Go-ahead for rent guarantee scheme

A NEW scheme that aims to make it easier for low-earners to find a home and give better protection to landlords has been launched by the government.

The Garantie des Risques Locatifs is a state-backed form of rent insurance that covers property-owners in case their tenants default on payments.

It is designed to make landlords feel more confident about letting their property to tenants on low incomes and was one of Nicolas Sarkozy's presidential election pledges.

Take-up was slow when the scheme first launched in 2007 but a new version was unveiled this week.
The MMA Group has become the first private insurer to sign a partnership deal with the government to offer the service. Others, such as Macif, are reportedly close to joining as well.

The new scheme sees the government and the insurance firm act as joint guarantors if a tenant falls behind on the rent. Landlords pay 2.19% of the rent (including charges) - but this is tax-deductible as a business expense.

Until now, private insurers have offered their own package against unpaid rents - but they tended to only cover tenants who are in stable work and earn at least three times the rent. This often meant that landlords turned away students or workers on short-term contracts.

The government-backed guarantee covers all tenants, provided their income is at least twice the rent. The monthly rent must not exceed €2,000 and the maximum insurance payout is €70,000.

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