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Rent to Rent – Does it Work?

Posted by Emma Johnson on March 8, 2019
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Rent to Rent is a type of legal subletting in that the landlord willingly allows another individual or company (a middle man) to take charge of the property they own for the purposes of renting it to others. The proviso is that the landlord will receive a guaranteed rent in return.

The rent may be a little lower than ‘market value’ but it means the landlord doesn’t have to look after the property since the individual or company renting it will take care of maintenance and collect the rent. Neither does the landlord have to worry about any void periods ie months where there are no tenants and the property isn’t giving him or her an income. That’s because the ‘renter’ will still be paying.

Rent to Rent by companies

This type of subletting is often carried out by companies who advertise rental properties for large global corporates whose staff travel between locations and need a place to stay over for a few days or nights. It works because it’s less expensive than a hotel and is of a high standard.

Rent to rent by individuals

Individuals who want to make money from property but have none to invest themselves can also benefit – especially with a House of Multiple Occupation (HMO) property. That’s because with a number of tenants they can make quite a bit of profit per month. However, it’s not all plain sailing since the more tenants there are the more maintenance and administration needs to be done. It’s obvious then to see why many landlords who have been doing the job for a number of years and want a break, are in favour of a Rent to Rent strategy.

Special restrictions for HMOs

There are issues to consider though. In the case of an HMO, for instance, the landlord needs a licence to operate from the local authority. This license will guarantee, amongst other things, that the property isn’t a fire risk, the rooms are of a minimum size and that there is adequate toilet provision per number of people living there. Although the individual renter is managing the HMO, the licence has to be applied for under the owner’s name. This is because if anything goes wrong he or she will be charged than the ‘renter.’

For landlords considering going down the Rent to Rent path, it certainly makes sense to have a Rent to Rent Agreement written up. This won’t just outline the landlord and individual or company’s role and legal responsibilities etc, but will also allow the landlord to apply for insurance. These days a fair number of insurance companies want to see a Rent to Rent Agreement before they will even consider issuing a policy.

Right to Rent

This law, which was introduced in the UK relatively recently, puts the onus on landlords to check that their tenants aren’t illegal immigrants. This means checking the papers and passports of prospective tenants. Failure to do so can mean a hefty fine. With a Rent to Rent strategy the landlord would have to ensure that the ‘renter’ took on this responsibility because, as the law stands, it would be the landlord who received the fine and not the ‘renter.’

In summary then yes, Rent to Rent as a strategy can work well for both parties – provided the landlord trusts the person/company he or she is renting to, and an initial agreement is drawn up in the first place.

If you’re a landlord and interested in a Rent to Rent strategy then contact us here at iSell on 0333 577 0733 or send us an email to info@iletproperties.co.uk.

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