 

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