Non-payment of rent is the great fear of landlords. The latest regulatory changes, between price caps and more protection for certain tenants, have increased the desire to protect themselves from late payments. Everything to guarantee payment no matter what happens, in any case. With the increased demand, the sector grows: traditional players and others that are emerging coexist.
Non-payment insurance is the one that has the longest history, having been on the market for decades. The big ones have been consolidating them in the offer. ARAG, Caser, DAS, Mapfre, Allianz... “We have been offering them for 18 years, in the last eight or nine the growth has been 20% annually, every year. The interest today is high,” says César Crespo, deputy general director of mediated business at Grupo Mutua Propietarios, another prominent player.
The product works like insurance, with a deductible payment and certain premiums and coverage. “You protect yourself from risks, from the time it takes to recover the home if there is non-payment, if the tenant causes damage...”. As an example, just as in car insurance, if a tenant stops paying or is late, a claim occurs, with which the company initiates a lawsuit for eviction and claim for amounts. In addition to legal protection, with the lawsuits filed, the insurance advances the unpaid amount to the month due, up to 12 months. Standard insurance for this term costs half a month (4.2% of the annual income). Depending on the type, there is insurance with a month's deductible at a lower cost and another without deductible that is a little more expensive. “95% of the policies are from small and medium-sized owners. If you value the cost and the risk covered, it is a good idea,” he explains.
Rental guarantees are another product that is making its way, with different modalities. Rent Seguro stands out in the market, emerging in 2007. Its solution is more to be a real estate manager that, in addition to giving general advice – presentation of the home, price, signature... – is responsible for paying the rent. He looks for the tenant and replaces him at the time of payment: he enters the rent on the 5th of each month and if there is a delay or non-payment he discusses it with the tenant, without the owner noticing anything.
“We guarantee payment by paying ourselves, the money does not come from the tenant. The owner wants there to be no defaults, the apartment not to be destroyed, and to separate himself from management,” explains David Caraballo, general director. Demand has grown 15%-20%, he details, “due to the uncertainty that the owner has.” The cost of this type of service is a monthly payment at the beginning of the contract and 5% of the rent month by month, as a fee. The price is higher, but Caraballo defends that insurance involves reading the fine print and that it acts if there is an accident and not when the first non-payment occurs.
In recent years, new actors and alternative models have emerged, even already integrated into platforms such as Wolo or Housfy. In another model with a rental guarantee, Finaer, with experience in Latin America and which has been in Spain since 2021, offers a solution “without deductibles or deficiencies, from the first month, to the first request,” says Jesús Pérez, commercial director. If a delay or non-payment arises, the owner is responsible for paying the amount owed to the owner and contacting the tenant for resolution. The cost is 4.5% of the annual rent, and rooms are also guaranteed for 2.9%. “The risk indicators show that rent arrears are on the rise, personal loans and card delinquencies have already increased, the next thing is rent,” he maintains.
There is one key factor to take into account. In order for all these alternatives to be contracted, the company has to carry out an analysis of the tenant, which is why it is usually done before someone enters the home. They come to reject them. Normally the rule is repeated that the rent does not exceed 30%-35% of income, “just because you charge more does not guarantee that you will be a good payer,” warns Caraballo.
Thus, it is more flexible and other factors are analyzed such as proof of income, defaulter files, bank valuation reports... “Based on your payments in the past we can extrapolate the future,” says Crespo. When choosing or approving one with a better profile, non-payment cases are not guaranteed, but they are very isolated. “Zero risk does not exist,” Pérez acknowledges. The rejection comes more in flagrant cases: people with outstanding debts, with a history of non-payment or judicial resolutions.
