Having problems with a Rent2Rent kind of company

It's a bit early to start panicking at this stage but forewarned is forearmed.

I'm afraid I have more questions than answers for you at this stage.

Who is YOUR tenant? is it the Limited Company?

Who were the tenants on the AST which you signed? I really hope you didn't just sign a blank one as that could really be asking for trouble!

Has any money actually been paid to you at all yet?

May I ask why you chose to rent your property this way?

By the way - you will notice that I have removed the company name from this post. At this stage we don't know that they have done anything wrong, save for giving you the wrong type of agreement. we do have a policy on "name and shame" though - please see >>> http://www.property118.com/what-property118-is-not/

We have had a similar thread which focussed on the legal implications of deposit protection where an AST was used for a limited company let. You may, therefore, find this link contains some useful information >>> http://www.property118.com/rent2rent-scheme-gone-wrong/38375/

There has been a lot of discussion about Rent to Rent on internet recently. The idea is that "tired" landlords can hold their properties but not have to do the work. Silly me I thought that why we have Letting Agents? Apparently some Guru are teaching newbees and wannabees how to get into property with no money by renting a property from a "tired" landlord and making a profit on sub-letting it. This raises some issues for me
1. Why would I rent my property to someone who has no money or assets on a "guaranteed rent" basis? If they have no assets their guarantee is worthless.
2. Why would I want my property altered (the Guru teach how to subdivide rooms to increase occupancy) in order to give someone else a bigger profit. Will the property be reinstated at the end of the contract? If its not how will I recover my costs if the head renter has no assets?
3. I cannot devolve my legal responsibility as a landlord simply by giving the head renter the ability to sub-let and therefore if he does something wrong I carry the can - I have assets and I am worth suing, he is not
4. What contract should be used between me and the head renter?
I have several more but they are all on a similar theme
Some people have said that they don't do it like that, they contract with the owner and guarantee the rent and simply let the property as a higher rent without altering it to increase the letable rooms. Points 1, 3 and 4 still apply.

Some local authorities are contracting with landlords under private sector leasing schemes and this is in effect Rent 2 Rent. If the local authority is doing it points points 1,2 and 3 do not apply and I assume that their aversion to risk will ensure that the contracts are sound. I think that these schemes are very useful for "tired" landlords.
When I do get "tired" I will use the services of a good letting agent because I cannot see anything that would induce me to get involved in a Rent to Rent relationship - unless I am missing something?

I am fascinated to know why a new landlord would go down this route?

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Hi Mary

In the discussion we are having over on the LRS Forum and the examples I gave of major players in the r2r sector, one is a very well established – "Northwoods". My concern with them is that they use management contracts, in which case, your point 3) above applies.

Point 3) and 4) can be rolled into one. Most (I suspect all but I may be wrong) private r2r operators are using the wrong contracts. That's the point I was trying to make when I started this thread. r2r is not something I advocate but I do recognise that a lot of landlords are operating this model, many of which have been sucked in by GRQ guru's but not all of them.

Most people doing r2r are decent people, even those who have paid for a GRQ course. There are, of course some very dodgy ones. The real shame is that even the well intentioned amatuers have not had access to the correct legal agreements and are using agreements which are dangerous to all parties.

The least I felt I could do to help the situation was to get a proper lawyer to draw up proper contracts. Incidentally, going back to your point 3) for a minute, landlords (property owners) can devolve themselves of their legal responsibilities of being a residential landlord if the correct agreement is used. It's the same agreement a landlord (property owner) would sign when letting to a Housing Association. In simple terms, it is a commercial lease over a residential building. AST's and Corporate Letting agreements are completely unfit for purpose, and if used your point 3) statement would be spot on. Therefore, I did a joint venture with Justin Selig, who, as you may know, is a qualified commercial property and contracts lawyer, a partner in Landlord action with Paul Shamplina, member of the law society and an all round decent bloke. He's also the solicitor we are using to represent the Class Action case we put together against BOI at Property118. As you may be aware, despite being unaffected by the BOI's decision to tinker with tracker rates personally, I also personally underwrote the barristers opinion to get the Class Action going. Sometimes the crusader in me simply can't be tamed! LOL That aside, Justin has been fantastic and so far has managed to influence the reversal of the BOI's decision for over 1,000 landlords and I am extremely confident that he is able to win the case for them all in due course if he gets enough support. Between us we are earning ourselves quite a reputation and the availability of professionally drafted r2r contracts will hopefully add to that. We will have to buy ourselves red capes and wear red undies on the outside of our trousers if we keep taking on crusades at this rate LOL

Anyhow, by the end of next week, r2r providers will have no excuse for not using the proper agreements and I suspect the press, assisted by Shelter no doubt as they always muscle in on these opportunities, will relish the opportunity to name and shame those r2r they come across who don't do it right.