What to look out for with a guaranteed rent scheme
ON THE FACE of it, a guaranteed rent scheme might seem an attractive prospect. After all, it promises to take away the hassle of finding tenants and ensures payment, even if the property becomes unoccupied.
Here’s how it is supposed to work. A landlord signs over his or her property for an agreed amount of time. In exchange, they receive a set payment every month. The lettings agent or company in turn sublets the property and makes their money from the difference paid between the tenant and the landlord.
If you are considering signing up for a guaranteed rent scheme, there are a few issues to think about. Take a look at our guide below. If you would like to speak to us about letting out your property in Buckshaw Village or the surrounding areas, just get in touch with the team on 01257 547062.
Do your homework
Only use a reputable company or lettings agent with the financial credentials to back up the guarantee. Faced with the scenario of tenants sitting in a property with no rent being received, a landlord could face the prospect of a lengthy legal dispute further complicated by third party involvement. In this case, it could prove extremely difficult to get the property back.
Quality tenants first
Paying out a guaranteed rent should incentivise the lettings agent or company to find tenants to fill a property. Does that necessarily mean that the tenants are the sort of people you would have chosen? Will there be a reference check? Should any damage occur, who picks up the tab?
For this reason, it is wise to seek assurances about the type of tenant who will live in the property and what application procedures will be in place.
Just because you have handed over your property doesn’t mean you have relinquished all responsibility. Landlords can face fines of up to £20,000 if their accommodation fails to meet certain requirements. For example, if it is not fire safe or is overcrowded.
An alternative solution…
Guaranteed rent schemes are not to be confused with Rent Guarantee Insurance, which is offered by legitimate insurance companies.
These peace-of-mind policies pay out to landlords if a tenant falls into rent arrears. Plus they can provide help towards legal costs in the case of related eviction proceedings. However, these policies are only open to landlords with tenants who have passed strict reference checks. They are not there to ‘plug the financial gap’ if a rented property is unoccupied.
It is important to be aware of the difference between Guaranteed Rent and Rent Guarantee Insurance. Why? Some companies and lettings agents may even take out insurance on behalf of the landlord and advertise it as a guaranteed rent deal. For the reasons outlined above, this may not pay out when it is needed the most.
If you are in any doubt, look at the terms and conditions of your agreement carefully.
If you decide to use Redrose, you can choose a ‘Let Only’ or ‘Fully Managed’ service, where we take care of all aspects of renting out your property from start to finish.
At Redrose we dedicate ourselves to working with great tenants and responsible landlords, offering excellent communication, absolute transparency and outstanding levels of client care. Landlords and tenants even have access to an online platform, My Property File. This allows instant access to information about a rented property, 24 hours a day, 7 days a week.
It’s no wonder that we’re one of the leading lettings agents in the region, letting property in Chorley, since 2004.
Redrose Director Dave Dyer adds his thoughts: “In a buoyant rental market we believe that guaranteed rental schemes are no comparison for a local, reputable company who are experienced at achieving the maximum rent for your property and ensure very low empty periods.
“If you’re considering choosing agents advertising guaranteed rental packages make sure they have the financial resources to back it up.”
To book your free rental valuation or ask about any of our properties to let, call the Lettings Team on 01257 547062.