Want a truly passive investment where you can sleep soundly at night, given these testing times?

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Landlords wanting to remove some of the hassle connected with the do-it-yourself letting process, or even using a letting agent, could consider “guaranteed rent”, renting their property to the local authority to rent out on their behalf. But exercise caution.

This is known in the industry as rent-to-rent or guaranteed rent: the property is let to the council, or sometimes to a private managing agent, who may rent to tenants or in turn to a local authority, for them to rent out.

This is done on a fixed term, usually 3 to 5 years, the monthly rent is guaranteed for that period whether the council has a tenant in the property or not, and the council is obliged to make sure the property meets all the necessary letting standards. It then returns the property in its original tenantable state at the end of the term.

Sounds a little too good to be true doesn’t it! Well, it can work out really well but from the landlord’s point of view there can be some pluses and some decidedly nasty minuses.

Yes, for the landlord the process gives peace of mind, its a let-it-and-forget it process where the landlord does not need to think about it for 5 years or so, and simply watches the rent pop into their bank account every month.

The first slight negative is that the rent will be slightly less than they would get on the open market, simply because of the trade off between having no hassle, no letting fees, and none of the expense of re-letting when tenants come and go – often this a very acceptable trade-off.

The second negative is that the whole process can become a legal minefield if things go wrong; even with a council this can happen, but more so with a private company or individual.

There have been some real horror stories with rent-to-rent when unsavoury characters or inexperienced individuals – talked into this by so called property gurus – rent properties from unsuspecting landlords and play fast a loose with their property: properties divided into multi-housing units (HMOs), overcrowding, letting without a licence, non-payment of rent and either handing the property back with expensive damage or refusing to hand it back at all.

Of course, renting to a council or a reputable agency reduces this risk to a minimum, but even so there can be problems. The legalities of this are complicated: it’s a lot more complicated legally that simply renting between a landlord and tenant because another legal entity is sandwiched between the two: ( The Landlord – > The Renter – Agency or Council) < – The Occupier (The Tenant)

Some agents will rent from you or act as an agent between you and the council, who in turn will let to their own tenants, usually low income/welfare individuals or families.

It is therefore vital for your own sanity that in this case you choose an agency that is well-established and with a track-record of successfully managing private rented accommodation. They should be members of at lease one of the main professional associations, preferably ARLA Propertymark, the National Approved Lettings Scheme’ (NALS), the ‘Ombudsman Services’ scheme, the UK Association of Letting Agents (UKALA) and the National Residential Landlords Association (NRLA).

I suggest you do your due diligence thoroughly by checking out the agency, and requesting to speak with other landlords who have used their services long-term. With councils this is less important but still worth doing. We’ve come across many landlords who have had problems when they let directly to councils.

You need to do checks with your mortgage lender, your landlord policy insurers and the freeholder of your rental property if it is leasehold. Get permission in writing in each case, otherwise your guaranteed rent arrangement may breach the terms of one of these. The last thing you need is for your insurer to refuse a claim because of this, or your mortgage lender demands immediate re-payment.

Having a valid contract between you and the council (or the agency) is key to a trouble-free and a pleasant experience. This is a commercial arrangement and therefore a million miles away from the Housing Act Assured shorthold tenancy – you leave that side to the agent. You need a commercial (business) (Landlord & Tenant Act 1954) tenancy between yourself and the council or the agent. You also need a detailed schedule of condition / inventory, ideally from an independent surveyor or inventory clerk.

These rental bodies will often provide their own contracts for you to sign, but you should resist doing this, at least until you have had expert legal advice, and when I say expert I don’t mean your family solicitor, I mean an experienced property lawyer familiar with this type of arrangement.

You would expect a council or a reputable agency to honour their contract and return the property back on time and in its original or better condition, but unfortunately that’s not always the case. Number one because the Housing Laws are such that the council or the agency will not necessarily be in a position to gain vacant possession just when it’s needed. Secondly, agreeing what is original condition is open to interpretation, hence the importance of a good schedule of condition.

Landlords are often drawn into the trap of thinking that renting to the local authority or a good agent is going to be trouble free and there will be no arguments as to what’s right and wrong: not always to case.

Don’t get me wrong when I’m pointing out all what can go wrong. Don’t let this put you off using guaranteed rent arrangements; it has many advantages not least of which should be a nice passive investment return. What I am saying is that preparation is the key to a successful outcome, so bear in mind the points I’ve mentioned above.

Coronavirus could wipe out the UK’s smaller Guaranteed Rent operators

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Want a truly passive investment where you can sleep soundly at night, given these testing times? | LandlordZONE.

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Rent and Legal Guarantee now available for existing tenancies

admin    Uncategorized     agents

Debt is a reality in every type of business, but unlike almost any other service provider, landlords are unable to terminate a contract with their client if payment is not received.

Only a court may end a tenancy agreement on the basis of non-payment.

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Free webinar: Join rental market experts to get your questions answered

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Four experts from the private rental market are gathering tomorrow online to host a LandlordZONE webinar that will explore all of the key issues facing landlords and letting agents in the private rental market.

All are welcome to the event which is free to attend and will feature Theresa Wallace, Head of Compliance and Customer Relations for Savills’ Residential Lettings Division and Paul Shamplina of Landlord Action and regular on Channel 5 show Nightmare Tenants, Slum Landlords.

The other experts are Tim Frome, Head of Legal at Landlord Action and leading mortgage broker Daniel Lee.

All four will give their views and advice on the leading issues facing the sector at the moment including the tenant fees ban, the government’s decision to extend the suspension of evcitions and the impact of the Coronavirus pandemic on the rental market.

The four are also likely to discuss the implications of the looming Section 21 bar, how mortgage holidays may affect creditworthiness and staying safe when renting properties.

The Ask The Experts webinar will start at 11am tomorrow and last for an hour. To reserve your seat at the ringside, register online here.
  

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Free webinar: Join rental market experts to get your questions answered | LandlordZONE.

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Rent Family Home and Move it into Ltd Company?

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I’m currently in the process of purchasing a new family home. The plan is to keep our current family home and rent it out, the mortgage is low on the property (7% LTV to be precise). I currently also have a LTD company which holds 2 rental properties.

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Tenant groups begin campaign to extend evictions ban

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A leading London tenants’ group has called for the eviction ban to be extended beyond the summer to give renters even more breathing space, echoing similar arguments by other local and national groups.

The Camden Federation of Private Tenants is urging the Government to take the temporary ban past 23^rd August and into the autumn.

Organiser Robert Taylor says: “The Government recently extended the ban by a further two months, but this is simply not enough, as we believe that the ban should continue until it has introduced legislation to permanently abolish Section 21 and ‘no fault’ evictions.”

According to the group, Camden’s renters pay an average of 59% of their income on rent.

Taylor tells LandlordZONE: “If the Government really wants to ensure fairness in the rental market, then it needs to give serious consideration to what we and others believe to be are very practical, sensible and reasonable demands.”

Other tenants’ groups such as Generation Rent haven’t publicly called for a further extension, but while they welcome the suspension of evictions over the summer, they still have concerns.

Director Dan Wilson says: “With holes in the housing safety net and much of the economy still in lockdown, millions of renters will get further behind on rent. The Government must use the time it has bought itself to develop a long-term solution to provide rent relief and end unfair evictions for good.”

Polly Neate, chief executive of Shelter, adds that the Government’s announcement is just a stop-gap. She says: “It’s critical that Robert Jenrick uses this extension wisely to change the law and properly protect renters.”  

The Government has yet to confirm whether it’s going to follow the Housing, Communities and Local Government Committee recommendation that once the courts re-open, they should be given discretion to dismiss Section 21 notices until 31^st December.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – Tenant groups begin campaign to extend evictions ban | LandlordZONE.

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LATEST: Councils reject landlord criticisms of evictions ban extension

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The Local Government Association (LGA) has rejected claims by the National Residential Landlords Association (NRLA) that the evictions ban exposes victims of domestic violence and anti-social behaviour to more risk.

Since the NRLA story broke this morning, the LGA has issued a statement insisting that its members back the ban because police powers can still be used to evict perpetrators of domestic violence despite the evictions ban.

The NRLA claimed that landlords were ‘powerless to take action against tenants committing domestic abuse or making the lives of fellow tenants or neighbours a misery’ during the ban.

Ben Beadle, Chief executive of the NRLA, said earlier today that extending the evictions ban is not without victims and that it “leaves landlords powerless to tackle the kind of behaviour that causes untold suffering and hardship for many communities and tenants alike,” he said.

But Councillor David Renard, the LGA’s housing spokesperson, says he is pleased that the government is banning evictions until the end of August because it will “help to mitigate against the rising homelessness pressures that councils are under as a result of the pandemic”, he said.

“For victims of domestic abuse, other options including police powers, enable perpetrators to be removed from the home while the victims remains living there.”

A Domestic Abuse Bill is currently going through parliament which seeks to create a statutory definition of domestic abuse and establish a Domestic Abuse Commissioner.

The will stand up for victims and survivors, raise public awareness, monitor the response of local authorities, the justice system and other statutory agencies and hold them to account in tackling domestic abuse.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – LATEST: Councils reject landlord criticisms of evictions ban extension | LandlordZONE.

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One-beds for city rental yields

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The latest research by, Howsy, has found that one-bed properties are now proving the best financial investment when it comes to buy to let rental yields across the UK’s major cities. Previous research from Howsy found that three was the magic number for rental yields

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New Build Contracts?

admin    Uncategorized     agents

I recently agreed to purchase a new property with Miller homes and part of the agreed purchase price was some additional work. The contracts were signed on that basis.

5 days later the sales agent reverted to say this work was not possible and that I would have to buy the property as is or the contract would be cancelled.

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BREAKING: Rental market returns to pre-Covid activity levels after June ‘surge’

admin    Uncategorized     agents

Agents, landlords and tenants across the UK have responded to months of pent-up demand since restrictions were lifted on 13^th May, helping the private rental market achieve levels of activity not seen since pre-pandemic days.

This surge reached a peak on 2nd June, which was the busiest day for new tenancy applications, hitting 112% of the volumes recorded on the same day in 2019. Tenancy application are counted as renters who have offers accepted by landlords and then proceed to contracts and referencing.

Agents had their busiest day for completed lets on 10th June, when activity levels reached 124% of those recorded on the same day a year ago.

According to data from online lettings platform Goodlord, new applications now appear to have flattened out, averaging 97% of 2019 levels over the last fortnight.

Its Lettings Activity Tracker reveals that since 1st June, completed lets have been running at an average of 94% of 2019 levels, with numbers increasing significantly since 7th June.

On each day between 7th June and 13th June, completed lets were higher than the 2019 average. 

Tom Mundy, COO at Goodlord, says it’s been an incredibly busy few weeks for letting agents, landlords and tenants.

He adds: “They’ve risen admirably to the dual challenges of a surge in demand coupled with a totally new way of working and doing business.

“We are starting to see some much-needed stability and consistency in the market. Alongside this, we’re seeing agents embrace new tools, processes and strategies to ensure lettings can continue safely across the UK.”

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – BREAKING: Rental market returns to pre-Covid activity levels after June ‘surge’ | LandlordZONE.

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TECH: Landlord app is now free (but only if you’ve got a big portfolio)

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An app-based property management service backed by £7 million in investor funding and launched three years ago by a rising star of the tech world has begun offering itself for free to larger landlords.

Smaller landlords with a few properties are not included in the deal and will continue to pay a percentage-based property management fee. But larger landlords including build-to-rent firms can now use the service for free and Residently tells LandlordZONE that it will make money from referral fees it will earn from tenants who order broadband, removals and lifestyle services through its app.

Like many apps in this field Residently has digitised the rental process and offers landlords of all portfolio sizes a way to rent their homes out without face-to-face contact.

The app’s founder and CEO Tom Allason (pictured), who claims landlords can use it to rent out a property from virtual viewing to signed contracts within five minutes, now believes his tech’s time has come given the social distancing restrictions of Covid.

“In the last few months, we’ve watched the contactless rental process that we’ve built go from a ‘nice to have’ to an absolute necessity,” says Allason.

“Not to mention, it’s never been more important for renters to feel ‘at home’ and cared for. We hope that by making our platform free, we can partner with companies across the industry to support their residents during this time.”

Larger portfolio

Although the app is useful for landlords of all sizes, the company’s main focus is on larger portfolio and build-to-rent operators, letting agents and property managers.

Residently’s biggest customer is property management and rental giant Touchstone which manages over 20,000 properties withing the UK.

“Technology is crucial in creating the very best experience for customers, and we’ll help support this ground-breaking approach, ensuring a smooth, frictionless experience when renting a home,” says Helen Kings, Touchstone Managing Director.

Read more about proptech.

©1999 – Present | Parkmatic Publications Ltd. All rights reserved | LandlordZONE® – TECH: Landlord app is now free (but only if you’ve got a big portfolio) | LandlordZONE.

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