Landlords rush to buy 'squatters insurance' after Renters' Rights Act

This article was first published by the Telegraph.

Landlords are rushing to buy £300 “squatters” insurance as a result of Labour’s renters’ rights push.

ARAG, Britain’s largest legal expenses insurer, said that it had seen an 11pc increase in sales of legal expenses and rent guarantee insurance in the first four months of 2026 compared to the same period the previous year.

This type of insurance policy typically covers unpaid rent when a tenant is in arrears, as well as legal expenses incurred during eviction disputes or the removal of squatters.

Paul Shamplina, of Landlord Action, said: “If a squatter breaks into a buy-to-let residential property, that’s a criminal act. The problem is that sometimes the police don’t enforce the law and advise it’s a civil matter. Then the landlord has no choice but to go to court to prove they’re a squatter.

“If you’ve got a residential property and it can’t sell and you can’t re-let it, then it’ll be lying empty. It will be an issue for landlords as a result of the Renters’ Rights Act and you will see it increase. Your property then becomes more vulnerable to squatters.”

The uptick came in the run-up to many of the provisions of the Government’s Renters’ Rights Act, which became law on May 1.

Andy Talbot, at ARAG, said: “We are seeing an increase even though our policy is sold as an add-on to landlord buildings insurance, so policyholders need to wait until their next renewal to buy cover if they don’t have it already.

“Sales are likely to increase as the year continues, as more policies come up for renewal and landlords become better aware of the impact the new legislation has on them.”

Under the Renters’ Rights Act, a landlord cannot re-let their rental for 12 months after an eviction if they initiated the repossession on the grounds that they intended to sell the property.

The legislation also bans Section 21 evictions, which were previously the fastest way for a landlord to evict a rogue tenant.

Instead, landlords now have to rely upon the longer Section 8 process to evict tenants who have stopped paying rent.

For a claim to be successful under this system, landlords must provide a specific ground to justify repossession. As a result, these cases are often contentious, leading to protracted disputes between landlords and tenants. The Telegraph has previously exposed the 341-day delay landlords face to regain possession of their property.

While landlords wait for a county court judgment and a bailiff eviction date, rent arrears can quickly spiral. The High Court Enforcement Officers Association (HCEOA) found that the average rent loss to a landlord during the eviction process is £12,708 nationally.

Steve Barnes, at Total Landlord Insurance, said: “While the market has been evolving for some time, the removal of Section 21 and greater reliance on the courts is clearly making some landlords more conscious of financial risk and the potential impact of arrears or prolonged possession cases.”

Ravi Sejpal, at broker Karis Insurance, said: “Reviewing insurance now is not just sensible – it could prove essential now the new rules have taken effect.

“It’s not clear how long a repossession will take under the new system so landlords can take out rent guarantee insurance, often providing them with the security of a 12-month indemnity period.”

Insurer Uinsure said that it had seen a 32pc increase in sales of legal expenses and rent guarantee insurance in the first three months of 2026 compared to the same period the previous year. Total Landlord said enquiries had more than doubled over the same period.

Uinsure added that it had recently changed the terms of its rent guarantee policy in response to the Renters’ Rights Act.

Rebecca Ellis, at Uinsure, said: “Previously we would only guarantee the rent for a 12-month period, and that’s now been removed from our cover so that the rent protection payment covers every month until the landlord regains possession of the property.”

Rent guarantee insurance typically costs around £300 a year, adding a further expense for landlords who have seen their margins squeezed in recent years.

Mr Shamplina said: “It’s another cost. The reality is landlords’ costs are going up and up and up at a time when we need landlords to stay in the sector because we’re not building enough properties.”

A government spokesman said: “Our Renters’ Rights Act provides the biggest upgrade to tenants’ rights in a generation while ensuring landlords have the stability and clarity they need.

“Our reforms are set to reduce pressure on the courts in the long term but to support them now we are recruiting up to 1,000 judges and tribunal members across all courts and tribunals this year.”