Landlords "should consider" taking out rent protection insurance as the economic downturn continues to bite, according to an insurance firm.
The slowdown in the economy means that many tenants may be unable to afford their rent, meaning landlords should consider taking out rent protection cover, an insurance company has claimed.
Michael Portman, managing director at Let Insurance Services, cited the example of employees at failed investment bank Lehman Brothers. He explained that many landlords would consider an investment banker as a "safe" tenant, but following the bank's collapse many of these people have been unable to pay their rent.
"If you've got a good quality tenant then you might think, 'Well, I don't need to have that insurance', but there is no guarantee that that tenant will have his job in three or six months' time and will be able to afford to pay the rent," he said.
This warning comes on the back of a report from the National Landlords Association in December, which found that 71 percent of landlords expect the amount of rent arrears to grow in 2009. Mr Portman explained: "You probably wouldn't have wanted to take out insurance last year [but] you would probably want to take it out this year. The economy is changing and circumstances change."
He concluded by saying that rent protection insurance may not be vital for experienced landlords with "lots of properties", but said it was "very important" for newcomers who "can't sell their house and [are] worrying that they have mortgage payments to pay out".
