Rent Guarantee Schemes + Mortgage Payment Break

Bettyboop

Hello,

Hope you can help. Given the current state of the market and expert opinions on this we cannot sell our house for about another 18 months : (. As well as that we will have a mortgage redemption penalty of a few thousand to pay if we did now. We took it out before the crash and are payint 5.25%, have another 3 years left!

Due to personal circumstances we are looking at letting the property. One agent has a rent guarantee scheme of course with this and renting direct the payments won't come close to what the mortgage is. Ours is £750.00 a month and the agent is willing to guarantee £460. Does anyone have experience with these schemes at all? While it will help we will still have to find another £300.00.

With regards to payment holidays I phoned the bank (didn't give my details), to ask if we were eligible to which they said given the current climate we couldn't apply for one. Again, what are others experience with this?

Thanks, hope you can help. BB

ILW

Bettyboop wrote: »

Hello,

Hope you can help. Given the current state of the market and expert opinions on this we cannot sell our house for about another 18 months : (. As well as that we will have a mortgage redemption penalty of a few thousand to pay if we did now. We took it out before the crash and are payint 5.25%, have another 3 years left!

Due to personal circumstances we are looking at letting the property. One agent has a rent guarantee scheme of course with this and renting direct the payments won't come close to what the mortgage is. Ours is £750.00 a month and the agent is willing to guarantee £460. Does anyone have experience with these schemes at all? While it will help we will still have to find another £300.00.

With regards to payment holidays I phoned the bank (didn't give my details), to ask if we were eligible to which they said given the current climate we couldn't apply for one. Again, what are others experience with this?

Thanks, hope you can help. BB

Why can't you sell for 18 months?

Bettyboop

ILW wrote: »

Why can't you sell for 18 months?

The housing market is at a standstill and according to the estate agents the market will only improve about then, however if we were to sell before our 5 year fixed term is up we will still be liable for a redemption penalty which is a few thousand pounds.

G_M

Rent guarantee schemes are offered by many agents, so step 1 is shop around, and negotiate hard. Thjey want your business.

the advantage of the scheme is certainty - you know you'll get the rent, and you know how much.

The disadvantage is the rent offered will always be less than the market rate. If you rent via an agent on a non-scheme basis, you may get a tenant who falls into arrears and you may have gaps between tenants - months with no rent.

Or you may get the ideal tenant who stays long-term and always pays the (market) rate.

A third option is to manage the rental yourself. Get full market rental, no 12% to an agent. You could put the 12% aside to cover the 'voids' (gaps between tenants.

But to go down this path you'd need to learn a lot about the responsibilities of letting. A rewarding and often enjoyable excercise, but time-consuming and with certain risks.

Mind you, agents are not always that reliable, and LLs often suffer as a result both financially and because at the end of the day the LL is responsible for their obligations even if an agent has let them down.

Bettyboop

G_M wrote: »

Rent guarantee schemes are offered by many agents, so step 1 is shop around, and negotiate hard. Thjey want your business.

the advantage of the scheme is certainty - you know you'll get the rent, and you know how much.

The disadvantage is the rent offered will always be less than the market rate. If you rent via an agent on a non-scheme basis, you may get a tenant who falls into arrears and you may have gaps between tenants - months with no rent.

Or you may get the ideal tenant who stays long-term and always pays the (market) rate.

A third option is to manage the rental yourself. Get full market rental, no 12% to an agent. You could put the 12% aside to cover the 'voids' (gaps between tenants.

But to go down this path you'd need to learn a lot about the responsibilities of letting. A rewarding and often enjoyable excercise, but time-consuming and with certain risks.

Mind you, agents are not always that reliable, and LLs often suffer as a result both financially and because at the end of the day the LL is responsible for their obligations even if an agent has let them down.

Thanks. Any tips for negotiating what they have offered? I definitely agree it's better to get some money rather than nothing however what they are offering is a little low ; (.

G_M

Go to another agent and see what they offer under a rent G scheme. Is it the same or more? that immediately gives you an idea of what is the 'going rate'.

Then go back to agent 1. Be honest. Say the rent they are offering is not enough for the mortgage so you cannot afford to accept it. You'll not rent out at that rate. Can they offer a better guarantee? Play them off against each other. Say you've spoken to another agent who is offering more (ideally if this is true!). As I said, shop around!
but also bear in mind the rent they guarantee is not the only thing to consider - are they actually any good as agents? Trustworthy?

Check they are members of ARLA, NAEA or some reputable professional body. Sadly, ANYone can set up as an agent with no qualifications, experience or ethics - even me :rotfl:

theartfullodger

Betty:

Do you have your lenders agreement for you to rent out?? Some charge a fee for this, others increase the interest rate (oh yes, and they can...). Don't try not to tell them... you could end up in an even bigger hole...

Only start renting out if you have the financial & emotional strength to cope with (either renting direct or through an agent) the "tenant from hell" who doesn't pay for 9 months whilst you keep paying the mortgage, and the legals fees to get him out.. and he then 'phones at 10:30pm Saturday evening "toilet's leaking" "oh, sorry, since when?" "Dunno, 3 or 4 weeks, you gotta fix it!" [He's right, you have to fix these things, even though he is months behind with the rent], ....

If you don't think you can handle this find another way. Sorry to be brutal but it may happen. (or the agent goes bust with your money ..)

And you have a valid Gas safety certificate?? And an EPC (can't even advertise without one...)?? And the furniture is all fire-regulations ok?? And, and, and, and,.....

Cheers!

Lodger

Bettyboop

Update so far. Haven't been able to find another agent that offers a rent guarantee scheme : (. The scheme offered to us by this particular agent also pays out when the property is left vacant between tenants moving in and out. All other agents offer the insurance which covers tenants defaulting on payments. The first month is excluded. Not really sure what else I can do because we simply can't afford to leave it empty. It will be rented at some point but finding descent tenants is another story... more stress, more stress : (. Thanks for all the input so far everyone.

Thought I would ask does anyone have experience with paying a lower mortgage rate to the lender? I'm sure it's a stupid question and if we all could we would. I wish what was offered by the agent was the same as the mortgage.

theartfullodger

Betty:

Think there is a terminological issue here...

What you are after is a "Rent Protection" insurance policy: The agent you found simply takes commision for selling it to you... there are others out there (Google "rent protection" ) eg (I am not recommending, merely mentioning
http://www.letsure.co.uk/landlords/rentprotection.htm

But they depend on getting the references/credit-checks-guarantors/paperwork right. I (frankly) wouldnae trust a letting agent to get that much right...

You can always take out a policy yourself, but if (eg) the guarantor didn't sign the tenancy you will still be stuffed...

Cheers!

Lodger