Company Let (Is it a scam)

IamWood

Dear All,

I just finished renovating the only property I let out in a popular town. One of the real estate agencies recommended I let it to a company called “Rolcor Property” for guaranteed rent. I feel like that's a bit dodgy. It will be a 'company let' with a guarantor from the director. This kind let is new to me and I'm not sure.

The property is in a popular town in a nice area with good schools etc. Personally, I think it can be a nice family home for a small family (all my children grew up there).

I reckon myself a responsible landlord and try to make the standard of the rent properly the same as for my own family.

Any advice and comments would be appreciated.

propertyrental

Not a scam as such, but probably not advisable.
Check if your mortgage lender (if any) allows company lets- most BTL mortgages stipulate an AST.

Likewise your LL's insurance may be invalid.

Bear in mind you'll have no say in who gets to live in your property, nor any right to evict them as they won't be your tenants.

On the plus side, yes, guaranteed income every month whether the property is occupied or not, though the rent agreed is likely to be lower.....

You'll also want to do your due diligence on Rolcor Property

IamWood

Thanks to @propertyrental.

Looks like the company will use my property for the local hospital staff or as a holiday let. They requested to replace all my furniture and would spend a few thousand to furnish it.

MikeJXE

Stick to your principles and listen to your gut

daveyjp

Not a scam model, but that doesn't mean there aren't companies who will scam you using it, so due diligience is key.

Whether to choose this model comes down to whether you want all the income, but all the active management responsibilities, or whether you want to let someone else do it for a fee and take a lower monthly income.

user1977

IamWood said:

Looks like the company will use my property for the local hospital staff or as a holiday let. 

Those sound like quite different things! In any event, are you going to have control over what they use it for?

Mutton_Geoff

A friend did something similar with a 3 bed house. The firm fill all rooms with beds (I counted 9) and they had a load of itinerant supermarket employees in there. At the end of the let, the place was trashed and cost way more than the deposit to put right. Small claims issued and the day before the hearing, the firm paid in full. Got the impression they were experienced in taking advantage in this way.

diystarter7

Hi OP

Good luck to you but don't go for one that seem too good to be true.
Around London, some outfits with shop fronts when they fall on hard times the guarantees they give you are not worth the toilet paer they are scribbled on

My, our moto to rent our properties inc that of our kids is DUE DIILLEGNCE, go for a well-established outfit - negotiate fees with them they may not be the ceapest/etc but there must be a reason tehy been around for 30 years or more IMO and they have served us well.

NB: A LA outfit we used, i did not see it in the small prient ie as skimmed through not note it EG works over 150/200 incrred extra charges and vat if LA sourced etc - never again. The LA we use now has none of that crap


Thanks

IamWood

user1977 said:

IamWood said:

Looks like the company will use my property for the local hospital staff or as a holiday let. 

Those sound like quite different things! In any event, are you going to have control over what they use it for?

My agency told me it was for the local hospital staff but from the website of 'Rolcor', it's full of the holiday let. Although I can put a clause to the contract, if the company does something different in practice, do I have the energy and time to argue with them in court?

I'll stick to the traditional let, I think.

LegallyLandlord

It sounds like what’s called a rent to rent scheme. You would have to trust the company to look after the property and comply with all the laws. I’ve heard of these deals turning into unlicensed HMOs where the company liquidates and the owner is left in breach.  

They make money out of charging others more than you charge them. There are 2 ways this is done - short term lets (services accommodation) and HMOs (renting out rooms to sharers which aren’t in a household). Both have risks. The problem with serviced accommodation (holiday lets) is they can get into trouble with the voids and costs. The problem with HMOs is the licensing and the extra rules. 

Both end up with high wear and tear. 

Stick to your guns. You obviously care about the property which is why you more renovated it. Let it to a nice family and manage the property yourself. Use another letting agent as this one is clearly not looking out for your interests. 

eddddy

IamWood said:

I just finished renovating the only property I let out in a popular town. One of the real estate agencies recommended I let it to a company called “xxxxxxx” for guaranteed rent. I feel like that's a bit dodgy. It will be a 'company let' with a guarantor from the director. This kind let is new to me and I'm not sure.

This type of business model has a very bad reputation. Historically, you often find 'rogues' running this type of business.

As others suggest, the main problems are that the company don't pay the rent they promised and/or the property gets wrecked.

But I guess there are some 'good' companies as well as the 'bad' companies.

It looks like the company you mention run holiday lets. FWIW, I spoke to a property owner who was happy with a company offering this type of scheme for a few years - before a dispute arose, and it all fell apart.


Essentially, you're talking about entering into a business relationship with a company that you don't know, in a business sector you have no experience of. So at the very least you need to do a lot of research and due diligence. For example...

• What is the track record of the company?
• What is the background of the people running it?
• Can you speak to other property owners that the company work with?
• (Can you be sure that the people you speak to are genuine property owners?)
• What is the financial situation of the company?
• How viable and watertight is the director's guarantor agreement?
• What is the financial situation of that director?
• How watertight is the commercial lease you would be signing?
• Try to imagine all the possible things that could go wrong with this business arrangement - and decide how you would deal with each of them

TBH - you might say it's similar (but different) to the type of due diligence you would do when taking on a tenant on an AST.

(Plus there are also the issues with mortgage, insurance, etc that others have mentioned.)