Guaranteed Rent: A guide for Landlords - House Manage
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Guaranteed Rent: A guide for Landlords

Buying a home may be a dream for various people but renting is the reality for many others. Guaranteed rent or rent to rent is the most commonly known term which is used by landlords and property management companies widely,

What is ‘Guaranteed rent’ or ‘rent to rent?

Guaranteed rent is where the company’s local authority or individual rents a property of a property owner and the property owner receives a guaranteed rental income for an agreed term whether your property is occupied or not.

The guaranteed rent scheme is offered by property management companies that handle all the responsibilities related to property from hiring, collecting rent, budgeting, repairing and maintenance, etc. The property manager sublet the property to a potential tenant at a higher rent and earn some part of the rent (from the total rent to be paid to the landlord) for earning profit in return for the risk taken and the work to be carried out.

In this way, property management companies in London cut the landlord hassle to find tenants and set up and deal with a traditional letting agent. By hiring a property manager, landlords do not need to handle void periods, all the legal obligations to the tenant, and no call-outs or repairs to worry about.

At the end of the term, the property manager you hired returns the property in the same state it was in when let –In simple words, as a landlord, you will not suffer from risk and all the time you will get the guaranteed rent payments.

That’s the theory and also the fact. But you should not feel relaxed into a false sense of security. Because facts may differ from landlord to landlord or property management company to company. Therefore a detailed guide is necessary to help property owners decide sensibly how to enter into a rent-to-rent arrangement. If you are thinking of handover the property to the property manager for your own peace of mind and a guaranteed rent with no hassle. Then, there’s a lot of information you can ask from the property management company, London you are going to hire.

 Is Guaranteed rent a totally legal arrangement?

Most of the landlords usually assume that guaranteed rent arrangement is illegal. However, a guaranteed rent scheme is not illegal,  involves no infringement of criminal or civil law, and provides all the statutory rules that have complied. It is considered as a perfectly legal commercial arrangement, offering all parties a legitimate solution to their property-owning and renting needs. People think it is illegal just because subletting hits the headlines because a residential tenant or a council tenant, does it against the terms of the lease and with the knowledge of the landlord. Clearly, this is not the case with a guaranteed rent scheme when the parties have all agreed to sublet in the first place.

How you will make sure that property managers or renters are handling all in the right way as they should in a guaranteed rent arrangement?

As a property owner, you have to let the property on a commercial basis and therefore you may don’t have time as well as the right to carry out periodic inspections. You can observe it by yourself or your tenant may tell you who is occupying your property and how he is handling your property.

It is always good for property owners to have contacts with neighbors, regardless of guaranteed rent arrangements. So, being a landlord, you should try to get to know neighbors who will be happy to report anything they see as untoward.

It will also be good to maintain regular contact with your property manager or renter who further rent your property and ask for updates on what’s going on with the letting property.

Below mentioned are some other questions you should ask your property renter or property manager related to guaranteed rent arrangements before signing any agreement.

  1. Is it a totally legal arrangement?
  2. What is the legal basis for guaranteed rent tenancy agreements?
  3. Who is responsible for repairing and maintenance guaranteed rent arrangements?
  4. Permissions and obligations in guaranteed rent arrangements?
  5. Insurance, deposits, and redress schemes
  6. How I will make sure that property managers or renters are handling all in the right way as they should in a guaranteed rent arrangement?
  7. What happens at the end of the term with a guaranteed rent scheme?

Conclusion

The Guaranteed Rent scheme is useful for both the landlord owner and rent to the renter (letting agent, property manager) to enter into such an arrangement. This guide aims to enlighten and help landlords understand the guaranteed rent schemes. For more information regarding property management services and the benefits of a guaranteed rent scheme, you can contact us freely.

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