Rent protection was a hot topic during the pandemic. Now, as the rising cost of living starts to bite, agents should be educating their landlords and tenants on why insurance is still relevant.
The cost of living crisis is a different ball game to the pandemic. When we went into lockdown, the government got involved and nearly everyone continued to get paid under the furlough scheme, so everyone had money in their pocket. The end of furlough brought some uncertainty but many agents and landlords had already chosen to take out rent protection insurance to protect themselves against it.
The rising cost of living crisis is a slow burner
This cost of living crisis is a whole different situation. Back then, all people wanted to talk about was rent protection. Everyone wanted to make sure their assets were protected, and they were going to get their rent paid every month.
Now, there is nowhere near the same level of financial support out there for tenants. There are a few measures in place, but they're not going to tackle the problems that many people may now face.
The cost of living will be a slow builder, and it will take a bit of time for people to realise that they've actually got less money in their pocket every month.
The effects may be more drawn out but, as in the pandemic, tenants' rent payments may soon start to suffer.
It's a worrying time, but it unfortunately hasn't had anywhere near the amount of press coverage specific to tenants as when the pandemic kicked off.
The cost of living crisis hasn't sparked the same sense of urgency. It seems to be creeping up on us - and some people may be a bit oblivious as to what's going on behind the scenes.
A change in mindset is needed
The fact that this issue is a slow burner will take a bit of a mindset change. Last time, the government encouraged landlords to be sympathetic and they therefore expected to have a conversation about the circumstances of their tenants. They were prepared for this.
That's not going on now in the same way. It's almost going to come as a shock to landlords if a tenant turns around to the agent and says that they're struggling, they haven't got enough money to pay the electric bill, and the rent's going to be late.
As the issues that tenants may face don't top the agenda anymore, it's up to agents to educate landlords. Rent protection is still absolutely relevant - as it always has been - but especially so during the cost of living crisis, as the effects of this are hard to predict.
At a time when stock is low, any support, advice, and extra services that agents can offer landlords to protect their investment is paramount.
Insurance for tenants when their savings may be low
The next level is insurance for tenants, whether contents or protection against illness, for example.
Homeowners wouldn't dream of not having contents insurance. You're protecting your own assets.
Landlords can consider rent protection or building insurance as part of their management fees and the cost of running their property business. But, for the tenant, it's very different - it's a personal choice.
Insurance is often not considered an essential living cost and is therefore the type of monthly outgoing to get squeezed first. However, tenants should consider insuring themselves to protect their own contents - especially if it has liability included.
Liability cover can help protect against damage to the landlord's property, especially at a time when savings may be low or people won't have as much disposable income to pay any big one-off costs.
Agents should be speaking with their tenants to ensure they're weighing up the value that insurance could provide, in the current context.
Whether for rent protection, tenants' contents insurance, or illness insurance, understanding its value is all about taking a sensible approach.
It's about pricing it out over the term of the policy - and understanding that it brings extra security if things do go wrong.