Letting firms are dangling carrots such as rent guarantees to pull in new landlords but one agent advises caution.

Jennifer-Lee Crowshaw, of Hodsons, said: “There are many types of rent guarantee products out there but before signing up to any of them, the first thing to work out is whether you are being offered an insurance policy, or a guarantee scheme?

“A rent guarantee insurance policy is the same as any other insurance policy with lots of terms that need to be checked.

“For instance, the tenancy has to be an Assured Shorthold Tenancy and tenants must have passed a comprehensive check within a minimum 95 per cent pass rate.”

She advises landlords to find out if the referencing company the agent uses complies fully with the insurance policy they are being sold and check any exclusions and special conditions. Typically, these might exclude tenants who are students, on housing benefit or non-UK residents.

Under most policies, landlords must be in one or two months’ rent arrears and there may be a minimum period before they can make a claim. Rent guarantee schemes come with similar requirements but some charge higher costs to pay for the cover.

Ms Crowshaw added: “Remember, no agent is going to pay your rent for you, if your tenant doesn’t. If something sounds too good to be true, it usually is.

“Being a landlord has its up and downs, the same as with all investments and there are always risks, but as with everything in life, you have to budget for the lows when you’re in the highs.

“Rent guarantees should be considered but do your homework first.

“The most important decision is choosing the right tenant in the first place and an experienced agent should be confident about doing this.

“If you have the right tenant, there is no call for insurance or rent guarantee.”