Everything You Need to Know About Guaranteed Rent
Guaranteed rent is also sometimes known as ‘rent to rent’, it is where an individual or company, such as an estate agent, takes over a property from a landlord, and guarantees to pay the rent to said landlord. In turn, the landlord gives consent to the third party, ‘ie. the renter’, to also rent the property to other tenants.
The main benefit of guaranteed rent is that the rental income is guaranteed, as it says on the tin. This is regardless of how many tenants are living at the property, or if it becomes empty. The ‘renter’ generally also takes care of any damage to the property, as it is their responsibility to return it in the same condition.
On top of this, the landlord does not incur any letting, management or renewal fees, and they can also request a contract length of 1-5 years. A longer contract can provide security for a landlord, so they can budget for the long term.
Sounds Too Good to be True?
People have been wondering for years, what is the catch when it comes to guaranteed rent. So, below are some pros and cons to consider, and then you can decide for yourself.
Pros:
Property emergencies aren’t your problem: you may have money set aside for emergencies such as floods, boiler breakdowns or water leaks, but usually these issues will fall under the third parties responsibility. So you don’t need to worry about the money, or being woken up in the middle of the night.
No need for maintenance checks: often the maintenance checks, and the costs involved with these, also fall under the remit of the ‘renter’ or estate agents.
Regulations: the headache of regulatory concerns such as health and safety, and fire evacuation plans are also the responsibility of the renter.
Cons:
No tenant checks: as the third party is responsible for choosing who gets to live in your property, you don’t get much say in it, and so you can’t conduct tenant checks.
Contract limitations: a guaranteed rent contract length of 1-5 years may seem attractive to some landlords, but it does, however, mean you have little say what goes on in your property for this amount of time.
Property suitability: not every property is suitable for guaranteed rent so it’s not a definite solution to your situation, you will have to look into it and scout around for a third party.
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