0:05 AM, 7th July 2023, About A year ago 1
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Some rent guarantee companies are allegedly encouraging landlords to evict tenants who are not deemed profitable enough, even if they pay their rent on time and have no other issues, an investigation reveals.
According to the openDemocracy website, some rent guarantee providers are advising landlords to use Section 21 ‘no-fault’ eviction notices to terminate tenancies without giving a reason.
The investigation highlights a tenant who had recently moved to the UK and did not have a three-year credit history, which was required by the insurance company.
The tenant had met the minimum income criteria and had taken out a loan to pay six months of rent in advance, but the landlord was still urged to evict them ‘as a precaution’.
Other insurance companies allegedly have policies that require landlords to issue eviction notices before they can claim for rent arrears, even if the tenants are willing to negotiate or seek help.
This puts tenants, the site says, at risk of becoming homeless.
Housing campaigners have condemned these practices as discriminatory and dangerous, saying that they exclude vulnerable tenants from accessing private rented accommodation and worsen the housing crisis.
Campaigners, including Shelter and Generation Rent, are now calling for stricter regulation of landlord insurance companies and more protection for tenants’ rights.
A senior economist at the Joseph Rowntree Foundation, Rachelle Earwaker, told the site: “I think the only way to describe this system is just quite messed up.
“We don’t see this happening in any other sector where an essential service is provided.”
She added: “An energy company isn’t going to turn off your energy because there is a risk that you’re not going to be able to pay in six months’ time.
“When a home is your actual foundation for life, I don’t think that should be something that’s even on the table.”
Landlords applying for a rent guarantee policy will need to show that a tenant has met referencing and other affordability conditions set by the insurer.
The tenant will have provided proof of address and photo ID and proof of address, undergone credit checks and provided references from their employer and previous landlord.
Renters may also need to show payslips and bank statements to prove their income.
However, if a tenant doesn’t meet an insurer’s conditions, they may have to provide a rent guarantor – or pay a big amount of rent in advance.
Ms Earwaker says that lenders and insurance firms are tightening their criteria for tenants as they fear more will default on their rent payments.
This means, she adds, that renters must prove they earn more, have a good credit history and have reliable references.
She says this move will affect lower-income households the most – and any tenant who has had financial difficulties in the past.
Ms Earwaker told openDemocracy: “That middle group between social housing and the bottom of the private rented sector is already large.
“I think it will be growing because of things like this.”
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david porter
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Sign Up10:10 AM, 7th July 2023, About A year ago
Insurance companies will try to risk evaluate to improve their position so as to eliminate claims.
However they are not very good at it. They did not foresee the Titanic sinking nor the aircraft flying into the WTC. The person making the decision within the insurance company has much less experience that I have.
My experience is that tenant defaults arise in the least expected areas. The more highly paid lose their jobs and cannot get another job whereas the blue collar worker will get another job within a few days.
The first will be living right up to their income and be in all kinds of trouble.
Why would I not keep a tenant who pays the rent and looks after the property?
The insurance company is trying to get between the wall and the wallpaper!