Rent to rent advice?

Rent to rent advice?

0:01 AM, 16th August 2023, About A year ago 15

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Hello, I have a property which has been let on an AST for a number of years and now looking for a new tenant. I have several rent-to-rent companies interested and am keen to get feedback from learned readers on this forum.

Queries as follows:

1)Presently the property is unencumbered but should I decide to raise the mortgage in the future what are the implications?
2)How can one protect themselves from issues of noise disturbance etc
3)What is the procedure to obtain a personal guarantee from a home-owning guarantor to supplement the company let?
4)Where is a good place to source a good company let agreement?
5)Is this classed as a commercial lease? Would a solicitor be required?
6)What is the process of obtaining back possession if rent is not paid/terms of the agreement are breached?
7)How does it work with utilities and council tax? Will these be the responsibility of the new company let?

Any advice, or suggestions are gratefully received.


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Graham Bowcock

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12:19 PM, 16th August 2023, About A year ago

Tread very carefully. Generally Rent to Rent deals are frowned upon by professional landlords.

If their tenant fails to pay, how will the company tenant pay? What resources do they have? Will the directors give guarantees (they should)? Who is responsible for safety/compliance issues? What if the head tenant cannot serve a s21 notice? Who is responsible for repairs/maintenance, especially big ones (new boiler)?

You should get a formal legal agreement drawn up if you go down this route and get good legal advice. Do not acept the R2R company's documents. This ius a minefield.

Freda Blogs

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12:45 PM, 16th August 2023, About A year ago

Invariably, but not always, R to R operators use this model because they are unable or unwilling to obtain mortgages to acquire their own properties, and when we were approached and looked into a few, they were newish companies with few assets or funds behind them,
Presumably the approaches you have had are looking to change your single let into a multi-let/ HMO? Remember the buck always stops with the landlord/owner for compliance, irrespective of the legal agreement you strike with the R to R operator, so if they don't do things properly you're on the hook legally, and you will have ceded all control over the tenancies to the operator.

I echo Graham's advice above.

Steve O'Dell

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13:22 PM, 16th August 2023, About A year ago

I concur with the earlier 2 responses. Most typically rent2rent companies lack experience, finance and in many cases morals. There is a significant get rich quick industry out there making a living from telling those without capital that they can make a fortune from the arbitrage from rent to rent. Ask them a few key questions face to face or by phone (not in writing) and you will likely see through their facade.

Small Portfolio Landlord

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14:49 PM, 16th August 2023, About A year ago

Although I echo all the advice above, there are also good R2R operators out there.
I also agree that many people looking to get into the property market have been told if they don't have any funds, they can simply R2R to acquire property which is really a shame as you have to know what you're doing with any property.
Regarding your actual questions, you can have written into the agreement however you want it and also include a break clause in case of bad practice.
I would recommend any agreement you make be checked by a solicitor you choose. The extra cost may save you a fortune later.

Reluctant Landlord

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14:52 PM, 16th August 2023, About A year ago

Reply to the comment left by Richard Aylward at 16/08/2023 - 14:49
who are the good R2R operators?

Small Portfolio Landlord

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15:38 PM, 16th August 2023, About A year ago

Reply to the comment left by Reluctant Landlord at 16/08/2023 - 14:52
I've no idea. But then I've no idea who the bad one's are either.
If you really mean the question and are not just being smart, then I'm sure you could find some if you wanted as I'm sure I could if I wished to offer my properties to someone else to manage. Currently that's not the case, but it's something I might consider at some point in the future. I'm not closing doors unnecessarily.

David Smith

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17:55 PM, 16th August 2023, About A year ago

If you go ahead you must rent the property on a Commercial Contract and not an AST.

The AST would not be valid as the landlord would not be living in the property.

With a Commercial contract you could have March in clauses for breaches in the contract giving you instant access back to your property.

Paul Essex

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21:07 PM, 16th August 2023, About A year ago

Can you please explain how the tenant with an AST (from the r2r) can be evicted with no effort or time, that feels highly unlikely.

If it is true why don't I issue my partner or friend the commercial contractor and they issue the AST. Landlords could effectively swap houses that way?????

Kat Scott

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6:22 AM, 17th August 2023, About A year ago

Reply to the comment left by Paul Essex at 16/08/2023 - 21:07
The R2R company should not be issuing AST's only licenses to occupiers. R2R is very much a commercial contract as you are letting to a company and not individuals. It comes under the 1954 L&T Act.
A very good paper on the pitfalls to watch out for has been produced by My Deposits on R2R, you can google to find it.

Nikki Palmer

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9:07 AM, 17th August 2023, About A year ago

Has anyone considered that this could well be a company looking to rent a property which they then furnish and advertise on AirBnB or similar?
I have been approached by someone wanting to do exactly that and it was a no from me!
Properties take quite a battering from holiday makers and whilst I appreciate that on a company let you may be able to increase the security deposit, I doubt the company will accept liability.
It's just a thought and may not be the case at all

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