With up to 1.2m landlords in England[i], there are as many different types of landlords as there are tenants. However, despite the common misconception that landlords often own a large portfolio of properties, in reality 78% of all landlords only own a single property[ii].
This means the majority are in no way property ‘giants’ but instead rely on a steady rental income from their rental property. They simply cannot afford risk of tenants’ consistently paying their rent late or indeed missing payments completely. Recent statistics (LSL Tenant Arrears tracker, April 2014) reveal that at any time 6.9% of tenants are 2 or more months behind in their rental payments and nearly 40% of landlords have experienced rental arrears in the last 12 months (NLA survey Dec 2013). The appeal of Guaranteed Rent as a safe alternative for a reliable rental income is evident.
We believe that the number of different Guaranteed Rent offerings on the market is creating misunderstanding, meaning landlords are potentially unaware of the rental agreement they are entering into and indeed the service that they have in fact signed up for. For example, looking at Guaranteed Rent Insurance alone, according to the Residential Landlords Association there are more than 116 different Guaranteed Rent Insurance products on the market, which vary considerably in the cover they offer and in their costs.[iii]
Our Guaranteed Rent vs Guaranteed Rent infographic is designed to unravel the four main offerings on the market; Guaranteed Rent Insurance, Northwood’s Guaranteed Rent, Council-Backed Rent and Rent to Rent. The Guide breaks down the different services and highlights key differences between them
Managing Director of Northwood, Eric Walker, says: “We receive thousands of enquiries from landlords every year who are genuinely confused by the range of Guaranteed Rent services. Whilst the headline label for these services might be similar they are often incorrectly used interchangeably where in fact there are fundamental differences.
“The key difference between Guaranteed Rent and more traditional lettings services is that it is a contract between us and the landlord in which we effectively become the tenant. We always make sure that the property is let to a tenant suitable for the type of property and that there are no structural changes made to create additional bedrooms. One of the key features and perhaps the most reassuring for landlords is that the correct, legally compliant tenancy agreement is used, ensuring that the landlord is never placed in a vulnerable position.
“Offering guaranteed rent is not as easy as people think and a lot of the companies offering a guaranteed rent service are taking on far too much risk and growing too quickly without the financial resources to support their commitments. We are extremely selective about the properties and tenants we take on as it is not in our interests to accept tenants who pose a risk.”