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PayProp DepositGuarantee

PayProp DepositGuarantee is comprehensive insurance for landlords at a cost that tenants can afford. Instead of an upfront deposit, tenants pay the landlord's premiums under the PayProp DepositGuarantee, a much more affordable proposition. Tenants who owe nothing when the lease expires receive a no-claim cash bonus, as well as, a good tenant certificate.

DepositGuarantee covers all of a landlord's claims against a tenant at the end of the lease – for up to 2.5 times the monthly rent. The exception is that only one month's rent can be claimed, but damages of up to 1.5 times the monthly rent can be claimed. Underwritten by RMB Structured Insurance Limited, the security is as safe as houses.

Rita Jacobsen from PayProp Capital explains: "The policy was recently launched and no claims have been submitted. However, we envisage that claims will follow the same process as for a damage deposit. Claims should not be complicated - it’s a fairly simple claims decision when the lease expires – does the tenant owe the landlord money or not? If the tenant owes the landlord money, the landlord will be refunded by the insurer instead of out of the damage deposit. The insurer will then attempt to recover the money from the tenant.  The potential for claims is further reduced because the tenant has an incentive to pay all his/her obligations in order to earn a cash bonus. It may not be much comfort, but insurers are nowadays very aware of the power of the consumer/policyholder and the insurance ombudsman. The reputation risk for refusing a legitimate claim is too high."

• It provides ample cover for damage, outstanding rent, utility and legal costs – landlords are covered for losses of up to 2.5 times the monthly rent (subject to a maximum of R50 000) – except for claims for unpaid rent, which are limited to 1 month’s rent.
• Instead of a damage deposit, tenants pay the landlord’s premiums, amounting to 35% of the monthly rent upfront and 1.25% of the monthly rental from month 2. Landlords receive protection for the duration of the lease. In addition, tenants pay a once-off administration fee of R175. The numbers include VAT. (The percentages are slightly higher for monthly rentals below R4 000 due to minimum premium amounts.)
• Tenants have more control over their money – money that would otherwise be locked in as damage collateral.
• DepositGuarantee rewards good tenancy – if tenants owe nothing when the lease expires, they will receive a good tenant certificate as well as a no-claim bonus of 40% of all premiums paid (excluding VAT).

Contact us should you require more information, or wish to mandate us to introduce PayProp DepositGuarantee to your tenants.

Published in: Linprop News


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