What is a Rent-to-Rent scheme?
This question comes up all the time – and although it sounds obvious, a rent-to-rent scheme is not quite what the name suggests. What it is NOT is the right to rent a property from the landlord and then simply to sub-let. This is not permitted for obvious reasons by the vast majority of AST (Assured Short-Hold Tenancy) agreements. So what is it then? At the most basic level, the term describes an arrangement whereby an individual or company takes possession of a property in return for providing the owner (landlord) with a guaranteed and fixed rent for the agreed period. On the face of it, that’s no different from any other rental agreement. The big difference is that a Rent–to–Rent (or Guaranteed Rent) scheme is specifically designed so that the renter can sublet the premises.
Good news for the property owner.
The great advantage for the individual property owner who rents privately is that this arrangement removes most of the risk and all the hassle from their property business. All the worries around a landlord’s legal responsibilities to their tenants pass to the renter, who becomes responsible for meeting all the various legal and compliance issues that would otherwise fall on the shoulders of the owner – or of their letting agent. Of course, the rate of rent the owner receives is bound to be less than on the open market – but for many that’s more than offset by the money they save on letting fees, legal costs, and the time they save by not having to source, sift and select tenants – or to manage the ongoing relationships.
And good news too for the renter (now the landlord).
In effect – and very often literally – the renter becomes the landlord and has all the rights you’d expect as a landlord. Of course, they also become liable for that fixed rate of rent for the agreed period and usually for all the maintenance and repair costs incurred during that time. On the other hand, in return for giving the property owner peace of mind, the renter (landlord) now enjoys the freedom to set whatever rent they feel the property can command and to make a profit. And, because they have complete autonomy over the way they run their business, they’re free to make more flexible arrangements with tenants. For instance, they might change the configuration of the building so that it’s possible to increase profits byletting single rooms to multiple tenants with access to certain shared facilities, such as communal kitchens and lounges.
Get some guaranteed peace of mind.
Rent to Rent can be a great way to achieve a reliable cashflow for an agreed length of time, and that means guaranteed peace of mind – as long as you’re working with an accredited, professional property company you can rely on to protect your interests as well as its own and those of its tenants. As with all legal agreements relating to property transactions, this is a complex area and it’s vital that you consult a specialist solicitor before proceeding. In any event, it’s always reassuring to know that your business affairs and your property itself are in the hands of highly experienced property professionals right from the start who have a well-established Guaranteed Rent for Landlords scheme in place.
Of course, we’re biased, but as a starting point, why not talk to the Abel Living team?