If you work in the private rented sector (PRS), you’ve probably come across the terms “rent guarantee insurance” and “rent guarantor services”. Now, these two might sound similar, but they actually serve very different functions.
With the Renters’ Rights Bill on the way, the PRS is set to undergo significant changes with the ban on rent in advance and the abolishment of Section 21 evictions and fixed-term tenancies. These changes will leave landlords without the security of full rent in advance from a tenant who might otherwise not pass referencing.
Rent guarantee insurance, sometimes called rent protection insurance, and rent guarantor services will become vital to letting agents and landlords looking for reassurance and security.
If you don’t know the difference between these two services, don’t worry, we’re here to help. In this blog, we're going to be taking a look at what these services actually are, how they’re different, and how you can use them to protect your business.
| Rent protection insurance | Rent guarantor services |
| Safeguards landlords during a tenancy | Helps tenants at the start of their tenancy |
| Ensures rental income is protected if a tenant fails to pay (subject to T&Cs) | Enables tenants (especially those without UK guarantors) to secure a home |
| Covers landlord legal fees during eviction proceedings | Supports tenants impacted by the ban on upfront rent payments |
| Provides landlords with peace of mind | Expands the pool of eligible tenants |
| Protects the agent's service fee by protecting the rent | Generates commission per service sold and opens up new markets |
With the advent of the Renters’ Rights Bill, renewal revenue is set to be wiped out by the abolition of fixed-term tenancies. The State of the Lettings industry 2025 revealed that 52% of surveyed letting agencies relied on tenancy renewals for 50-100% of their overall revenue.
By integrating rent protection insurance and rent guarantor services into their offering, agencies will strengthen their revenue model and build a business that thrives under the new legislation.
By offering both, you can:
Simply put, rent guarantee insurance is an insurance policy that steps in when a tenant fails to pay their rent. It covers the policyholder for lost rental income until vacant possession is obtained and can also support you with legal costs.
For landlords, a single month of tenant rent arrears can jeopardise their ability to maintain property or meet mortgage obligations. Rental guarantee (or protection) insurance acts as a crucial safety net by ensuring landlords continue to receive rental income, even if their tenant defaults. Under the evolving legal framework, this protection becomes essential.
With the Renters’ Rights Bill now advancing toward Royal Assent and being expected to come into effect in early 2026, landlords face a shifting landscape that amplifies potential downside risk.
As we mentioned above, the Bill abolishes no-fault evictions under Section 21 and does away with fixed-term assured shorthold tenancies in favour of rolling periodic agreements.
Because of this, regaining possession becomes more complex. Section 8 notices require letting agents and landlords to cite strict statutory grounds, which typically result in longer and costlier repossession processes. This increased procedural burden and tenant security underscores why rent guarantee insurance is now an essential part of the process.
For letting agents, introducing a rent protection service within their property management offering provides an opportunity to build a steady, recurring income stream. Rather than selling insurance directly to landlords, the agent provides a comparable rent protection service as part of their overall management package, either as an included benefit or as an additional service charged at a fee (subject to VAT).
This service can be especially attractive to landlords seeking peace of mind around the risks of rental arrears or legal costs, while also allowing agents to position themselves as a safe pair of hands.
To deliver this service, the letting agent purchases a rent protection insurance policy in their own name from a provider regulated by the Financial Conduct Authority (FCA). In this arrangement, the agent is the policyholder, not the landlord.
The policy is designed to cover the financial liabilities the agent has committed to under the rent and legal protection service they provide.
This structure ensures landlords enjoy the same protections as having insurance without having to hold or manage an insurance policy directly.
Over time, the fees collected from offering rent and legal protection services across a landlord portfolio can become a significant source of revenue.
For example, an agency managing one hundred landlords with five properties each could generate a recurring and predictable income stream by charging for this added service across their managed portfolio.
In addition to the financial return, providing this service strengthens the agent’s value proposition, fosters positive long-term professional relationships with their landlords, and supports the overall stability of their business model.
Once tenant referencing is complete, Goodlord Rent Protection becomes available. Our service is designed to simplify rent guarantee insurance without sacrificing any protection or coverage.
From one unified system, we offer a comprehensive service that includes:
With Goodlord Rent protection, we add absolute protection and reassurance to landlords, while you add extra value to every tenancy agreement.
"I feel really confident having Goodlord Rent Protection in place. I know they're going to look after us and make sure the policy pays out to the policyholder when it needs to. They're always there for support, training, help and advice whenever we need it, which gives us a lot of reassurance." - Becky Ward, Letting Director at Bourne
A guarantor is someone who agrees to pay if the tenant defaults on the rental payments. Traditionally, this role has been filled by a family member or a friend of the tenant with a strong UK credit history.
If a tenant doesn’t have a family member or friend that fits the bill, they could engage the services of a corporate rent guarantor. These businesses act as the UK rent guarantor for the tenant, thereby allowing them to secure a tenancy agreement.
Everyone deserves a home in which they can feel safe and secure. If, for whatever reason, a tenant finds themselves in a situation where a landlord is hesitant to rent to them (due to previous County Court Judgements, failed credit checks, etc.), guarantors can fill the gap.
Professional guarantor services are poised to become an integral part of the PRS in the wake of the Renters' Rights Bill. In the Bill, the Labour government plans to amend the Tenant Fees Act 2019 to ban the widely used practice of charging rent in advance. While this ban will save the majority of renters money, it will have some unintended consequences for parts of the PRS.
Traditionally, rent in advance has been a lifeline for marginalised groups in the rental market to secure property. These groups include non-UK residents, such as international students, newly arrived migrants, tenants who have previously failed reference checks, and tenants with a poor credit rating.
Private guarantor services will be in high demand once the law passes. Tenants that might have been otherwise shut out of the rental market will be able to access homes, and landlords and letting agents will widen their tenant pool and build new revenue opportunities.
While several professional rent guarantor services are available, we believe that Goodlord can offer a superior service that works in the interests of tenants, letting agents, and landlords. That’s why we’re developing the Goodlord Guarantor.
When this service launches in 2025, it will feature:
This service will be available to tenants with an income between 2 and 2.5 times their rent. Thanks to seamless integration with the Goodlord platform, tenants will enjoy complete ease of use while agents will unlock a valuable revenue stream.
The rental market is entering a period of unprecedented change. With the Renters’ Rights Bill set to reshape the landscape by removing fixed-term tenancies, banning rent in advance, and tightening eviction processes, both landlords and tenants will face new challenges. Agencies that adapt early will be the ones that thrive.
By integrating Rent Protection Insurance and professional rent guarantor services into your offering, you’re future-proofing your business model. Rent Protection offers landlords financial security and peace of mind, while guarantor services provide opportunities for tenants who might otherwise struggle to access housing.
Agencies that offer both solutions will not only safeguard their portfolios but also play a vital role in shaping a more accessible, secure, and balanced rental sector for landlords and tenants alike.