The basic idea
In a guaranteed rent arrangement, a company agrees to pay the landlord a fixed amount each month for a set period. The company then lets and manages the property itself. The landlord gets a predictable payment; the company takes on finding occupants and the day-to-day running of the property.
The fixed amount is usually lower than the full market rent the property might achieve, because the company is taking on the work and the risk of empty periods and arrears.
How it differs from full management
With full management, the landlord is still the tenant’s landlord, the tenant’s rent is collected on the landlord’s behalf, and the landlord’s income goes up or down with the rent achieved and any empty periods. With guaranteed rent, the payment to the landlord is fixed by the agreement.
Questions to ask before you sign
- What exactly is the agreement? Is it a lease to the company, a management agreement, or something else? Who is the landlord of the people living there?
- How long does it last, and can either side end it early?
- When and how is the rent paid, and is it paid during empty periods?
- Who pays for repairs and maintenance, and who is responsible for safety certificates and any licence?
- What condition will the property be returned in at the end?
- Does your mortgage lender allow it, and does your insurance cover it? Many lenders and insurers have conditions about how a property is let.
- What happens if the company stops paying or stops trading?
Read any agreement carefully, and take independent legal advice if you’re unsure about any of it.
Is it right for you?
Guaranteed rent tends to suit landlords who value a predictable income and want little day-to-day involvement. Landlords who want to maximise the rent, or stay closely involved, may prefer full management or managing it themselves.
See how Masterkey’s guaranteed rent service works.
Talk to us
Questions about your own property? Send the details below, chat to us or email info@masterkeyestates.co.uk.
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