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The last few years have been tough for UK landlords. During the pandemic, many were faced with the prospect of their tenants being unable to pay their rent as the country faced unprecedented levels of unemployment and redundancy. Following the introduction of Universal Credit in 2015/16 which reduced income benefits for many families, which was relied on to pay their rent, and coinciding with the erosion of mortgage interest tax relief from April 2020, this has culminated in all relief being removed from this April.

Fast forward to today, and Landlords are now battling significant increases in mortgage interest rates, greater requirements around Energy Performance Certificate (EPC) testing and minimum requirements, along with changes to the way that Tenancy Agreements in England operate, making it much harder for landlords to regain possession of their property.

Is it therefore any wonder that the news is full of stories of a mass exodus of private landlords selling up and leaving the sector? This all coincides with the supply of UK housing being far outstripped by demand.

Supply and demand

More people are being forced to go down the rental path as the goal of home ownership moves further away; at the same time the Government has fallen behind on its promise to build more new houses. In theory, this should create a very attractive environment for private landlords to operate within, however when the maths simply don’t ‘add up’, and less ‘risky’ investment opportunities are available – who can blame them for leaving the sector.

So, what of the private landlords that are staying in the sector. Anecdotal evidence gathered by financial advisory service Unbiased suggests that the risks associated with letting property are significantly increasing.

There are an estimated 2.74 million registered landlords in the UK. Far from being wealthy property magnates with a portfolio of properties, many of these just rent out the one home, for reasons ranging from investment to necessity.

As the UK faces another year of financial uncertainty and fluctuating interest rates, landlords are coming under pressure to cover the cost of their own mortgages in addition to that of their rental properties. Raising rent, therefore, may be their only option, passing on the cost of these increases to their tenants, who are already feeling the squeeze from increased prices elsewhere such as food, energy, and travel.

Landlords therefore risk being in a position where their own rent increases become unmanageable for tenants, and with so few other rental or council properties available in the UK housing stock, tenants risk being forced into arrears with nowhere to run.

When a tenant goes into arrears, landlords are unable to meet their own financial obligations as often the rental payment covers the mortgage on the property. As soon as a tenant begins to fall behind on their payments, the landlord faces their own financial struggles – a knock-on effect that disadvantages all parties concerned.

Though evicting a tenant who falls behind on rent payments is an option, the process can take months, leaving landlords without income for a protracted period.

When landlords do finally secure the property, they may have to spend further time and money getting it cleaned or refurbished depending on the state the previous tenant left it in.

The announcement earlier this year of the intention to abolish Section 21 notices also adds another layer of uncertainty for landlords. With the scrapping of ‘no fault evictions’ via this notice, landlords face an even more difficult battle to evict problematic tenants.

A Guaranteed solution

There is an insurance solution however, that is designed to help mitigate these costs, and hopefully prevent hard-working, honest landlords from being forced to sell up: Legal Expenses and Rent Guarantee insurance (LERG) for landlords is available as part of our Property Owners Legal Expenses Insurance solution.

LERG offers peace of mind when renting out properties and offers rent protection to landlords and letting agents in the event of a tenant defaulting on their tenancy agreement; it also covers legal expenses incurred, such as in evicting a tenant. Landlords with this kind of protection can take comfort in knowing that if a tenant defaults, their rent is covered by the policy. It can also provide cover for disputes with tenants, criminal prosecutions, and other types of property disputes.

Customer testimonial
“I want to pass on my thanks to Arc Legal for their invaluable support and professionalism during a difficult period. We were facing considerable rent arrears, were deeply distressed about the legal process and anxious about our capacity to support our outgoings. 
Throughout our claim Arc Legal were supportive, which was very assuring given the circumstances.”
Arc Legal LERG

Our LERG product is well regarded across the market for the quality of legal advice and service our customers receive. Rent payments are made promptly, and rather than pushing all policyholders to resolve their disputes in an oversubscribed court system, we prefer to focus on other methods of dispute resolution to find the right solution for our customers.

Our products are also backed by A rated capacity, which during this economically challenging time, is vital for providing the security our distribution partners and their customers needs.

Richard Finan, Director of Strategic Development, Arc Legal Group

To find out more about Property Owners Legal Expenses Insurance, please contact your Relationships Manager or email

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