Being a landlord is an incredibly stressful job as you have to deal with finding new tenants and maintaining the property while also handling tons of paperwork, constantly repairing issues, and upholding several laws.
But one of their biggest worries is not having a regular source of income to rely on. Many tenants pay rent late or not at all sometimes, rental prices can significantly dip, and they fail to generate any rental income if there is no tenant.
A guaranteed rent scheme can overcome all of these problems, providing peace and financial stability for landlords. Here’s what they can do for you.
How the rent guarantee scheme works is that a property owner enters into a contract with a third party, which could be an individual, a company, or a council. They then take the responsibility for managing the property.
The landlord also hands over the responsibilities to sublet tenants, find new tenants, pay property bills, and repair and maintain the property. The third party will provide a monthly rent to the property owner.
If the tenants choose to leave without prior notice, stop paying rent, or damage the property, the third party will handle the financial burden and liabilities.
Most companies, organizations, or individuals that offer guaranteed rent schemes work with a minimum of 12 months of occupancy. They also have the flexibility to renew contracts and do a maximum of around 5 years or more.
But still, it largely depends on the organization and its practices. Some might offer schemes for shorter periods or longer up to 10 years.
It’s clear why landlords are concerned about their financial security with rising taxes and expenses to take care of and dipping property rates. This is why guaranteed rent schemes have grown in popularity recently. They offer several benefits, including:
A guaranteed rent scheme does exactly what it says in the name. Once the property owner joins the scheme, they are guaranteed rent every month as the owner of the property, regardless of whether someone is living there or not.
This is because the third party will serve as a “Renter” and pay the rent, entirely eliminating the risk of late paying, troublesome tenants, and going without an occupied property for months at a time.
Since the responsibility of finding and letting new tenants becomes the responsibility of the third party, they handle the costs associated with them and other expenses like the council tax and property bills.
Most guaranteed rent providers don’t charge commissions or management fees, over the agreed rent to landlords on their properties.
The landlord no longer needs to worry about upholding rooms and appliances in the property, scheduling monthly maintenance checks, or setting money aside for maintenance and repair costs.
The third party takes responsibility for all this and more. They ensure that the property is fit for tenants and deal with any maintenance complaints they may have.
If the property does get damaged at some point, the renter would have to take care of the damage and return the property back to its original state. The landlord would also not incur management, letting, and renewal fees.
The third party, also called “The Renter” is expected to comply with all the several laws and compliance issues that typically an agent deals with.