Guaranteed rent through Company Let. How do we pay high street agent Letting fee?

grumiofoundation

cherrytree123 said:

We haven't run the numbers for expected yields and compared with our pension provision.. 

I would do this.

rachel230

Go to a proper professional agent and make sure full credit checks are done. I would not advise you to go near these companies and forget the HMO idea. You sound very naive and fraudsters will smell this a mile away.
You seem to have no idea of the stress and financial cost of renting your home to the wrong people. 

cherrytree123

Thanks all. We are definitely sentimentally attached to this house and never considered selling. But yes we also thought it would be a good investment - the agents were confident our house would rent out easily. We just didn't know they meant multi-lets / HMOs. If we had a nice family living here everything would work out well. 

But so far no families are interested, only these guaranteed rent companies. We looked into this and can see why our house would make a profitable HMO. 5 bedrooms 3 bathrooms (so only big families I guess), we're just 10mins walk from high street and the train station, there's lots of big companies here so professional houseshare would be in demand. The first company that made us an offer we can see from their active Facebook page they have launched their first houseshare in our town just last month, they spent a week putting in firedoors doing up the house furnishing it (they shared behind the scene videos), and  on spareroom website these rooms were all snapped up already at high prices.

So we're considering this company (we think/hope they're genuine and won't run off with our money!). There was no mention of personal guarantee or credit check in their offer, so we should request this via the agent if we decide to go with them, correct?

But you guys are right first and foremost we need to do our maths. Just learned the interest rate for Individual ASTs for the tenants lender will be much higher (nearly doubled) than All tenants named under one AST lender

Many thanks again for all your advice, appreciate the help here. I will be back with more questions.

cherrytree123

cherrytree123 said:

Thank you @edddy! I checked the documents from the agent after reading your note and of course you're right 'Letting Only' fee is a one-off fee which is collected in total at the outset of the tenancy. MY BAD, I should have read properly rather than assuming 'Let only' is a monthly fee like 'Fully managed' just cheaper.

Happy now that it's a one-off fee, and yes it's about a month's rent. Thank you. We know the letting company will be paying £1995 (a month's rent) so do we have to pay about the same? ie. the agent would be getting double in this case? They are a reputable high-street agent.

I emailed the agent yesterday to ask if they're charging both the Letting company and us a months rent each. They still haven't replied so I googled and found this RICS professional statement 'Conflicts of interest - UK commercial property market investment agency' where section 2.3 says "The practice of dual agency within the UK commercial property investment market is not generally accepted. Consequently dual agency must not be undertaken under any circumstances." In our case, I believe the Agent already has a contractual agency relationship with these Letting companies so they can't be having another contract with us and charging both ways? @edddy like you said, maybe the Agent is selectively introducing these 'rent-to-rent' companies rather than tenant families to us. Is this legal?! As mentioned they're a reputable high-street agent..

dimbo61

HMO is hard work and can cost thousands of pounds to get property up to the right standard.
Fire doors, mains wired interlinked smoke alarms, etc
Put your property on spareroom or gumtree yourself with lots of photos and Good description.
See what replies you get and tell the guarantee rent scam artist to Fxxx OXX

cherrytree123

Thank you, I'm doing that right now. Not sure we can even trust the professional agent. Hopefully we'll be able to find a nice tenant family this way!

tom9980

cherrytree123 said:

Thank you, I'm doing that right now. Not sure we can even trust the professional agent. Hopefully we'll be able to find a nice tenant family this way!

I do not understand why you continue to look for a tenant when you have yet to properly run the numbers and seek feedback from us to make sure you did it correctly. Even if you find the mythical family who pay the rent on time and live happily ever after it wont necessarily make it a good investment in comparison to others.

Have you even read the stickies on how to rent to make sure you do everything correctly?

cherrytree123

You're right we don't know much about investment. We put quite a bit extra into our pension each month (through work) and that's about all we do. With 3 kids we want to be more financially secure. At the same time we want to be closer to the schools, the Agent assured us our current home will rent no problem, finally found this other house we like, so we thought all is well. Then we  put the house on rightmove and no families turned up, only this HMO guaranteed-rent business which we haven't heard of before. And that's how we ended up here on this forum.

Cakeguts

cherrytree123 said:

Thanks all. We are definitely sentimentally attached to this house and never considered selling. But yes we also thought it would be a good investment - the agents were confident our house would rent out easily. We just didn't know they meant multi-lets / HMOs. If we had a nice family living here everything would work out well. 

But so far no families are interested, only these guaranteed rent companies. We looked into this and can see why our house would make a profitable HMO. 5 bedrooms 3 bathrooms (so only big families I guess), we're just 10mins walk from high street and the train station, there's lots of big companies here so professional houseshare would be in demand. The first company that made us an offer we can see from their active Facebook page they have launched their first houseshare in our town just last month, they spent a week putting in firedoors doing up the house furnishing it (they shared behind the scene videos), and  on spareroom website these rooms were all snapped up already at high prices.

So we're considering this company (we think/hope they're genuine and won't run off with our money!). There was no mention of personal guarantee or credit check in their offer, so we should request this via the agent if we decide to go with them, correct?

But you guys are right first and foremost we need to do our maths. Just learned the interest rate for Individual ASTs for the tenants lender will be much higher (nearly doubled) than All tenants named under one AST lender

Many thanks again for all your advice, appreciate the help here. I will be back with more questions.

First of all I have been a landlord for over 30 years I know exactly what kind of property lets to families because that is our business model and I did years and years of research before we bought any property.  You haven't done any research into your business at all.

Please look at this logically. You are moving because you have children and don't want to live on a busy road?  However you expect other families to want to live in a house that you have decided isn't suitable for families because of the road. Please explain why you think that this house that is not suitable for your family would be suitable for someone else's family?

What you have basically is a property that would be at the bottom of anyone's list of suitable rental properties and it is only suitable to be let to people who want a cheap room in a convenient area and who don't care about the road because the room is cheap. This is why you are only getting interest from Rent to Rent companies.  Those Rent to Rent companies are telling you what you want to hear because you are completely ignorant about all aspects of being a landlord. You have done absolutely no research. The agent is struggling because they know that they can't let your house to a family because it isn't suitable so they are trying to get anyone to take an interest so that they can make some money.

This property is not going to let to a good tenant family because it is in no way suitable for family because of the road so forget about letting to families who would be good trouble free tenants because that is not going to happen.  What a landlord wants is a trouble free let. Your house is in the category of problem let and it is only ever going to be a problem and it is going to cost you a lot of expense if it goes wrong. You are unlikely to make any money from it.It is completely the wrong property in the wrong place.

If you cannot afford to keep it vacant when you move your only stress free expense free option is to sell it. Someone will buy it and either turn it into flats or an HMO and it will be their risk not yours.

Never ever let a property that you have an emotional attachment to or you will be absolutely devastated when you get it back and it is so damaged that you need to replace everything in it.

My advice to you regarding this property is that it is only a heap of bricks with a hole in the middle.  Memories are what you take with you when you move. Sell it and move on with your life.

cherrytree123

If we found that perfect family, we'd be very happy. We did run the numbers for that. True this is probably not the best investment option in comparison to others (but we don't know other options either!) and this is enough for us . We're near completion on the onward purchase so really hope we find that right tenant soon. I'm nearly done with the house ad now. :-)