It’s been a term that’s been thrown around for a while now, and in general, it’s quite successful. In short, you sign a contract, you accept a payment upfront, and your tenant takes responsibility for the property. While there is undoubtedly an appeal to opening your property to a rent-to-rent tenancy, such agreements have suffered its share of bed press.
Claims of unethical practice and properties being left in a poor state have appeared online and in newspapers, leaving many would be landlords concerned and hesitant to even contemplate a rent-to-rent arrangements.
What is Rent-to-Rent
First we should start with the different types of rent-to-rent you should be aware of.
Rent-to-rent HMO (House of multiple occupancy)
Rent-to-SA (Service Accommodation)
Rent-to-HL (Holiday let)
Rent-to-rent is when you rent out a property to a tenant on a single let basis. This tenant will rarely live at the property, and will be free to sub-let its rooms as they see fit. Depending on the type of property and the agreements made, sometimes the arrangement involves a small amount of refurb work, converting offices/lounges etc. into extra bedrooms, (HMO).
If the tenant would like to rent the property out on a serviced accommodation or Holiday Let basis, they will more than likely want to advertise on Airbnb and/or booking.com among other holiday sites. They should only did this with your permission and your understand of what they want to use the property for.
Common misunderstandings about rent-to-rent
Rent-to-rent is not an assured shorthold tenancy
Because the tenant is not going to be living in the property, it cannot be considered an assured shorthold tenancy, and should not be treated as such. Such agreements will be commercial or business tenancies.
Tenants cannot be evicted without a court order
Just because the property is being sub-let, a tenant still has their right to remain at the property, and they cannot be removed without the presence of a court order. Evicting a tenant without a court order is a criminal offence, and landlords/sub-letters who try it risk being taken to court for damages.
A rent-to-rent agreement is not a license, and neither are those of the live-in tenants
The sub-letting tenant will have a contract with you for their part in the renting and upkeep of the property, and the tenants living there are likely to have assured shorthold tenancies, even though they are sub-letting through a 3rd party. This means that all rights that generally go along with renting a property are likely to be in place, despite the primary arrangement being between owner and sub-letter.
Original post: Rent to Rent Explained (progressiveproperty.co.uk)
Who to watch out for
With the rise of Rent-to-Rent also comes the rise of criminal renters, unfortunately, even the savviest of property owners can be conned by them, so what do you need to look out for when deciding to rent your property out on a rent-to-rent basis?
People who offer you what sounds like a fantastic deal, but then get you to sign a tenancy agreement which has been adapted to remove all your rights, and
People who sign up as a normal tenant but then illegally sublet to tenants without your consent. Which can get you into trouble with your mortgage lender and insurer and may make you liable for penalties for failure to get an HMO license.
In order to make your experience with the Rent-to-rent model a pleasant one, you’ll need to look out for the following:
Does this company have other properties they’re currently renting out?
Does the company own said properties or are they all rent-to-rent?
Do I still have rights to my own property?
Does this person have a dedicated property manager?
Is there a clause in my contract allowing me to pull out at any time if I feel this isn’t working?
Is there insurance guaranteeing my rent each month?
What am I still responsible for financially?
As a landlord, you always want to make sure you can meet your new ‘subletter’ in person. If this isn’t possible then you want to make sure you can at least meet via video call. You need to know that they’ll be available when you need them and if any question or queries arise.
Baytree Property and our Rent-to-Rent promise
With our own fully owned properties around Chester and North Wales, housing students, professionals and families alike as well as our serviced accommodations housing holidays makers and trade workers, we know the best way to get the most out of properties.
Our guaranteed Rent promise and a dedicated property manager, means you can rest assured and know that your property is in good hands. We will always be 100% open and state our full intentions. With 17+ years of property experience and knowledge within the team, we can answer any questions you may have with full confidence.
Being landlords ourselves, we understand the amount of work that goes into keeping your property up to code for each type of use. Let us help you get the most out of your investment.
Speak to us today to find out how to get started on 01244 732 444
Comments