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Rent-to-Rent Scheme – Benefits and Things Landlord Needs to Consider

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The guaranteed rent scheme is an arrangement in which a landlord enters into an agreement with a local authority or a housing association to lease their property to them for a specified period of time.

The local authority or housing association will then guarantee the landlord a fixed rent, regardless of whether the property is occupied or not.

The scheme is also known as ‘Rent to Rent’. Under this arrangement, the housing association or local authority approves to pay a fixed rental income to the landlord every month for a specified period.

It is usually between 1 to 5 years, irrespective of whether the landlord’s property is vacant or tenanted.

They take the responsibility of property management, finding tenants, and ensuring the property is well maintained.

They also cover any costs related to repairs or maintenance of the property during the rental period.

Benefits of rent to rent scheme to the landlords

The Guaranteed Rent Scheme can be beneficial to landlords for several reasons:

  • Firstly, they can receive a fixed rental income every month, even if the property is unoccupied, which can provide financial stability and predictability.
  • Secondly, the property management company takes care of all aspects of the property management, including finding tenants, so landlords do not have to spend time and resources on these tasks.
  • Finally, the scheme can provide peace of mind to landlords who do not want to deal with the day-to-day management of their property and prefer to have a professional property management company handle everything for them.

However, it is important for landlords to carefully review the terms and conditions of the rent to rent scheme to ensure that they fully understand the obligations and responsibilities of the housing association before signing up.

They should also check the credibility and track record of the company offering the scheme to ensure that they are reputable and reliable.

What must the landlord consider while deciding to get involved in the rent to rent scheme?

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When considering whether to get involved in the rent to rent scheme, the landlord should consider several factors, including:

1.     Financial stability

The landlord should ensure that they are financially stable and able to cover any costs associated with the property, such as mortgage payments, maintenance, and repairs, even if the property is empty for some time.

2.     Trustworthiness of the local authority or housing association

The landlord should research the local authority or housing association that they are considering entering into an agreement with to ensure that they are trustworthy and have a good track record of paying rent on time.

3.     Length of the lease

The landlord should consider the length of the lease that they are being offered and whether it fits with their long-term plans for the property.

4.     Terms of the agreement

The landlord should carefully review the terms of the agreement to ensure that they fully understand their obligations under the scheme and the conditions for terminating the agreement.

5.     Potential rental income

The landlord should consider whether the rent to rent offered under the scheme is competitive with the rental income that they could receive from private tenants.

Overall, while the rent to rent scheme can offer a reliable source of income for landlords, it is important to carefully consider the potential risks and benefits before entering into an agreement.