Guaranteed rent disaster on new Nightmare Tenants Slum Landlords episode tomorrow night

9:30 AM, 2nd November 2021, About 3 years ago 1

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The popular TV show, Nightmare Tenants Slum Landlords, returned to Channel 5 last week with episode seven of the 12-part series after a pause in the programme’s airing.

Showing at the later time of 10pm, series six continues to follow the frontline work of letting agents, eviction specialists and lawyers helping landlords chase rent arrears and get their properties back; as well as council housing enforcement officers clamping down on slum landlords taking advantage of vulnerable tenants.

This week’s episode (3^rd November) sees the return of eviction expert Paul Shamplina from Landlord Action who helps one landlord serve notice on a dodgy guaranteed rent agent and collect more than £24,000 in rent arrears.

Landlord Gulam Sumar handed over two six-bedroom HMO properties to RHP Services, a guaranteed rent provider in Walthamstow, London four years ago.

Monthly rent was guaranteed for a three-year contract but after only two months it stopped paying and arrears quickly built up.

Mr Sumar says: “A two-year break clause was written in the contract so after months of problems with the agent and thousands of pounds of missing rent I tried to serve notice, but even that was extremely difficult as they wouldn’t answer my calls or emails. They wouldn’t even give me access to inspect the properties, something that should have been done every three months. I could see both properties were very run down, but I could never get in.”

With Paul’s help, Mr Sumar tries to confront the letting agent at their offices to serve notice, for the arrears and damage to the properties.

Paul Shamplina comments: “Landlord Action has received numerous complaints against RHP Services, now operating as RHP Lettings, from landlords in similar situations to Mr Sumar and all prove how guaranteed rent (or rent-to-rent) can go disastrously wrong. In this particular case, we wanted to finally confront the agent at their office to apply pressure, and this can be seen on tomorrow’s show. Thankfully, with a tenacious landlord and our expertise we managed to collect the full amount of rent back, totalling some £24,000.

Guaranteed rent can work when using the right company, but so often we see these rogue agents abusing the system and the consequences can have a severe impact on the lives of these landlords.”

Paul wants to educate landlords on the possible problems with guaranteed rent. Therefore, mydeposits, part of Hamilton Fraser along with Landlord Action, has launched a detailed guide on this sector of the industry.

Also in tomorrow’s episode, viewers can see Paul help another landlord evict two tenants who have been upsetting the neighbours.

Watch Nightmare Tenants Slum Landlords on Channel 5, Wednesday 3^rdNovember at 10pm.

Contact Landlord Action

Specialists in tenant eviction and debt collection. Regulated by The Law Society.

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Comments

Ian Narbeth

11:11 AM, 2nd November 2021, About 3 years ago

"Guaranteed rent can work when using the right company, but so often we see these rogue agents abusing the system and the consequences can have a severe impact on the lives of these landlords."
Landlords who hand over their HMOs to a limited company are taking a massive risk even if the person behind the company is not a rogue. Rent to Rent (R2R) has numerous risks for the owner.
The "guaranteed rent" merchant (GRM for short) has an unavoidable conflict of interest. Every penny spent on repairs, maintenance, decoration, gardening and cleaning is a penny less profit. There is little incentive to maintain or maximise the value of the property. That is one problem.
Second, the local authority will look to hold the owner of the property responsible. If the GRM does not comply with the very complex rules the LA may come after the owner. Most of the GRMs who approach me cannot even comply with the rules relating to company number and registered address on their letters. Would I trust them to comply with the law relating to HMOs? About as far as I could throw them!
Third, if there are problems securing tenants and the gross income is not sufficient to cover outgoings and pay the "guaranteed rent" the rent will not be paid. The company may be wound up and the owner is left to pick up the pieces.
Fourth, most GRMs are limited companies , sometimes with almost zero on their balance sheet.
The "guarantee" from a company with no assets is worth zero - plus or minus. Even if a company has assets on its balance sheet as RHP Services (UK) Limited Company number 08304499 had, they may be charged to secured creditors and cash is easily dissipated.
Fifth, although a recent case suggests that tenants cannot always get a rent repayment order against the owner when they have only contracted with the owner's tenant, the GRM, there is a risk. Given that the gross rents paid by the HMO tenants may be three times what the owner receives, he stands to lose far more than just the rent he received.
Sixth, unless the owner has access to all the documentation with the tenants, he will not know on what terms the tenants' occupy or whether the GRM provided them with the correct paperwork.
So, landlords who are tired of the problems of managing your property, you can:
1. sell to somebody who is not;
2. appoint a competent agent who is acting for you and is not taking the surplus over the guaranteed rent;
3. help a stranger get rich by using your valuable asset. If you are prepared to risk ending up with no income, a damaged property and a local authority pursuing you for civil penalties and perhaps even criminal ones, go for it.
I am glad that Paul Shamplina has recovered Mr Sumar's £24,000. That is the exception - many landlords receive little or nothing. However, Mr Sumar will probably not be compensated for the damage to his property.
Unless you know the GRM very well and have a personal guarantee from an individual of substance, I would not touch R2R with a ten foot pole.

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