Guaranteed Rent – evaluating the “guaranteed” bit.

December 23, 2015

Here at Northwood, we have been offering our market-leading Guaranteed Rent service for 20 years.

Our Guaranteed Rent service does what it says on the tin!  We effectively become your tenant, and take over the financial risk of the tenant not paying the rent. Your rent gets paid on time, every time, even if there is a void or rent arrears.

However, we’re increasingly seeing sole traders and newcomers to the industry offering the promise of ‘guaranteed rent’ but in reality –  other than the name – the business model is very different.

Many of them have been on a “Rent 2 Rent” course and told they can rent a property from a “tired” landlord, and then rent out the rooms on an individual basis by sub-letting them, and keeping the margin as their profit.

This causes us concern, because their proposition is vastly different to ours.

Here are a few facts about Northwood and our Guaranteed Rent service:

1.   Our service is the original and the best – we’ve been offering it for 20 years.

2.  The property is not sub-let on an individual room basis, potentially creating an HMO (House of multiple occupation) which may need a licence.  We let on a single AST basis, meaning a lot less wear and tear on your property.

3.  Northwood has a long track record of being in business and our company finances and business model are robust, giving credibility to our ability to be able to guarantee the rent.

4.  Robust and rigorous tenant vetting procedures are in place.  As we are guaranteeing your rent, you can rest assured that we are going to choose the best possible tenants who meet our tough criteria.

5.  We are members of the Property Ombudsman scheme and subscribe to a professional code of practice.

6.  Northwood is a founding member of SAFEagent – which is a badge to agents like ourselves who have client money protection in place.

7.  We have many hundreds of 4 and 5 star reviews for our Guaranteed Rent service on independent review sites such as AllAgents and RaterAgent.

8.  We are committed to compliance and professional standards, such as protecting deposits, serving the prescribed information, and setting up tenancies in the correct manner to protect all parties and ensure a compliant and smooth tenancy.

9.  Northwood agents are able to offer Guaranteed Rent because they know their area so well.  They also manage a large portfolio of properties, meaning that they are able to spread their risk across many properties, not just yours.

Compare this to another company or individual offering Guaranteed Rent.  Can they make the same claims as us and back them up?

We recently saw the following comment on Facebook regarding a Rent to Rent model, which sums up our concerns perfectly:

“I’ve just taken over a property from a landlord and offered him a guaranteed rent.  Unfortunately, I have been unable to let out all the rooms, and the first payment is due.  Can anyone advise me on how to delay the payment to the landlord, as I don’t have the money to pay him the rent yet?”.

Paul Shamplina, Founder of Landlord Action, is increasingly seeing new Guaranteed Rent schemes that have no substance to them, often leaving the landlord high and dry with rent arrears and multiple tenants that they did not vet and choose themselves.

Paul told us:

“It’s so important for landlords to do their due diligence on a Company offering guaranteed rent schemes.

We have dealt with many eviction cases at Landlord Action against ‘ Rent to Rent Companies’, who have failed to pay the rent to the landlord, under their agreement, where they have clearly collected the rent from their tenants.

Obviously the sub tenants are not the landlord’s, so we have to issue a claim against the ‘ Guaranteed Rent Company’. It can get messy!

We do see some underhand companies, putting as many people into the landlord’s property,  giving them separate agreements to try and maximise their income, which can result in HMO issues and a severe impact of the condition of the property.

Lastly we see so called  ‘ Rent to Rent ‘ experts selling courses to individuals on Rent to Rent and sometimes we see individuals getting into trouble,  not giving correct contracts to landlords, managing the property poorly and even worse not paying the landlord his rent”.

So, if you are offered a “guaranteed rent”, you must do some due diligence and ask what the guarantee is based on.  You can then make an informed decision as to which guaranteed rent service is best for you and your property.

Also see Guaranteed Rent v Guaranteed Rent – what’s the difference?

See also – 5 guaranteed rent myths – BUSTED!

Northwood is one of the largest and most recognised lettings agents in the U.K. and the leading supplier of Guaranteed Rent to give landlords complete peace of mind.

Find us on Twitter @northwoodUK or visit our YouTube Channel.

 

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