What is a Guaranteed Rent Scheme?
WHAT IS A GUARANTEED RENT SCHEME?
Guaranteed Rent! The name alone is a compelling promise. It almost sounds like it’s too good to be true, and it did when the schemes first landed on the real estate market. Landlords found them contentious and even controversial years ago.
With time, however, Guaranteed Rent Schemes have become a real-estate staple, and they can provide a wealth of benefits. But as with any financial investment decision, as a landlord, you need to ensure you read and understand the small print, as relying on a rent guarantee company is by no means the ‘no risk’ failsafe alternative to traditional lettings.
At Wentworth, we are a dedicated team of industry professionals with a wealth of experience in the real estate market. We offer this service ourselves, but even we don’t believe guaranteed rent is right for every landlord or investor. We pride ourselves on maintaining lengthy relationships with our clients because we provide objective advice.
SO WHAT IS IT?
A Guaranteed Rent Scheme (sometimes also known as Rent-to-Rent) entails a contractual agreement between a landlord and a company, an institution, a letting agent, or an individual. For a specified timeframe, the landlord agrees to relinquish their control and management over their property (with conditions & clauses for opt-out) in exchange for a guaranteed monthly rental income.
Thus, that company / institution / letting agent or individual rents the property from you, the landlord, and then sub-lets it to tenants while managing the full process. The tenants have no direct relationship with the landlord, and everything is handled by
the ‘main tenant’. It alleviates some of the overwhelming set of responsibilities a landlord has and works very well for:
- new landlords with little or no experience.
- landlords that are far from their investments.
- or investors that own several properties, estates, or HMOs where management can become overwhelming.
Most private companies running Guaranteed Rent schemes charge 0% commission and state there are no up-front payments. Their profits come from the difference between the guaranteed payment agreed with the landlord and the monthly rent they achieve on
the property, minus time, and expenses.
It’s not a secret, as most guaranteed rent companies are quite transparent in telling you that you are trading some potential profit in exchange for stability and guaranteed payments. They are talking about all the risks. If you believe a Guaranteed Rent Scheme is right for your circumstances, then we are here to help. Find out what Guarantee Rent Scheme Wentworth Properties provides.
guaranteed rent e-book
Guaranteed rent, guaranteed Insurance, rental income protection… which one is which?
No wonder you are confused about what brings the most value to you and protects your property portfolio.
Learn what to pay attention to by spotting false promises and deciding what’s right for you, straight from the experts.
See what’s inside the guidebook:
- What Is Guaranteed Rent
- What are the benefits?
- What are the disadvantages?
- What should you consider?
- Is Guaranteed Rent right for HMOs?
- Is Guaranteed Rent right for you?