What main points should I look out for when entering into a rent to rent arrangement?
Landlords entering into such arrangements need to look beyond the obvious appeal of having no hassle and guaranteed rent.
Landlords entering into such arrangements need to look beyond the obvious appeal of having no hassle and guaranteed rent. They will only achieve this if they deal with a reliable rent to renter, and unfortunately the evidence suggests that there are at least as many unreliable ones as there are reliable ones.
Key to this is checking out the reputation and track record of the rent to renter and then making sure that the agreement between landlord and rent to renter is watertight. Often the agreement will be provided by the rent to renter, whether this is a local authority, specialist rent to rent company or an individual. Do not sign up to such an agreement unless it has been properly scrutinised and if necessary amended by your own solicitor, and one with excellent property knowledge.
Make sure you understand the intentions of the rent to renter regarding the type and number of tenants to be allowed into the property at any one time, including whether there is a possibility of the property being used for short term Airbnb type lettings. In order to maximise income and therefore profits, squeezing as many tenants as possible into the property is an obvious strategy, and some rent to renters will go down this route, with or without the landlord owner’s knowledge or permission.
Some rent to renters will even go as far as reconfiguring the internals of the property, sub-dividing rooms, and using basement or attic space. This is a concern for the landlord owner for two reasons: one that a lot of work may be needed to return the property to its original state and two, an HMO requires planning consent and a licence to operate. Some rent to renters have no intention of returning the property to its original state, or indeed of operating within the licensing laws.
