Research: Rent-to-rent arrangements
Rent-to-rent agreements are attractive to landlords seeking a guaranteed income and a minimum of property or tenant management worries and the NRLA has been talking to landlords about such arrangements - and how they are working.
The research work comes ahead of proposed changes - being brought in as part of the Goverment's rental reform plans - which would affect landlords' liabilities should things go wrong.
What is rent-to-rent?
Essentially a rent-to-rent arrangement sees a landlord hand over management of their rental property to a third party, often (although not always) a specialist provider or a letting agent.
This third party then takes on responsibility for letting the property, paying an agreed monthly payment to the property owner. This will typically be significantly below market value, with the third party taking the difference - which is how they make their money.
What did landlords have to say?
Of the NRLA members questioned around 10% of members told us they had - at some point - had at least one property in such a scheme.
The most common reasons for joining such a scheme included the reliability of regular rental income, which was the single-most common reason.
In addition landlords said rent-to-rent:
- Gives landlords a stress-free proposition for letting
- Solves problems of geography & distance
- Are particularly attractive to landlords whose portfolio is focused in London
The graph focuses on those members have have been involved in rent-to-rent arrangements.
One-in-four, 25%, reported that they had experienced no problems at all with the arrangement.
However, the chart highlights some of the potential pitfalls.
By far the two most common difficulties were, firstly the condition of the property when returned (30%) and, secondly, issues with the tenant selection carried out by the intermediate landlord (28%).
Of those answering the survey 15% said they had issues ending the arrangement, with 19% having ongoing issues.
Comments from landlords were mixed, underlining the need for landlords to think carefully about rent-to-rent, and who they enter into arrangements with.
Some were positive about their experiences. One landlord to answer the survey said rent-to-rent had allowed them to remain a landlord despite living remotely, saying: "This has been very useful as the property is over 100 miles away. Without this arrangement I would have sold this property, which is in an area with good property sale prices."
Another agreed: “It works well for the property let on this basis. No voids in six years, no maintenance costs in six years...overall I'm satisfied with the outcome”
For other rent-to-rent has been a poisoned chalice, with one landlord telling us: “The experience was awful. The company stopped paying rent and the properties were left in terrible condition.”
The full research report will be posted on the NRLA website in the coming weeks. Keep an eye on our news site and social media channels for more details.
More information
- For more information on rent-to-rent click here.
- Our Quarter 1 survey will be sent out to members on March 10th, with those who sumit answers to be entered into a prize draw to win a £250 John Lewis voucher.