In short: Rent guarantee insurance is worth it for landlords who depend on the rent and could not absorb a 6-month possession process; landlords with reserves, strong references and a large portfolio often self-insure instead.
Updated 29 September 2026
The key facts
In this article:
Since the Renters' Rights Act came into force, letting agents have been encouraging landlords ever harder to take out legal expenses and rent guarantee insurance. So we thought it would be useful to share our thoughts and experience on the subject: whether it is necessary, and what to look for if you decide to use it.
Because arrears are the single most common reason tenancies end: 42% of landlords who ended a tenancy reported rent arrears as the reason, according to the English Private Landlord Survey, and despite rigorous checks a defaulting tenant remains a risk.
When a tenant struggles to pay, the question is whether you have a backup for the mortgage and other costs. On top of the lost rent, court proceedings bring substantial legal fees. Legal expenses and rent guarantee insurance is designed to cover both: the arrears themselves and the legal costs of recovering possession from a tenant who has stopped paying.
Rent guarantee insurance suits landlords who rely on the rent to cover mortgage payments, single-property landlords with a limited cash buffer, anyone for whom eviction costs would be hard to absorb, and landlords who simply want certainty, particularly in uncertain economic periods.
Some landlords decide against it: their tenant is well known with an excellent payment record, they have reserves and self-insure, they spread risk across a large portfolio, they prefer to manage arrears and legal action themselves, the tenancy type does not meet an insurer's criteria, or guarantees are already built into their managing agent's service, as with our Management Plus service. If you do take out insurance, read the small print carefully to make sure you have the cover you think you have.
Yes: the arrears threshold and the timeline both lengthened on 1 May 2026, which raises the cost of a default and strengthens the case for cover.
Before the Act, a Section 8 notice for arrears could be served after two months of unpaid rent, with 14 days for the tenant to respond. Rent arrears remains a mandatory possession ground under the Act, but a Section 8 notice now requires three months of unpaid rent, plus four weeks' notice once that threshold is reached. Both regimes sit on top of court timetables that are unlikely to shorten soon: average time to possession currently runs at 6 to 7 months, and with Section 21 abolished our reading is that it could move closer to 8 to 9 months. Either way, the cost to the landlord is significant and should be weighed against the premium and the probability of a claim.
Missed rent and the legal costs of recovering possession are the two core elements of most UK policies, though the detail varies.
On missed rent, policies typically pay monthly in line with the rent due, capped at 6 to 12 months, with some paying from the first missed payment and others only after a set arrears period. On legal expenses, most policies cover serving the correct notices, starting possession proceedings, solicitor and court fees, and the process through to eviction if needed, which can be the most valuable part given how quickly eviction costs add up. Some higher-tier policies also continue rent payments while possession proceedings run, supporting you until the property is legally returned.
Property damage, cleaning and redecoration, arrears that existed before the policy started, tenancies that fail the insurer's referencing criteria, informal or non-compliant tenancy agreements, and legal matters pursued directly with the tenant outside the agreement. This is where most misunderstandings arise.
Insurers are strict about tenant referencing because it is their main defence against arrears, and since the Renters' Rights Act made eviction slower, that strictness has only increased. A tenancy agreement compliant with the Act matters for the same reason.
A properly referenced tenant, a legally compliant tenancy agreement, rent set at a reasonable proportion of tenant income, the right documents served, and prompt notices when arrears arise: miss any of these and a claim can be rejected even though the rent is not being paid.
In full, insurers usually require credit checks, income verification, right-to-rent checks and proof of identity on every tenant; an affordability check as part of referencing; the EPC, gas certificate, How to Rent guide and deposit information served to the tenant; and the correct notice served promptly, with legal advice, when arrears begin.
Referencing is both your best tenant-selection tool and a requirement of most legal expenses and rent guarantee policies. It gives you an in-depth view of prospective tenants and any guarantors, helping you select reliable, financially stable applicants.
The affordability check matters most: a tenant must show they can afford the rent, and a failed affordability check can make cover harder to obtain, in which case a guarantor is the usual answer. Our guide to how tenant referencing works covers the checks in detail.
Mediation is a form of alternative dispute resolution that lets landlord and tenant resolve an arrears disagreement without going through the courts.
An impartial, trained mediator acts like a referee in a meeting between the two sides. The mediator does not make or enforce a decision; they guide both parties towards an outcome that landlord and tenant decide entirely between themselves, which can be faster and far cheaper than proceedings.
Do not consider rent guarantee insurance in isolation: high-quality referencing, an independent professional inventory and a proven tenancy contract often do more to reduce risk than a policy does.
Good communication with your tenant and six-monthly inspections belong in the same practical toolkit. Our guide on how to find a tenant yourself covers each of these steps.
For the thousand properties we manage, we use high-quality references, independent inventories and mid-term inspections, plus clear communication with the tenant. And while we know a great deal about letting, we are not insurance experts and are not authorised to discuss or arrange insurance.
We have, however, partnered with the Alan Boswell Group to provide standalone legal expenses and rent guarantee insurance; details of our Rent and Legal Protection cover are on the service page. Alan Boswell Group is one of the largest independent insurance brokers in the UK, with over 450 staff and over 86,000 properties insured. Their products are underwritten by Aviva, they have protected landlords for over 40 years with award-winning insurance, over 40,000 landlords have entrusted them with protecting their income, and over 90% of landlord clients renew each year.
The Alan Boswell Group policy can provide Hello Neighbour's landlords with: financial protection against unpaid rent, with rental payments up to £2,500 a month for a maximum of 15 months (there must be 2 full months of missed rent to claim); cover for legal advice and representation up to £100,000 with no excess, helping landlords follow the correct eviction procedures; cover for the cost of eviction proceedings; a claims process managed by Alan Boswell rather than third-party providers; and extended cover after eviction, with vacant possession cover at up to 75% of the rent for a maximum of 3 months once possession is gained via the policy, until the property can be relet.
For many landlords, yes: it protects rental income, covers the legal costs of eviction, and turns a missed rent payment from a serious financial problem into an inconvenience. It is not right for everyone, and it only pays out when the setup and compliance behind the tenancy are right.
Whatever you decide and whoever you buy from, read the terms and conditions carefully: what the insurance covers, and what the insurer requires from you to make sure it pays out when needed. If you have any questions, please get in touch.
IMPORTANT. If your property is managed by us through our Management Plus service, we will have taken out a policy in our name which provides a rent guarantee mirroring that of the standalone policy mentioned above. In this instance, please note that we are not arranging insurance for you, we are simply backing our service with insurance in our name. Hello Neighbour are not authorised to arrange or advise on insurance. If you do not use our Management Plus service, you can buy standalone cover directly yourself and there are numerous suppliers available. Being a market-leading provider of legal and rent guarantee insurance, we are happy to introduce our clients to Alan Boswell Group. Together, we have produced the details above for your information.
This information does not constitute advice, or a personal recommendation, and insurance is subject to terms, conditions and exclusions. Hello Neighbour is an Introducer Appointed Representative of Alan Boswell Insurance Brokers Ltd, which is authorised and regulated by the Financial Conduct Authority.