The Breakdown of Repairs in Guaranteed Rent Agreements
There are lots of reasons why landlords love guaranteed rent schemes – probably the most prominent of which is the fact that they do exactly ‘what it says on the tin’, in that you can count on your rent being paid on the nail every month without fail, regardless of whether the tenants pay and even if the property has no tenants! That’s a pretty powerful attraction – but close behind that comes the fact that when you sign your contract and hand over the keys, you’re also handing over responsibility for maintenance and repairs. That’s a lot of hassle we can all live without!
Guaranteed rent schemes (such as Abel Living’s own Guaranteed Rent for Landlords scheme) are also known as rent-to-rent agreements – and, of course, each scheme will have its own contract terms. Broadly speaking, they’re all lease agreements under which the owner leases the property for a fixed period to another individual or company who then sublets the property to tenants. Of course, the degree to which maintenance and repairs are covered will vary from scheme to scheme but they all have a number of general principles in common, of which the following is a brief overview.
In the following, by the term ‘renter’, we mean the company or individual who has leased the property to sublet.
Minor Repairs and Maintenance
Generally speaking, the renter is responsible for these under the agreement. But what counts as minor? Well, again broadly speaking, things like fixing appliances such as washing machines for instance, making sure the place is clean and making good day-to-day wear and tear quite reasonably caused by their tenants.
Major Repairs and Structural Issues
When it comes to problems with the roof, external walls and foundations or with major installations like the electrical wiring, heating and plumbing, responsibility almost always remains with the property owner. In any case, though, the contract should define very clearly what it’s calling a major repair and what it’s calling a minor one.
Legal Compliance and Safety
As a property owner, it’s important to remember that you can’t offload your responsibilities in law for the property – even if you’re arranging for the renter to do the work on your behalf. That means you remain responsible for ensuring the property is compliant with building regulations and codes, safety regulations and local housing standards.
Opening Negotiations
Although, by definition, these schemes have set parameters that define what is and is not included, there is often room for negotiation in some areas. For example, in the unlikely event that it’s not included in the contract, you’ll need to get the renter to agree regular inspections to ensure the property’s being properly maintained. Don’t forget that any contract is all about ‘give and take’ – so you might, for example, agree to retain more repair and maintenance responsibilities in return for a higher guaranteed rent.
Of course there’s much more to these agreements than we can cover in this brief overview. The most important thing is for owner and renter alike to understand fully the terms of the agreement relating to repairs and maintenance – and for complete peace of mind, we’d advise getting legal advice to ensure that what you’re about to agree complies with all local laws and regulations and works in your best interests.
If you’d like to know more about these schemes, allow us to suggest you look into our own Guaranteed Rent for Landlords Scheme. Just talk to the Abel Living team about your property business and get a valuation and advice with no obligation!