leasing agency as "primary tenant" when we're renting out property

bnorth

we are planning to rent out our old house and are signng up with a renting agency whose arrangement would be for them to be the primary tenant - their rep told us the reason would be to make our life easier as they would deal with any problems and the real teneant who lives there would have no dealings with us or knowledge of us.
We are concerned that we might lose some control of our house wrt utilities , repair etc and lose some control and knowledge of the conditions of the tenancy.
Also we read that one reason for this - and the rep didn't tell us this - is that the agency would charge a higher rent than we would receive (as well as the fees which we were obviouslyt informed of - their fees are low and the extra rent they would receive may explain why)
the chairman is up front here about this arrangement -
http://choices.co.uk/chairmans-message.html
“in 2007 I had the idea for the ‘Primary Tenancy’, an approach that makes Choices the primary tenant and instead of earning a fee we make a profit from the rent by subletting.”
is it a good idea for us to proceed on these grounds ?

mrginge

Depends if you want to give a monkey's about who your renting to.

Doesn't this make your agreement with the LA a commercial lease rather than an AST?
I might be wrong.
Subletting is inherently more complex than a standard LL - tenant agreement. Look very carefully at the contract you would be signing with this agent.

00ec25

there is nothing revolutionary about this arrangement, it is how many rent guarantee schemes work.
Your tenant is the LA and they pay you rent - you would need to check your contract with them to ensure they will do so even if they don't themselves have a sub tenant in paying them rent (hence the guarantee).

As Mr Gringe says it cannot be an AST if the LA signs in the name of a Ltd Company or Ltd Liability Partnership

of course they will charge more to their sub tenant, that is the whole point of the exercise for them

as for you, some of the issues you flag suggest you are not ready to be a LL, you do not "control" who the utilities are with. The tenant has absolute choice over who they use. Is this your old home? You seem to showing classic signs of on going emotional attachment and a desire to control elements which are irrelevant to a rental business

at the end of the day you have a simple choice:
Pros
- you get a smooth rental income and no need to deal with "real" tenants.
- you will not be responsible for the sub tenant's deposit
Cons:
- your overall income will be lower.
- Your contract with the LA may still require you to pay for some LL obligations such as gas safety certificates
- you may still have to pay for repairs
- you run the same sort of risk as letting direct to your local council, ie you have no control over who the sub tenant is nor (contract dependent) any ability to evict them

princeofpounds

Ah yes.. The 'revolutionary' Choices. One of my personal favourites in the universe of letting agent bluster.

Remember it is a totally different relationship, with totally different behavioural incentives, to being a LL with an agent. They will not be your agent. They will be your customer.

That has various pros and cons, but personally I would never like to lose oversight of who is going to physically occupy the property.

The other big problem is that it is unlikely to be an AST. This makes it more complex, as the ultimate landlord, to understand what you are really getting into and more importantly, how to end it, as there is less standardisation of terms and procedures. If you are not experienced then I would always suggest running such tenancies past a solicitor, which is of course an extra cost.

Don't think you are necessarily going to end up with ultimate tenants from 'blue chip companies who are relocating' and the like. These sorts of tenancies are great places to stuff any old tenant.

jjlandlord

This would be a commercial lease so you would probably need legal advice regarding the terms and obligations, especially if (as I would guess) the company tried to impose their contract on you.

“in 2007 I had the idea for the ‘Primary Tenancy’, an approach that makes Choices the primary tenant and instead of earning a fee we make a profit from the rent by subletting.”

I laughed...

princeofpounds wrote: »

They will not be your agent. They will be your customer.

Tenant, even.

Pixie5740

There has been another poster recently who signed up to one of these agreements and is having one hell of a time terminating the agreement.

G_M

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G_M

Pixie5740 wrote: »

There has been another poster recently who signed up to one of these agreements and is having one hell of a time terminating the agreement.

See

https://forums.moneysavingexpert.com/discussion/comment/64612070#Comment_64612070

bnorth

many thanks to all of you for the useful feedback - and the links to help pages and to the post Pixie mentionned were particularly useful, thanks G_M

AnnieO1234

My advice bnorth, especially as it appears you're a first time landlord, avoid this type of set up like the plague. Maybe in a few years, once you've established yourself and understand the obligations of being a landlord, then maybe look at something like this.


X

princeofpounds

Thing is, when you're experienced you typically don't need something like this. When you are a novice you have no business getting wrapped up in something like this.

That's basically why this is not the prevalent model for renting in the land.

I'm not saying it doesn't have a place, but it's a small place.