What does rent guarantee really mean?
Mon 03 Aug 2015
Rent guarantee schemes may seem like a strong proposition for landlords at first glance, but they could leave investors out of pocket and fending off tenancy problems.
Guaranteed rent arrangements require landlords to sign over a property for a specified period in time in return for a guaranteed monthly income – and most schemes promise to cover any void periods and maintenance costs. The scheme providers will make their money on the difference between the rent they pay the landlord and the rent they receive from the subtenant. However, they may not always be as reliable as they seem.
One of the biggest risks to landlords and investors lies in the financial security of the rent guarantee provider and with more small companies and sole traders targeting landlords with such schemes, this is a growing concern. If they get into financial difficulty or go bankrupt, the landlord may not be able to recoup any moneys paid to the scheme – also risking incurring expensive legal fees if you need to obtain possession of the property.
Of course, some reputable lettings agents offer very attractive rent protection schemes. Look for industry recognised accreditations, such as the Association of Residential Letting Agents (ARLA), which requires mandatory client money protection and a recognised independent complaints process.
With Green & Co’s rent protection warranty, investors can be safe in the knowledge that they have all the benefits of guaranteed rent from an ARLA member, with legal support, financial security and comprehensive client references included as part of the service. In addition, our property management service offers a dedicated team of professionals, each with responsibility for different aspects of the property rental and management.
Chris Green, Director