In this post, we'll consider why you might consider a guaranteed rent scheme rather than a traditional let.
If you’re a landlord, often your financial stability is reliant on securing a steady rental income from your property. This can be worrying in times of economic instability, where one unlucky experience with unreliable tenants can put you and your family in a vulnerable position.
Finding tenants, dealing with any rent arrears, and managing property maintenance can also all be challenging as a private landlord, particularly if this is your first time attempting to let a property. Even more stress may be added if you’re in possession of a property which requires some work before it can meet the legal requirements of a let.
That’s where guaranteed rent services come in. In this blog, we’ll discuss the benefits of guaranteed rent services and how they can provide peace of mind for landlords.
A guaranteed rent service is a scheme where a letting agent or property management company pays a fixed monthly rent to the landlord, regardless of whether the property is vacant, or the tenant stops paying rent.
Essentially, the agent or company itself becomes the tenant, removing all uncertainty about whether the rent will be paid or how long there might be in-between paying residents.
The agent then finds tenants, manages the property, and deals with any issues that may arise during the tenancy period. Agents such as Let’s Rent in Bristol may also include extras such as working to bring run-down properties up to standard before finding tenants.
With guaranteed rent services, the letting agent pays the property owner a fixed monthly rental amount for a specified period (our contracts usually last between 3 and 5 years).
The agent then rents out the property to tenants and manages the tenancy. The rent paid to the landlord can be lower than the market rate, but the landlord has the peace of mind that they will receive a monthly income without the risk of rental arrears or void periods.
With a guaranteed rent service, landlords can rely on a regular monthly income, even during void periods or maintenance periods between lets. This means that landlords can pay their mortgage and other expenses without worrying about rental arrears or overdue payments.
Void periods can be costly for landlords, especially if the property is vacant for an extended period. Guaranteed rent ensures that the property is occupied by tenants, reducing the risk of void periods.
Acquiring tenants, worrying over property legislation, chasing late rental payments, and dealing with property issues are all things which can be time-consuming and stressful for landlords. Even more than a full property maintenance package, Guaranteed Rent companies take full control over these issues, leaving landlords free to focus on other things.
Guaranteed rent schemes are usually a longer-term option, lasting for up to five years. This provides landlords with long-term rental income, allowing them to plan and budget for the future. No more worrying about whether you can afford the family holiday next year or whether you’ll need to work overtime to cover the mortgage.
Knowing that rental income is guaranteed can remove a huge source of anxiety for landlords. They can relax, knowing that their property is in good hands and that they will receive a regular monthly income without any hassle.
This service also takes away the need to stay abreast of new and existing rules and regulations for renting out properties. Your agent’s experience and expertise in the field will keep you on the right side of any legislation, ensuring the property and tenancy agreement are up to scratch and matters such as HMO licenses are dealt with far ahead of time.
In a traditional private letting arrangement, the landlord is responsible for finding tenants, managing the property, and dealing with any issues that arise during the tenancy period. The landlord also receives the market rate for the property, which can be higher than the rent paid under a guaranteed rent scheme.
They may alternatively choose to invest in a property manager, who will deal with finding tenants and dealing with day-to-day property issues on their behalf, in exchange for a fee.
However, traditional lettings also come with risks. Landlords can experience void periods where no money is coming in, rental arrears, and property damage, which can be costly and time-consuming to resolve. In contrast, a guaranteed rent service provides landlords with a fixed monthly income and removes these risks.
Let’s Rent, one of Bristol’s leading lettings agencies, is now offering guaranteed rent schemes for properties in areas including Bristol City Centre, St Werburghs, Filton, Fishponds, and St Pauls.
Our property experts will give you a fair, consistent monthly payment while we bring the property up to spec, manage tenants, and take care of any problems. It’s a long-term, worry-free solution which suits many first-time landlords or those who come into property unexpectedly.