Guaranteed rent and rent guarantee insurance sound almost identical, and they are completely different products. One is a tenancy: a company becomes your tenant and pays you a fixed rent regardless of what happens at the property. The other is an insurance policy: you pay a premium, and it may pay out if your tenant stops paying. This guide explains what each one actually is, how they work in practice, and where the confusion comes from.
What is rent guarantee insurance?
Rent guarantee insurance is an insurance policy a landlord buys, usually annually, that can pay out if a tenant stops paying rent. Like any insurance product, it involves a premium, policy conditions, exclusions and a claims process.
In general terms, policies of this kind tend to work like this. The tenant usually needs to have passed referencing for cover to apply. If the tenant then falls into arrears, the landlord makes a claim, and subject to the policy’s conditions, the insurer pays some or all of the missed rent for a defined period. Some policies also contribute towards legal costs involved in recovering the property. The specifics vary from policy to policy: waiting periods before payments start, excesses, monthly caps, maximum claim lengths and conditions that must be met for a claim to succeed are all defined by the individual policy.
The important structural point is what the product does not change. The landlord is still the landlord. You still find and manage the tenant, or pay an agent to. You still carry every compliance obligation on the property. And rent guarantee insurance does not pay anything during a void period, because an empty property is not a defaulting tenant. It is a hedge against one specific risk: a vetted tenant who stops paying.
What is guaranteed rent?
Guaranteed rent is not insurance, and this is where most of the confusion sits. Under a guaranteed rent arrangement, a company becomes your tenant under a lease, typically for one to five years, and pays you a fixed monthly amount for the full term, whether the property is occupied or not.
There is no premium, no claims process and no conditions to trigger. The payment is simply the rent owed to you under your tenancy agreement with the provider. The provider then sub-lets the property, manages the occupants, and carries the obligations that come with the property for the term of the lease: the maintenance, the compliance, the licensing, the tenant management.
The London Landlord has operated this model across London and the South East for over 20 years, with more than 1,000 properties managed. If you want the full picture of how the arrangement works, read our guide to what guaranteed rent is and how guaranteed rent works.
Why do people confuse the two?
The names are nearly the same, and both products exist to answer the same underlying worry: what happens to my income if something goes wrong at my property?
But they answer it in structurally different ways. Rent guarantee insurance is a financial product bolted onto a traditional letting. Everything about being a landlord stays the same, and the policy sits in the background for one specific bad outcome. Guaranteed rent replaces the traditional letting altogether. The company becomes the tenant, so the question of “what if the tenant stops paying” stops applying to you at all, because your tenant is a business with a contractual obligation to pay you either way.
A useful way to keep them straight: rent guarantee insurance protects a landlord who is still doing the job. Guaranteed rent removes the job.
Side by side: how the two products compare
| Rent guarantee insurance | Guaranteed rent | |
|---|---|---|
| What it is | An insurance policy | A tenancy agreement with a company |
| Covers void periods? | No – an empty property is not a claim event | Yes – the payment continues whether the property is occupied or not |
| Covers non-payment? | Potentially, subject to the policy’s conditions, excess and claims process | Yes – your payment does not depend on the occupant at all |
| Who finds and manages the tenant | You, or your letting agent | The provider |
| Who carries the compliance obligations | You | The provider, under the lease, for the full term |
| Ongoing cost to the landlord | An annual premium | None with The London Landlord – no fees, no commission |
| How you get paid | Via a claim, after the conditions are met | Fixed rent on the same date every month |
What each product looks like in practice
The clearest way to see the difference is to walk through the three situations landlords worry about most.
A void period. The tenancy ends and the property sits empty for six weeks. Under rent guarantee insurance, nothing happens: there is no tenant, so there is no default, so there is no claim. The lost rent is yours to absorb. Under guaranteed rent, nothing happens either, but in the opposite direction: your payment arrives as normal, because the company is your tenant and the lease continues regardless of occupancy.
Rent arrears. The occupant stops paying. Under rent guarantee insurance, you begin the claims process: notify the insurer, meet the policy conditions, wait out any excess period, and receive payments subject to the policy’s terms while the situation is resolved. Under guaranteed rent, the arrears are the provider’s problem. The occupant owes the provider, not you, and your fixed payment is unaffected.
A compliance issue. A licensing scheme launches in your borough, or a maintenance obligation with a legal deadline arises. Rent guarantee insurance has nothing to say about this: compliance sits with the landlord, insured or not. Under guaranteed rent, these obligations sit with the provider under the lease for the term of the contract.
Two products, two different problems
It should be clear by now that this is not a like-for-like choice, because the two products are not trying to do the same thing.
Rent guarantee insurance is designed for landlords who are staying hands-on. It leaves the letting exactly as it is and hedges a single defined risk. Guaranteed rent is designed for landlords who want the income without the involvement. It fixes the payment and moves the workload, the voids and the compliance to the provider.
Which arrangement fits a particular landlord depends on their circumstances, how involved they want to be, and their own financial position. This article is general information about how the two products work, not financial or insurance advice. If you are considering an insurance product, speak to a regulated insurance broker about your circumstances.
If you would like to know what a guaranteed rent arrangement would pay for your property, that part is simple to find out: we come to you, view the property, and make you a fixed offer. No fees, no commission and no obligation. Find out what your property could earn.
Frequently asked questions
Does rent guarantee insurance cover void periods?
Typically no. Policies of this kind respond to a tenant defaulting, not to an empty property. Guaranteed rent pays through void periods because the provider is your tenant and the lease continues regardless of occupancy.
Is guaranteed rent a type of insurance?
No. It is a tenancy agreement with a company rather than an individual. There is no premium, no policy conditions and no claims process. The payment is rent owed under a lease.
Do I still need rent guarantee insurance if I use guaranteed rent?
Under a guaranteed rent arrangement, your rental income comes from the provider under the lease rather than from an individual tenant, so the specific risk that rent guarantee insurance covers – a vetted tenant defaulting on you – no longer applies to that property. Whether any insurance product is right for your wider circumstances is a question for a regulated insurance broker.
Is guaranteed rent paid at the full market rate?
No, and any provider who claims otherwise is not being straight with you. A guaranteed rent offer sits below the open market rate, because the provider takes on the voids, the costs, the compliance and the risk for the full term. The honest comparison is the fixed offer against your real annual income after voids, fees and bad months. Our guide to whether guaranteed rent is worth it sets that calculation out in full.