Guaranteed rent is in short known from the words rent to rent. It is where an individual or a real estate agent takes over the property from a landlord and guarantees to pay the rent to the said landlord. In turn, the landlord gives consent to the third party (property management company) to further rent the property to the tenants.
The main benefit of a guaranteed rent scheme is that your rental income is guaranteed. It is regardless of how many tenants are living at the property, or if it gets vacant. Your property manager generally takes care of all damage to the property and keeps the property managed by handling repair and maintenance issues.
Moreover, the landlord does not incur any letting, management, or renewal fees and they try to make a contract length of 1-5 years. The longer the contract, the more security the landlord gets, and accordingly they can budget for the long term. People are wondering for years when it comes to guaranteed rent. Let’s discuss about it.
How guaranteed rent works?
A property management company in London can effectively become your tenant, guaranteeing you a fixed rental income for your investment property. Then, property management companies such as HouseManage will sub-let your property and maintain or manage it.
Also, the property management company’s work is to select the right tenant and take care of the property in the full tenancy period. In addition, after hiring a property manager you can live hassle-free and manage your personal life.
And, if you are a landlord or real estate investor looking for fixed rental income which you can get each and every month without hassle then you came to the right place. Below is a guaranteed rent summary that helps you clear all your queries related to it.
Guaranteed Rent Summary
1. You will be able to get guaranteed rental income on time, every month
2. You still get paid even if your property is vacant.
3. You will get paid on time even if the tenant of your property pays late or if they do not pay at all.
4. There is no need to pay any setup fees, monthly commissions, or hidden extras.
5. Property manager itself will deal with tenant’s queries, complaints, and questions.
6. As a landlord if you started a guaranteed contract then you should not worry how long it will take to find a tenant.
7. In some companies, property managers cover the court costs and eviction process (if mentioned in the contract) on behalf of you.
8. It will also include regular property inspections and maintenance management
The above mentioned are the various tasks covered by property managers in a guaranteed rent scheme. However, it may vary from company to company policy and services.
Below are some pros and cons to consider, and then you can decide whether it is beneficial for you or not.
Pros of Guaranteed Rent Scheme:
- Property emergencies will no longer be your problem: You may have funds aside for emergencies such as boiler breakdowns, floods, or water leaks. But generally, these issues will fall under the third party’s responsibility (property management company). So you can live hassle-free without worrying about money as well as responsibilities.
- No need for maintenance checks: The cost involved in maintenance checks also fall under the remit of the property manager or estate agent.
- Regulations: the various regulatory concerns such as health and safety plans are headaches for some landlords. But this responsibility also comes under renter.
Cons of Guaranteed Rent Scheme:
- No tenant checks: The third party is responsible for choosing tenants. As it is the responsibility of the agent or manager, you can’t conduct tenant checks.
- Contract limitations: You need to sign a guaranteed rent contract whose length can be between 1-5 years which may seem attractive to some landlords, but after it, you have little say in what goes on in your property in the contract period.
Final words:-Guaranteed rent is a scheme usually provided by property management companies for rental properties or HMO to the landlord or property owner. This scheme offers guaranteed rent to the owner whether his property is vacant or not. Moreover, they offer more property management services as we discussed above which vary from company to company.
You can contact HouseManage for property management services in London and a guaranteed rent scheme that can be tailored to fit your lettings requirements.