Guaranteed rent insurance and a guaranteed rent scheme are two different things sold under nearly the same name, and landlords are regularly offered one while believing they are getting the other. One is an insurance policy. The other is a commercial letting arrangement with an agent or a council, and it is not insurance at all.
The insurance product
Rent guarantee insurance: an insurer pays the rent when a properly referenced tenant stops paying, for a stated period, usually with legal expenses for possession. It is conditional on referencing, a written tenancy, deposit protection and prompt notification. The landlord remains the landlord throughout.
The letting scheme
A guaranteed rent or rent to rent arrangement, where an agent, a company or a local authority takes the property on a lease and pays a fixed rent whether or not it is occupied, usually below market rent. The landlord is paid by that party rather than by an occupier, and the counterparty's solvency is the risk.
How to tell which is being offered
An insurance product names an insurer and a policy, and asks you to reference the tenant. A scheme names a rent, a term and a company, and takes over the letting. If you are being asked to sign a lease to an agent rather than a tenancy to an occupier, it is a scheme, and the questions to ask are about the company rather than about cover.
Questions people ask about guaranteed rent insurance
Is guaranteed rent an insurance product?
Sometimes. Rent guarantee insurance is. A guaranteed rent scheme, where an agent or council takes the property on a lease, is a commercial arrangement rather than insurance.
Which is safer?
They carry different risks. Insurance depends on meeting referencing conditions; a scheme depends on the counterparty staying solvent and honouring the lease.
What should I check on a scheme?
The company behind it, the term, what happens at the end, who is responsible for repairs, and whether subletting is permitted under your own mortgage and lease.