The Definitive guide to Guaranteed Rent vs. Guaranteed Rent

July 21, 2014

For landlords looking for a fixed but reliable rental income from their property, the options and differences between the services on offer can be overwhelming.


This simple Guaranteed Rent vs Guaranteed Rent guide is designed to help landlords better understand the range of different services which are available when a landlord is looking for an assured rental income.  The four we have focused on are; Guaranteed Rent Insurance, Northwood’s Guaranteed Rent, Council-Backed Rent and Rent to Rent.



Guaranteed Rent Insurance

Guaranteed Rent Insurance, as its name suggests, is an insurance product protecting the landlord from tenant arrears.  The landlord pays a premium and like any insurance product there is a range of terms, conditions and exclusions that apply. With over 116[i] different Guaranteed Rent insurance products on the market, it is vital that a landlord is absolutely clear on what is or isn’t covered with any given product.

Key facts:

  • Costs vary significantly dependent on the level of cover provided.  Some are a fixed fee, but a premium of 6 – 12% of monthly rent is not unusual[ii].
  • The landlord is typically covered for the length of an individual tenancy.
  • The insurer will pay the outstanding rent but often an excess applies.
  • Coverage does not include when the property is vacant.
  • Processing a claim can take anything from 0 to 90 days[iii].
  • Prospective tenants must pass insurer-approved credit and reference checks.  No benefits tenants are accepted.
  • Normal letting agent management fees still apply.

Northwood’s Guaranteed Rent

Northwood’s Guaranteed Rent provides continuous rent payments to the landlord if the tenant stops paying and if the property becomes empty – giving the landlord guaranteed rental income every month. Northwood effectively become the tenant, taking away the normal hassles and risks associated with letting a property. A fundamental difference between Northwood’s offering and other Guaranteed Rent providers is that the property is never structurally modified to accommodate more tenants and that only the correct, legally-compliant tenancy agreement is used.

Key facts:

  • A start date for rental payments is assured
  • All tenants must pass full credit and referencing checks before moving into the property.
  • There is no landlord set up, administration or renewal fees.
  • If there is a need for court action, to evict a tenant or recover unpaid rent, Northwood will meet all the legal costs and manage the process.
  • Any repairs for tenant-caused damage are covered for up to 1.5 months of the rent value.
  • Northwood has been operating since 1995 and has over 15,000 Guaranteed rent landlords
  • Northwood’s Guaranteed Rent is offered on a minimum 12-month contract with optional multi-year contracts


Council-Backed Guaranteed Rent

With this service an agent acts on behalf of the local council to provide homes for tenants who are often vulnerable and unable to find accommodation elsewhere.  There are a limited number of councils nationally that work with agents in this manner, the majority of whom are based in and around London

Key facts:

  • The length of a contract with a landlord is usually anything between 3 and 5 years.
  • Council-Backed Rent does not usually cover any damage to the property or wear and tear.
  • Rent payments will continue if the property becomes empty or if the tenant stops paying.
  • Tenants are typically on housing benefits or unable to find private accommodation elsewhere.
  • Typically rent paid is marginally less than the market rate.


Rent to Rent

Rent to Rent occurs when a locally based agent or individual becomes the tenant and then sublets on a room-by-room basis. Out of all of the Guaranteed Rent options this is the one where landlords need to do full due diligence in order to protect themselves.

Key facts:

  • Additional bedrooms are sometimes created by sub-dividing existing rooms or converting spaces such as the living and dining rooms.
  • If the correct contract is not used then the landlord is legally vulnerable.
  • If there is a need for court action, to evict a tenant or recover unpaid rent, the landlord must attend court and pay any legal fees required.
  • Tenants are solely the choice of the agent or individual subletting the property.




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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.

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