At the time, Kerry-Ann Dowdell, Credit Management Manager, issued a warning to landlords not to cut corners by opting for a cheap tenant referencing service only to find themselves out of pocket as tenants struggle to meet the payments.
It seems that her warning was well heeded as October has seen a record low number of landlords, who used Paragon’s own tenant referencing service, claim on their rent protection warranty.
However, Kerry-Ann advises caution for those landlords who may feel that accurate referencing alone is enough to protect them from being out of pocket.
She comments:
“There has been a lot of press coverage recently about this being a good time for landlords, with rents increasing and a readily available supply of tenants. There may be plenty of tenants floating around but, with the proposed cuts in the public sector and an increased likelihood of redundancies in general due to the ongoing economic climate, rent protection is now more important than ever.
"Undoubtedly, proper referencing significantly reduces the risk, but there is still the threat of a tenant losing their job and being unable to pay the rent, albeit through no fault of their own. Of course, there are also the less scrupulous people who try their luck with a fraudulent application, often due to the severe lack of social housing stock and an element of desperation.
"These numbers are also on the rise. Whilst we have, in the past, managed to obstruct several of these submissions during the referencing process, there will always be a small number of well informed individuals who are successful in slipping through the system.”
It’s for this reason that FCC Paragon has recently launched their new Collect and Pay warranty available to managing agents and landlords, which guarantees to pay the rent on time, every month, for the duration of the tenancy.
Therefore, if the tenant does default, the landlord has the peace of mind that they will not be out of pocket. This not only protects landlords’ and managing agents’ cash flow but also reduces bank fees for the agent as FCC Paragon will collect the rent directly from the tenant.
For 3% upfront fee or 3.5% monthly fee, inclusive of VAT, FCC Paragon will pay the rent directly to the agent or landlord, up to the point of vacant possession, even if the tenancy agreement has ended, as long as the warranty remains in place.
FCC Paragon will pay up to £50,000 worth of cover for rent arrears and legal expenses following non payment of rent. Money laundering services are included as standard and, if the tenant should default, eviction of the tenant is also covered. In effect, FCC Paragon does everything, including rent statements, significantly reducing the administration time in dealing with arrears.
In conclusion, Kerry-Ann comments:
“It’s important for landlords to obtain a combination of both first-rate tenant referencing and to ensure that, if things do turn sour, they are covered with a rent protection warranty. By using our new Collect and Pay warranty, they can be sure they are covered for all eventualities.”
