The responsibilities related to renting your property can take a lot of your time to resolve. As a landlord, you may face many challenging problems like maintenance work, rental arrears, void periods, and annoying tenants.
Hence, operating your property activities needs the utmost care, time, and efficient abilities to deal with the obstacles that may arise at any time.
The guaranteed rent scheme is an ideal system for landlords in East London to rent their property without any hassles and stress that comes with it. It is a safe, legal, and beneficial way to manage and earn from your investment.
City Borough Housing has been efficiently helping landlords through their guaranteed rent East London services by providing flexible lease periods ranging from 3 to 7 years.
What is a guaranteed rent scheme?
A guaranteed rent scheme, also known as a rent-to-rent system, refers to a contractual agreement between a landlord and a company, an institution, a leasing agent, a property dealer, or an individual.
In the agreement, the landlord agrees to temporarily transfer the control and management of their property for a specified period of time in exchange for a guaranteed monthly rental income.
The contractual company becomes the direct or middle tenant to the landlord. It is best suited for new inexperienced landlords and real estate investors with several properties.
Read also: When Could Be The Right Time to Begin Within House Development?
How does the guaranteed rent scheme work?
The guaranteed rent scheme secures your monthly income to give you peace of mind. To achieve this, you must follow a few steps to arrive at a mutual contract.
Here are the steps involved.
- The direct or middle tenant evaluates the property at its current market value.
- You and the middle tenant discuss the guaranteed monthly rent and contractual terms and conditions.
- Upon mutual agreement, you temporarily hand over the control of their property to the middle tenant.
- You will receive the agreed monthly rent irrespective of whether the property is occupied or vacant.
- You are released of your responsibilities related to renting or tenancy process.
- At the end of the contract, your property is returned to you in the same initial condition.
The agreed guaranteed monthly rent is slightly below the market value of your property. The middle tenant works to achieve a higher possible rental income from your property to cover the property expenses and create a profit for them.
What are the benefits of a guaranteed rent scheme?
During the contractual tenure, you are relieved from the overwhelming responsibilities of a landlord while you are assured of a regular monthly income.
You will receive the agreed rental income regardless of whether your property is occupied or not, and whether the middle tenant has received their rent or not.
From maintenance to legal proceedings and renovations, the middle tenant handles everything on your behalf. You do not have to advertise your property for rent.
Your monthly income is predicted and you are free from the hassles of any damage repair expenses. You do not have to worry about any council fees and utility bills as it becomes the responsibility of the middle tenant.
How much does the middle tenant charge?
The companies or the middle tenants that provide the guaranteed rent scheme services do not charge any commission or upfront fees from you.
Their profit comes from the difference amount between the guaranteed rent they agree with the landlord and the monthly rent they achieve minus the maintenance expenses.
You will receive slightly less rental amount than what you would have received through a direct tenancy. This difference is the amount that costs you to live a hassle-free and stress-free life.
Remember, a guaranteed rent scheme alleviates your fear of a negative cash flow property to minimize the risks associated with tenancy.