Rent to Rent - safe of a landlord?

foxreymann

I'm running an AirBnB in my Bermondsey London 1 bed house. But I have to stop as I'm too busy with my main job.

I have a lettings agents who has offered me a Rent to Rent agreement. I would love to sign it. For me the benefits or Rent to Rent where he is going to do AirBnB or Booking.com rentals is:

- no tenant eviction issues

- AirBnB houses have to be kept in great condition all the time

But I don't know any legal things about Rent To Rent. What happens if the Agent doesn't pay? How simple is it to take possession? 

foxreymann

This is the agreement:

"The Company and The Owner hereby agree as follows:

The Owners Responsibility (to provide prior to the agreement commencing)

1. Certificates:

a. Valid Gas Safe Certificate (only to be provided at the start of the agreement)

b. EPC, (Energy Performance Certificate)

a. Valid Electrical Certificate

b. Proof of Ownership (Mortgage Statement, Land Registry Document)

2. The Property must be fully furnished, with basic furniture in accordance with the

layout of the property. (The Company will provide the furnishings accordingly.)

Who will be your tenant/Occupants?

3. The company will seek and find tenants long term or short term

4. The Company may grant tenancies in its name and have the right to sublet. The

subletting will create either an Assured Short Hold Tenancy or a short-term

occupation like Airbnb/booking

5. The Company has absolute discretion as to whom they may let/provide

accommodation for in The Property.

Your guaranteed rent payments:

6. 

The Company will pay the agreed sum of £

_____1810___ per calendar month. This is a

net figure into The Owners specified account which is paid via Standing Order .

Account Name:.................................

Bank Account info: S/C:............ A/C:.....................

7. The Company will pay the agreed sum to The Owner every month on the 1st

with The Owner’s first payment on

01/09/24

_____________

until the agreement is

terminated.

_________

Term of your Guaranteed Rent Agreement:

8. The Guarantee rent agreement between The Company and The Owner shall be for a

term certain of

12 months 01/09/24 31/08/25

____________, commencing from

__________

until __________.

9. If The Owner or The Company wishes to terminate the agreement early, or at the

end of the term. If the agreement is terminated whilst the tenants remain in the

occupation of the property. The Owner must honour a three-month notice period

with written confirmation of this action and pay The Company redemption fee of

one month’s rent to cover any losses.

10. Should The Owner wish to terminate the agreement after the fix term, he may do,

but only once The Company has terminated the subletting agreement. (This is to

allow time in the event of a subtenant refusing to vacate the property, to obtain

possession through the courts).

11. Should The Owner or The Company wish to terminate the agreement and the

subtenant refuses to vacate for any reason, both parties will continue to pay the

monthly rent until such time as the subtenant vacates.

12. At the end of the term certain, The Property will be returned to you un-occupied.

Maintenance of your Property:

13. Internally and external repair with respect of roof, guttering, walls (damp), windows

i.e. double glazing, entry phone system, drain blockages, any pipework or cabling

coming into the property from the outside mains the central heating system/boiler,

electrical circuits, gas pipework is beyond repair or if it needs a new gas pipe run due

to gas leak (inside the property), the structure and fabric of the building or any other

unforeseen repairs not caused by a tenant will be The Owners responsibility to

repair or replace the system for the duration of the term.

14. All emergency maintenance works (such as gas, drainage blockage, heating,

electrics, and roofing) which are not carried out by The Owner within a specified

2time scale (usually 48 hours depending on emergency) will be carried out by The

Company at The Owner cost.

15. If The Owner does not address any incidental/unforeseen maintenance issues, and

The Property is deemed to be in an unliveable condition. The Company will suspend

the rent until the works are completed in full.

16. The Company will agree to carry out internal maintenance work, for example, pay

for all costs to irradiate mice, rats, cockroaches, bed bugs, door locks and bulbs of

light for the term with no cost/charge to the Owner . Repair and maintain white

goods (if the white goods are beyond repair), The Owner will have to replace the

good. Please note the boiler repair and all the electronic appliances like washing

machine, oven, fridge and maintenance is not included in this agreement.

17. The Owner will provide at least 2 sets of keys to the Agency at the start of this

agreement.

18. At the beginning of the agreement, The Company will carry out an Inventory report

(with pictures and written description) noting the initial condition of the property

before the agreement.

19. If The Owners property or goods are damaged or stolen, The Company will replace

or repair the items to match the condition in the initial inventor report.

20. The Company role and responsibilities in relation to HMO properties, the

essence of this being that Owners/Landlords are responsible to ensure that their

properties meet all statutory and Local Authority provisions; as Binky Services Ltd

does not undertake such responsibility for property owned or leased by others but

managed by The Company. It is the Landlord’s responsibility to clarify with their

Local Authority, as to whether their property is classified as an HMO and if a license

is required. Binky Service Ltd does however provide technical support to

owners/landlords to assist where appropriate.

21. The Owner may inspect the property periodically but only in accordance with the

terms of the subletting agreement. 48 hours' notice must be given to the

Agent/tenants by the Landlord before an inspection can be arranged.

22. The Company will transfer all the utility bills, (gas and electricity, water and council

tax and wifi) into The Company’s name and after on to the tenant’s name. The

Company take responsibility for bills during any void periods within the guaranteed

rent period."

saajan_12

Sounds terrible and has all the issues you're trying to avoid. 
The company can let to a long term AST sub tenant, and if that person doesn't vacate when you want them to, you have to wait however long it takes. 
Your contract is with a (probably ltd) company rather than a person with a credit history to worry about. So if there's a failure to pay rent, then you can sue but when you try to recover, the company could fold more easily than a person could go bankrupt. 

Emmia

foxreymann said:

I'm running an AirBnB in my Bermondsey London 1 bed house. But I have to stop as I'm too busy with my main job.

I have a lettings agents who has offered me a Rent to Rent agreement. I would love to sign it. For me the benefits or Rent to Rent where he is going to do AirBnB or Booking.com rentals is:

- no tenant eviction issues

- AirBnB houses have to be kept in great condition all the time

But I don't know any legal things about Rent To Rent. What happens if the Agent doesn't pay? How simple is it to take possession? 

If you're too busy, perhaps it's time to sell up?

Schwarzwald

saajan_12 said:

 
Your contract is with a (probably ltd) company rather than a person with a credit history to worry about. So if there's a failure to pay rent, then you can sue but when you try to recover, the company could fold more easily than a person could go bankrupt. 

i disagree strongly with this.
It ultimately depends on the profile of the Ltd.
and that you can look up on Companies House, assuming you can read a PnL and Balance Sheet.

if the Company is in good standing, lots of retained equity and profitable it can be a great tenant.

in other words, I would be much more comfortable doing a R2R with a large high street estate agent, say Foxtons, than a small shop estate agent whose business just got set up last month ...

propertyrental

Insurance?

Consent from freeholder (if relevant)?

Consent from mortgage lender (if any)?

But even if the above issues are OK, I wouldn't touch this with a bargepole. In particular, if you're going to grant a commercial tenancy to (Ltd Co), then they should be responsible for ALL repairs, maintenance etc and return the property in condition they found it.

Irrespective of whether within, at end of, or after the fixed term, you can't evite the occupant (who has an AST of which you are not the landlord, making you powerless.)

Stubod

..nah...just sell it if you are too busy....

_Penny_Dreadful

foxreymann said:

I'm running an AirBnB in my Bermondsey London 1 bed house. But I have to stop as I'm too busy with my main job.

I have a lettings agents who has offered me a Rent to Rent agreement. I would love to sign it. For me the benefits or Rent to Rent where he is going to do AirBnB or Booking.com rentals is:

- no tenant eviction issues

- AirBnB houses have to be kept in great condition all the time

But I don't know any legal things about Rent To Rent. What happens if the Agent doesn't pay? How simple is it to take possession? 

I wouldn't touch rent to rent with yours.

If you want to let the property longer term with minimal input from you then you need to find a good letting agent a let the property to the occupant using an AST with you as the landlord. You lose all control with rent to rent and it can be a nightmare to regain possession of the property as not only do you have to part ways with your tenant but you also need to get their tenant out.

Bookworm105

you as owner have no connection with the occupants of the property at all. If the occupants fail to move out that is not something you have any control over as they are not your tenant 

 your tenant, and thus the only entity you have any relationship with, is a Ltd Company, and therefore your tenancy is a contract law one, not a housing law AST, since an AST cannot be used with a non natural person.

it should be your contract you wrote, not one they devised to favour themselves. I note for example you have no control over "the company" letting it in such a way that it becomes an HMO.... which the contract makes you liable for the resultant extra compliance costs of HMO licensing.

is is no different to letting to "the council" it works for some LL as hassle free income, but for many others it is a source of endless pain and big end of term costs 

foxreymann

propertyrental said:

Insurance?

Consent from freeholder (if relevant)?

Consent from mortgage lender (if any)?

But even if the above issues are OK, I wouldn't touch this with a bargepole. In particular, if you're going to grant a commercial tenancy to (Ltd Co), then they should be responsible for ALL repairs, maintenance etc and return the property in condition they found it.

Irrespective of whether within, at end of, or after the fixed term, you can't evite the occupant (who has an AST of which you are not the landlord, making you powerless.)

Great points, you really know what you're talking about

Insurance - I've one but I've asked to remove it from the agreement
Freeholder - I'm the freeholder
Mortgage - No mortgage

The deal is that agent is doing only short term lets in the house, but you're right, the agreement doesn't say so. Should I like ask to add that only rental up to 30 days are allowed?

foxreymann

Just to add the point. I know the lettings agent as I was doing business with him. It is a small company, he was helping me to run my AirBnB and when he was away I was helping him to run his AirBnB (8 of them I think).