Tenant Guarantee Scheme Launched

[resident]

The ground-breaking Tenant Guarantee Scheme is now operational and is already accepting tenants into membership.

The essential features are that landlords who accept members of our scheme as tenants receive the benefit of a rental guarantee of up to three month’s rent, plus contents insurance cover equal to one month’s rent, plus legal cost cover of up to £1,000. They also have the comfort of knowing that members have been credit checked and are committed to displaying their credentials as good, responsible tenants.

The cost to tenants is little more than they would pay an agent for credit checks and documentation. Landlords who see benefit in the scheme can pay for tenants if they so wish, otherwise there is no cost whatsoever.

Further, as we believe the Tenant Guarantee Scheme provides a viable alternative to deposits, landlords who accept tenants on the basis of the guarantee alone will not have to become involved with deposits or in deposit protection schemes – and all the cost, bureaucracy and uncertainty and inconvenience involved.

Tenants gain also because through membership they can rent properties that might otherwise be out of their reach solely because of the need for a large security deposit.

Our website iguarantee.co.uk has all the details of the scheme including sample insurance policies and guarantees and online registration.

In launching the scheme we believe we are offering a valuable service to both landlords and tenants by helping to overcome the hassles involved with deposits and also rewarding members for their record as exemplary tenants.

If you have further queries about the scheme, please call us on 01322 311795 (Mon - Fri 9am - 6pm).

Best regards,

The Residential Landlord Team

[ChelseaPE]

I saw an email announcing the new scheme. Hence my joining the forum.

My initial take impression is the program could really be a benefit to both sides of any rental. I need to consider the details further before approaching my property managers and tenants.

[gnawood]

A quick summary seems to be;

iGuarantee is an insurance scheme avoiding the need for deposits.

Tenants pay £50 to join to the scheme which verifies they are credit worthy etc.

tenants also pay £5 per month (each?) to stay in the scheme. ie £60 pa.

Based on this, Landlords is covered for loss and does not need to take deposits.

Pluses;

+ tenants don't have to find deposits, instead pay £60 pa.

+ solves the issue of credit checks as these are done by iGuarantee.

Minuses;

- for structural damage could claim on building insurance anyway

- claims will involve an insurance company and in my experience they are not fast or neutral

Queries;

- how long will the settlement process take and will it delay repairs and re-letting ?

- what arbitration is available, how fast and what cost ?

- If multiple tenants, do they all have to be in the scheme, or only one of them ?

- Are tennants application fees refunded if they are not accepted ?

[resident]

Thank you for your post about our new Tenant Guarantee Scheme (iguarantee.co.uk)

There are quite a few more pluses than you list. First, one of the most important ideas behind the scheme is that we are building up a database of responsible tenants - so that in future landlords who find a tenant has been a member for, say, two years, will know that they have passed a number of credit checks and have not defaulted on their responsibilities during that time. Further, because by being a member tenants can rent without paying a deposit, they have a continuous incentive to remain responsible tenants (so, for example, the last month rental collection problem experienced by many landlords should be eliminated).

Another advantage is that the cover given is actually better than that afforded by a deposit - three months rental guarantee, contents cover of up to one month's rent (so landlords are covered not just for structural damage) plus legal fees of up to £1,000 should repossession proceedings be necessary .

Importantly the scheme is free to landlords and, if they accept members without a deposit, avoids the cost of involvement in tenant deposit protection schemes.

We have set up this scheme with Letcare, an FSA registered insurance broker, and one of the criteria we specified was that claims procedures should be as quick and efficient as possible. We do not believe landlords will experience problems in respect of claims, but should they do so they will have recourse through the usual industry regulators.

It is impossible to say how long the claims process will take, because this will depend on the nature of the claim and the quality of the evidence that landlords are able to present. But it is in any case the timescale is likely to be shorter than the dispute resolution process involved in deposit protection schemes.

The scheme covers multiple tenants. Where a married couple rent and one is the main income earner, only one membership will be required. When unrelated people are joint tenants, each will have to belong to the scheme, although after the first tenant has joined, subsequent tenants pay less (£20 plus VAT) to register.

And to answer your final question, application fees are not refundable to tenants who do not meet our criteria - which is why those criteria are displayed on the website (http://www.iguarantee.co.uk/criteria.htm) and tenants who know they cannot meet these are advised not to apply.

We hope this answers your questions. The Tenant Guarantee Scheme can be reached on 01322 311795 (Mon- Fri 9.30 - 5.30pm) or by email at iguarantee@writenow.co.uk if you require further information.

[Joanna Huntley]

Hi guys,

As a small independent letting agent this is great news and just what we we

have been hoping for. The new legislation regarding tenancy deposits has

really affected our business so just want to say thanks to everybody

involved in the new scheme, as this is a real life saver for us !!

[Simon Dewsberry]

Hi Resident

What is the position with HMo's of say, 6 on individual ast's ?

Simon

[J4L]

I think this idea is fabulous and will certainly aid both sides of any AST's.

The Tenants already are getting into a pickle when they start a new agreement simply because they need to find a whole load of money as downpayment.

[Simon Dewsberry]

In my experience tenants who get into a finacial "pickle" before they move in or on raising a bond invariably turn out to be "problem tenants"

Perhaps you should re assess the quality of tenant you are dealing with!

[J4L]

In my experience tenants who get into a finacial "pickle" before they move in or on raising a bond invariably turn out to be "problem tenants"

Perhaps you should re assess the quality of tenant you are dealing with!

No it's not always to do with the quality of tenant it's usually because an unscrupulous landlord has retained their initial deposit without due reason.

This can be a stuggle for people. Hopefully the new schemes in place will help out.

[Simon Dewsberry]

There are very few LL who do this to tenants without due reason - there are however a much higher number of "skint" tenants who claim this is why they havent got the bond!

This will no longer be relevant as the TDS will take care of this almost non existent problem !

In todays world most people have credit cards and all reputable agents should have facilities for taking debit/credit cards so anyone with anykind of financial standing should be able to deal with the bond.

This said - there is deinately a place in the market for schemes such as this - it will be horses for courses !

Simon

[resident]

Hello Simon,

In answer to your question 'What is the position with HMo's of say, 6 on individual ast's?'

Each person would need to become a member of the Scheme. If they were all party to one ast there would be a discounted rate for any additional member. Any tenant can apply, our criteria for membership is set out on the website. (www.iguarantee.co.uk).

Hope this helps.

[resident]

In my experience tenants who get into a finacial "pickle" before they move in or on raising a bond invariably turn out to be "problem tenants"

Perhaps you should re assess the quality of tenant you are dealing with!

Please see our membership criteria set out on the website (http://www.iguarantee.co.uk/criteria.htm).

For your information the 'Bond Board' who run a scheme in Bolton have told us that their claims experience is very good even in dealing with tenants who are unable to rent without a bond. But we are not seeking tenants who necessarily require a bond only those that see this a sensible way forward.

Resident

[Matthew]

A few questions:

1: What happens if a tenant suddenly stops paying the £5 monthly fee and shortly after decides to trash the place and leave, if the tenant is no longer a member where does the Landlord stand in getting the money?

2: The affordibility tool is a good one, however it doesn't mention bills. My contracts for individuals renting a room includes bills, can the £50 per month be deducted when compared to the "rent they can afford"? Quite a few rescent tenants would qualify without the bills, but not with the bills.

3: With the enormity of bills these days is it factored into the equation, for example someone paying £450 for an all inclusive for a room and sombody paying £400 for a 1 bed flat will more than likely have bills amounting to £200. So the real cost of one is £450 and the other £600, yet both would either have to earn enough to cover the £400, or worse still depending on Q2 above, the all inclusive one will have to earn enough to cover £450, clearly unfair.

4: What happens if they are struck off the I guarentee list for any reason, will it come up on one of my rentchecks, or does it just mean the tenant will have to pay a bond in future, if so it has less value.

Don't get me wrong I do like the idea of the whole thing,

Regards,

Mat.

[Simon Dewsberry]

Hi Matt

good points !

Resident

"For your information the 'Bond Board' who run a scheme in Bolton have told us that their claims experience is very good even in dealing with tenants who are unable to rent without a bond. But we are not seeking tenants who necessarily require a bond only those that see this a sensible way forward."

Appreciate the sentiment ref bond affordability - as some who struggles to find bond is more likely to fail ig criteria anyway !

I think ig is a good idea in principle as it should hopefully weed out the potential financial problems thru referencing- my comments were made in repect to people who struggle to find a bond as opposed to those who choose to use ig for other reasons!which in my experience invariably turn out to be "problem tenants".!

Simon

[resident]

Hi Mat,

Here are our answers:

1) Once a tenant has been accepted into the scheme and a tenancy registered, the landlord is covered for the next six months no matter what. The consequences of not paying the subscription fall entiirely on the tenant who will not be able to use the scheme in future.

2) The amount of rent/affordability relates to the cover given. So if you are happy for a tenant to quote a net amount (say £400 rather than £450 including bills) we do not see any problems - however your cover will related to the £400 rather trhan to the £450 - so rental guarantee of up to £1,200, contents of up to £400 plus legal fees of up top £1,000.

3) The criteria are those laid down by the company which makes the credit assessment and provides the rental guarantee. It is based on the firm's experience and will therefore encompass an overall ability to pay.

4) One of the ideas behind iguarantee is that we are building up a list of responsible tenants who will be rewarded for their good records - by being able to rent without having to come up with a deposit. So, if landlords have a claim - for unpaid rent or damage - the tenants will be given an opportunity to make good the loss (or provide proof that it is not their responsibility). If it is their responsibility and they do not make good the loss, then they will not be able to use the scheme again.

Hope that answers your questions,

www.iguarantee.co.uk

[Matthew]

Thanks for the reply,

Re answer 4, it would be much better that measures were put in place that if they did not make good the loss the scheme would ensure that this went onto their credit history somehow. Not sure how the credit system works, maybe a county court injunction (again don't know anything about yet, thankfully) but it would be good if it turned up on future credit checks, otherwise they have lost little really.

It would make it a really powerful tool and I would definately encourage people to join, as it will mean, break the rules and you may not be able to ever rent at all, a really good thing, that will protect landlords from these people who think debt goes when they move.

Every property I have bought I have had debt collectors sending letters or coming around asking me if I'm so and so, it surprises me how none of this appears on thier credit history.

It's especially funny when they ask me if I am "Asif Jabir", or "Mr Odemwengie". Do I look like Mr Odemwengie?! :-)

[Simon Dewsberry]

Mat

why dont you just charge a rent of £450 with no portion allocated to bills

I do so if a student is sharing with a professional etc they pay exactly the same as the professional whether they are entittled to CT exemption or not ! My tenants are not given abreak down of the bills as they have absolutely nothing to do with them !

they have a price for rent with exemtion from any further charges for CT gas electric water.I make it very clear to students who ask for a reduction that this is the case (please note this only applies where i "rent a room" not joint ast. If the house is to be full of students then i would adjust accordingly if i had no CT bill to pay ......Unless of course they were happy with the RENT fig as quoted .

This is so much simpler and will put you in a position where you are covered in full from ig 's point of view.(i presumme?? Resident ....)

ALSO if you have set bills at £50 that is presumably if prop is full - if house is half empty this fig will double etc so it is not a constant - it is very much a variable whereas the rent fig is a constant for acc's purposes and for everything else. If only 2/6 rooms are full then on your system it could be argued that the bills created by the tenant would be 3x £50 as you only have 2 rents to cover them leaving you with ig only covering £300 which could be declared as rent for that particular month. Conversely in summer months when bills are far lower probably £430 would be rent - This is all rather messy !!!!!

If you take the logic of "bills" money a bit further to running costs then it could be argued that ins, mort payments, tax, repairs, ad fees, LA fees and all the other costs to run the house could be included and the rent would then be £50 plus £400 for "bills" so where do we draw the line at bills - personally you can see where i do - In my humble & cynical opinion ................Rent in this case is the full £450 as presumably the utilities etc are in your name making you responsible for them, not the T.As long as your AST is worded to confirm this ..................

Put Simply you collect your "RENT" and then you pay all disbursements from them as an expense why complicate by quoting a split on the rent ??

The point is we need to be covered for the amount that the tenant is contracted to pay each month loosely termed "rent" to cover all of our expenses so as long as an ast states that a periodic payment is agreed and documented by an ast then clearly we need cover for the full amount. As things stand with this system we are left out of pocket.

If these bills are in the tenants name that is of course a very different matter as they would be responsible and outside the remit of ig or any other scheme (unless there is a chance that default could revert responsibilty back to you - which needs to be covered somewhere!)

The Devil is in the detail and i like to play his advocate !!!

Someone is now going to rip this to bits !!!!..............

Simon

PS think i may be in danger of getting myself chucked off the forum now !

[Matthew]

Hi Simon,

No I know what you're saying I do charge a flat fee now after the nightmares of my first attempt in which I got burnt somewhat, but the point I was making is that somebody earning say 10,000 pounds per year could not be on I-guarentee for a room costing say 450 per month all inclusive, unless I read it wrong. However someone could rent a 1 bed flat on I-guarentee for 400 pounds per month. This would make no sense as the 400 pounds per month would turn into 600 with bills included. The tenant could afford the room much more comfortably.

I would get a scernario, if this took off, that tenants would say I can't afford your room as it is above my limit, which would be unfair, so this needs to be considered by I-G.

Have I got it totally wrong? I feel I may have???

[Simon Dewsberry]

Hi mat

I take the point but isn't that going to be true of all credit referencing !

I use FLS and they give a recommended credit limit "for rent" without knowing wether or not it is inc or not - I guess the point is, as ig has made clear, is that they will/will not cover the requested amount regardless ..

Perhaps it should be made clear to referencing agencies that "the rent" is actually an inclusive figure so that they can take this into account whilst assessing financial suitability/ability (as clearly this will affect their overall financial ability).

I Guess the difference is that once i/we have the info I/we can make a decision and weight it with the knowledge that they will have £200 less amonth to spend - Unfortunately I/we will have the decision making process removed !

Simon