Rent to rent arrangements can offer landlords guaranteed income and hands-off management. But they vary enormously in quality. Here's how to evaluate any offer you receive.
Rent to rent is a broad category of property management arrangement that encompasses guaranteed rent, corporate lets and management company tenancies. If you receive an approach from a company offering to lease your property directly, this guide will help you evaluate the offer and protect your interests.
How rent to rent works
In a rent to rent arrangement, a company or individual (the "renter") leases your property directly and then sublets it to tenants or uses it for serviced accommodation. You receive a fixed monthly payment; the renter manages the property and makes their profit from the spread between what they pay you and what they earn from sub-tenants.
The key question — what are sub-tenants doing in your property, and are they legal? — is one you must ask and receive a clear answer to.
Types of rent to rent
Professional rent to rent operators typically use one of three models: taking the property on a guaranteed rent basis and subletting to long-term tenants (the most common model), operating the property as serviced accommodation, or using it as an HMO. Each has different legal, planning and mortgage implications.
What to look for in a legitimate offer
Legitimate rent to rent operators will be transparent about: the exact monthly figure and payment date, the contract length and exit provisions, how they plan to use the property, whether they are operating an HMO and will apply for appropriate licensing, how maintenance is handled and at whose cost, and what happens if they fail to pay rent.
Red flags
Be cautious of operators who are unwilling to provide references or show you other properties they manage, offer vague or misleading terms, pressure you to sign quickly, or are unclear about how they plan to use your property. Ask specifically whether they intend to operate the property as an HMO or serviced accommodation, as these uses may breach mortgage and insurance conditions.
Legal protections
Have any agreement reviewed by a solicitor before signing. Key terms to scrutinise include the notice period for ending the arrangement (both parties), who is responsible for maintenance costs, what happens if the operator stops paying rent, and what rights you have to inspect the property.
Arete Lettings has been operating professional rent to rent management since our founding. We are transparent about all our arrangements and can provide references from existing landlords in our portfolio. Contact us on 01268 944120 for a full explanation of how our guaranteed rent arrangements work.