Due to pandemic, huge job losses have made landlords to worry about their financial insecurity. Tenants may sometimes face financial adversity and struggle to pay rent. Also there are times when your property is vacant due to absence of any tenants. Your existing tenant may need to relocate and you have not found a new tenant. Ultimately, landlords have to suffer from income gaps.
To eliminate the risk of such inconsistencies in rental income, landlords are showing huge interest in guaranteed rent schemes. If you are a property owner and looking for a guaranteed rent scheme in the U.K., you must consider one of the leading property management firm like City Borough Housing.
What is a guaranteed rent scheme?
Guaranteed rent scheme, also known as rent to rent scheme, is a contract in which a property owner transfers the control and management of their property to a property management firm for a specified period of time. The firm is also entitled to sublet the property to other tenants. The contractual timer period may vary from 6 months to 5 years.
This firm is the direct tenant to the landlords and agrees to pay a fixed monthly income irrespective of whether the property is occupied or not by other tenants. The firm is the tenant for the landlord and becomes the ‘Renter’ for the other tenant. There is no direct relationship between the landlord and the other tenant.
How do these schemes work?
The renter or managing firm will find the tenant, and do all the administration and maintenance work of the property. They are also responsible for all kind of property’s legal requirements and proceedings. You, as a landlord, may get a guaranteed monthly rent that is slightly less than the market value for your property.
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The firm tries to get a high rental income from your property to cover expenses and generate a profit. This is often achieved by renting several single-rooms of the home to different tenants against individual contracts. You must make a comprehensive research about your renter before signing the contract. If they are competent to manage your property, you may sign a legal commercial lease.
What are the advantages of guaranteed rent scheme to landlords?
Under this scheme, as a landlord you enjoy the financial benefits of consistent income and peace of mind without the agitation of managing and maintaining your property. You do not have to chase for the rental money or to get stressed up in finding a new tenant. This saves your valuable time to engage in some other productive works. You are free from hassles of facing the complaints of the tenants.
You may also enjoy free accreditation and a waiver of council fees. All the utility bills are paid by the third party, the renter, as it becomes their responsibility. As you sign the scheme contract, the renter has to take care of all regulations related issues like safety and health regulations.
Your worst nightmares as a landlord of empty properties, income gaps, and finding a tenant are resolved through this scheme. The renter performs regular property inspections and fixed any interior damages efficiently. Against your approval, the renter will carry out any required maintenance work.