why don’t estate agents do rent to rent?

dkts

Hi,
just doing some reading/research about rent to rent, i know there’s pros and cons to it, but say it all checks out and its feasible/the numbers work for whoever is sourcing the deal etc, why don’t estate agents just do the rent to rent themselves with the landlord? Instead of the deal sourcer, just watching some youtube videos of “calling up estate agents” and asking if the landlord would accept rent to rent, surely the estate agent would grab the
 opportunity instead, if the landlord was up for it in the first place?

canaldumidi

Because most owners prefer the security of letting their property via an AST rather than via a commercial tenancy?

Because most LLs prefer not to reduce their income by introducung a middleman?

Because most BTL mortgages insist on ASTs?

Because insurance companies.....

There are EAs who offer this option, and there are certain advantages for LLs, but there are many reasons not to do this.

dkts

I see. What you mentioned, i understand.

but what i’m asking here is:

if i was looking at properties for rent to rent, and i call up an estate agent about a property, and ask if the Landlord would be willing to accept guaranteed rent (say its on for £1,800 a month for rent and i’m offering guaranteed rent of £1,500) and the landlord agrees to this. What stops an estate agent (as an individual maybe and not as the estate agent as a company) from asking the landlord themselves if they would be up for rent to rent with them rather than say me?

the landlord would still be letting out via ast
rather than commercial tenancy.

the landlord would either way be getting a reduced income of £1,500 instead of £1,800 wether thats through me or the estate agent individual as the middlemen.

with btl mortgages there must be a clause otherwise how do rent to rent business work? likewise with insurances.

i understand there are many reasons not to do it. Im just wondering why an estate agent wouldnt just take the rent to rent for themselves (if the landlord agrees) and let it out room by room..

theoretica

dkts said:

What stops an estate agent (as an individual maybe and not as the estate agent as a company) from asking the landlord themselves if they would be up for rent to rent with them rather than say me?

Probably nothing - except which business they are in.  Just as the main thing that stops me buying the bicycle my neighbour wants to get rid of, doing it up and selling it on is that I have no desire to be a cycle dealer.

canaldumidi

dkts said:

...
if i was looking at properties for rent to rent, and i call up an estate agent about a property, and ask if the Landlord would be willing to accept guaranteed rent (say its on for £1,800 a month for rent and i’m offering guaranteed rent of £1,500) and the landlord agrees to this.

You can ask

 What stops an estate agent (as an individual maybe and not as the estate agent as a company) from asking the landlord themselves if they would be up for rent to rent with them rather than say me?

Again, they could ask - though why would they? If they wanted to be in that busienss, they'd already be in that business
the landlord would still be letting out via ast
rather than commercial tenancy. No, it would be a commercial letting. I suspect you are not familiar with the relevant leglislation.

the landlord would either way be getting a reduced income of £1,500 instead of £1,800 wether thats through me or the estate agent individual as the middlemen. Correct. Reduced rent, Commercial letting. Breach of mortgage/insurance terms. Possibly breach of lease terms. Any number of reasons LL would refuse. But he'd be more likely to form a commercial tenancy with an established agency that with an unknown individual - ie you.

with btl mortgages there must be a clause otherwise how do rent to rent business work? likewise with insurances. 'must be a clause? Yes, almost all have a clause requiring ASTs. Of course, not all LLs have mortgages.

i understand there are many reasons not to do it. Im just wondering why an estate agent wouldnt just take the rent to rent for themselves (if the landlord agrees) and let it out room by room..

Because it's hard work. And risky. And difficult to pursuade LLs to agree. Ad requires funds.

caprikid1

I guess I don't really see what you are doing for the £300 a month I am effectively paying you ?.

If the tenant stops paying you will instantly default on me as I highly doubt you can afford to pay me if you are not getting paid.

Not sure most tenants would want it . If I want something fixed I need to speak to the Agent, then the idiot in the middle and then the landlord ?

caprikid1

"why don’t estate agents just do the rent to rent themselves",

Because they get paid without all the risk, if the tenant does not pay they are still due their fee.

dkts

Thanks all, clearer understanding now. Just wondering what the hype was about and if its really a good business plan. Not quite convinced that rent to rent works or can be done, although there’s “proof” out there that it does.

canaldumidi

A number of agents offer this. Northwood are a prime example.

I have no knowledge of how extensive their portfolio of properties is, or how financially successful, and certainly their marketing makes it sound attractive.

But look beneath the surface and the issues bubble up

eddddy

dkts said:

Just wondering what the hype was about and if its really a good business plan. 

What 'hype' have you seen or heard?

Most of the 'hype' I see about rent-to-rent is from people who are trying to sell 'advice' or 'training' or 'guides' etc.

They all look like the standard "pay me a chunk of money and I'll tell you how to get rich" scams to me.

[Deleted User]

Because renting is bad enough, if people start renting to rent it will just make the market even worse.

Even estate agents aren't that bad.