Guaranteed rent- a good idea or not?

Jellybabies

Hi,

Me and my husband own a flat which we have been trying to rent out since November last year. We had it advertised with an agent since a couple of weeks ago without much interest. We then decided to act as landlords and we have only had a couple of people interested which we weren't happy with.

We really need to get someone in as we are paying the mortgage and rent on the property we are living in now. We have come across companies which offer guaranteed rent. It seems they effectively take on the property, find a tenant, pay you reduced rent every month, pay for repairs and there are no other fee's included.

This seems really appealing to us as it saves alot of hassle getting someone etc and we are happy to pay the additional amount to cover the mortgage.

Does anyone have any experience of this? If anyone has found this a good way to rent, what company did you use?

Many thanks in advance for any advice.

G_M

Jellybabies wrote: »

Hi,

Me and my husband own a flat which we have been trying to rent out since November last year. We had it advertised with an agent since a couple of weeks ago without much interest. We then decided to act as landlords what were you acting as before if not LLs?and we have only had a couple of people interested which we weren't happy with.

We really need to get someone in as we are paying the mortgage and rent on the property we are living in now. We have come across companies which offer guaranteed rent. It seems they effectively take on the property, find a tenant, pay you reduced rent every month, pay for repairs and there are no other fee's included.

.

* yes, you get guaranteed income. Until you read the small print
* you have NO say on who the tenants are
* you get way below market rent - have these companies given you a figure?
* what happens/who is responsible if the tenants trash it?
* watch out for conflicts in tenant catagory - does your insurance demand/prohibit certain one?
* as LL you are still legally responsible, yet you ar giving away huge control

Personally I would price the rent right/doup the property to find a tenant you are happy wih.

Jellybabies

G_M wrote: »

* yes, you get guaranteed income. Until you read the small print
* you have NO say on who the tenants are
* you get way below market rent - have these companies given you a figure?
* what happens/who is responsible if the tenants trash it?
* watch out for conflicts in tenant catagory - does your insurance demand/prohibit certain one?
* as LL you are still legally responsible, yet you ar giving away huge control

Personally I would price the rent right/doup the property to find a tenant you are happy wih.

Thanks for the advice.

We were aware it wouldn't all be as great as it sounds, we were just looking for any easy option which it probably isn't!

In respect of me saying we are acting as LL, i just meant we would do it ourselves rather than paying an agency.

Would be great if anyone has any personal experiences of these companies.

I think the reason we are having problems finding someone is because it's not near the centre of the city which most people are looking for. I'm sure if we are patient enough we will find someone.

Werdnal

As you are now trying to DIY let, and GM hasn't posted a link to his helpful newbie LL post, I will:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

If you are having trouble letting due to location, my guess is the rent is wrong - reduce it and get it tenanted asap, rather than holding out for a higher tariff and leaving it empty. You already have the burden of the mortgage and your own rent, but also your house insurance is probably void as it is vacant, and you will be paying council tax, utility standing charges etc. Better cheaper rent, than no rent.

Have you gained consent from your lender to let it? Do they know it is currently empty, as mortgage companies do not like vacant properties either!

By the way, even using an agent, as GM says, you are still Landlord's, and responsible for the property and your tenants whilst they are resident - agents generally charge a lot for doing very little!

Jellybabies

Werdnal wrote: »

As you are now trying to DIY let, and GM hasn't posted a link to his helpful newbie LL post, I will:


If you are having trouble letting due to location, my guess is the rent is wrong - reduce it and get it tenanted asap, rather than holding out for a higher tariff and leaving it empty. You already have the burden of the mortgage and your own rent, but also your house insurance is probably void as it is vacant, and you will be paying council tax, utility standing charges etc. Better cheaper rent, than no rent.

Have you gained consent from your lender to let it? Do they know it is currently empty, as mortgage companies do not like vacant properties either!

Thanks for your reply and the link which we will read through.

Yes, we have changed our mortgage to be able to let the property. I'm not sure they know it's still empty, but it's not something they told us would be a problem!

The rent we are asking only just covers the mortgage, we are also going to have to pay the ground rent on top of that, repairs etc so I wouldn't really be keen to drop it. Looking at other properties in the area it's at the same price.

There have been other properties in our building rent fairly quickly which is why we didn't think we would have a problem, maybe it's something else we are doing wrong?

Beckyy

If the rent your asking only just covers the mortgage, then I don't think this would be an option because you would be getting significantly less for the convenience of having them do it all for you. You'd be making more of a loss.

Have you tried advertising in other places? Local news papers, daily and weekly. Websites, local shop windows and notice boards etc.

Werdnal

You do realise you will have to declare your rental income for tax don't you? If it is only just covering the mortgage, is it really wise to let it? You can offset the rental profit with some of the costs in running the let, but only mortgage interest is an allowance expense, so any capital payments are not permitted.

The link to the HMRC property tax page is in GM's post I referred to.

Where are you advertising the property?

BitterAndTwisted

The rental market is bouyant at the moment and rents rising. If you haven' been able to find a tenant by now then it's overpriced. Also, I worry that should you find a tenant it really diesn't sound like a sensible move to let it. You need a decent margin for voids, repairs, income tax etcetera. Why don't you just sell up and get shot of it?

DannyboyMidlands

It's been empty since November so the rent is probably too expensive but the money you are asking for doesn't even cover your expenses.

Why are you renting this flat out? It seems like a toal waste of time, money, effort............

Madness.

Jellybabies

Thanks for the replies again.

Basically, the reason we left is because we have grown a hate for the place and we were really unhappy living there. We know renting isn't the best option and we are aware we are going to have to pay out for things such as repairs/fee's which we have savings for.

We tried selling last year but we would be in too much negative equity to afford.

We are currently listed in freeads and gumtree. I was going to go round the local area and advertise in shops etc.

And yes, we are aware we will also be paying tax!

Again, the rent really isn't overpriced...it's priced in exactly the same region as others in area!!

Annisele

I wouldn't look for a flat on gumtree (too many scams) and I'd never heard of freeads. A quick look on it shows 600 rental properties available in the whole of the UK - which suggests that it isn't the best place to be advertising.

The places that are nearby - do you know whether they're actually being let at those prices, or just advertised at them? If they are being let at those prices - where are they being advertised?

If it isn't too personal a question, why did you "grow a hate for the place"? If I was to walk in as a potential tenant, would that something make me hate it too?