Rent to Rent Contracts – lots of questions?

I've totally got the jitters now with this R2R proposition. Looking at a direct rental with a tenant instead. Like someone once said, if it looks too good to be true it probably is....

At least with a direct TA (even with a bit of financial 'assistance' from the Council in terms of direct payments to me for the length of the time they are a tenant) running the gauntlet of a direct tenancy, seems to pale into comparison if the poop hit the fan within a R2R arrangement... 🙁

There seems a bloody great hole in the system where R2R lies at the min, with the middle men escaping all responsiblity yet making the £'s

Reply to the comment left by RL at 21/12/2020 - 17:16
I feel that I've done my good deed for the day!

If you fancy risking your asset, your income and your reputation to help a stranger get rich on little or no money down, then go for R2R with a private company or impecunious individual.

Doing a deal with an RSL or a local authority is less risky but the rewards are less and you will almost certainly find your property suffers much more wear and tear than with private tenants chosen and vetted by you.

Reply to the comment left by Ian Narbeth at 21/12/2020 - 17:55An interesting question here would be have gone out of your way to specifically to seek a Rent To Rent company or have they contacted you (cold calling or responded to your usual residential advertising). I’d be very wary if you had no intention of R2R or perhaps never heard of it and are now being sucked into it which wasn’t your original intention. That’s always a big warning sign.
I was contacted a few months ago after advertising my 2bed flat by a R2R company. I’d heard about it but hardly knew what is was. After wasting several days looking into it (and getting worked up and stressed) I decided it was not for me and I’d be well out of my depth. Told them to sling their hook and they then become quite rude and aggressive. I reckon they were a bunch of sharks.
You’d lose all your control by handing your property over and only the Lord knows what you’d be getting yourself into. Just stick with what you know and what’s worked for you in the past, a nice AST contract where you or your local agent you’ve worked with for years know what they’re doing and you haven’t got any unnecessary complications.

Great words Ian & Tessa,

I'm having several people offering to lease with option to buy on mine, if any of mine come empty.
I'm tempted as I get rent in for another 4 years or so, with apparently no hassle, no one ringing me for repairs, rent there every month it seems.
And these people borrow money off some investor at 1% a month-Which I'm tempted to do too, but then I'm buying my house in a temporary way.
Then they get JV Joint Venture from someone else & it goes on.
There has to be a loser along the way.
And we all know, in the real world, there is a human being tenant paying rent & it don't always go smoothly for 4 years.

This is basically me just using an agent, so as Ian says, why not get my own agent to get more control & more rent in & my increased value for myself.

Rent to Rent seems to be the preferred business of Youtube fantasy millionaires. This kind chap is happy to give you 1k a year income over 5 years while he keeps 60k for himself, how generous!
https://youtu.be/uRyGbAnhYz4

I did comment on it , my comment starts with "Utter Bol........."

Letting to anyone is a risk, now more than ever with the current eviction ban/delays, and things can go wrong and end up costing you more than you expected. Private R2R operators are also subject to those same risks (and more), but if things go wrong for them (too many vacancies/non-payers, property damage, bad tenants, etc) then those problems can become a problem for the owner landlord too, and like others have pointed out, the R2R operator may end up going bankrupt and leaving the owner landlord with a big pile of legal and practical problems to deal with.

However, Registered Social Landlords, charities, housing associations, and councils, are not subject to the same rules and regulations as private landlords, (particularly if the properties are being used for supported accommodation), and this may mean that they are able to factor in the risks and added costs, so that they can fully cover their rental and property maintenance liabilities. As well as being able to achieve higher rental incomes to cover all their property costs, such organisations also tend to have far more experience of managing such projects. There will of course still be good ones, and some bad ones, BUT if done right then R2R to a housing association, housing trust, council, or charity, can work well for all parties.

If anyone is thinking of entering into a R2R agreement, it is important that all parties know what they are agreeing to, e.g. which party is responsible for which eventualities and how each can ensure that the other adheres to those responsibilities (and how to deal with matters if they fail to do so). Much of this can be laid out in the property lease agreement (as Tessa has already indicated), but the enforcement of whatever terms also has to be considered (the R2R operator may have to enforce against the property owner in some circumstances, e.g. if structural repairs are needed), and Ian is right to say that it can be difficult for either party to enforce against the other, particularly if the party has no assets.