With a guaranteed rent agreement, landlords receive regular rental income regardless of whether or not their properties are occupied. This type of contract is very attractive to investors who want the assurance of fixed monthly payments without taking on too much risk.
At 53 Degrees Property, we understand how important peace of mind and financial security is for landlords and homeowners. That’s why we offer our clients a guaranteed rent service, designed to make sure that your investments pay off in the long run. But how does guaranteed rent work, and what do you need to consider before jumping in? Read on to find out.
What is Guaranteed Rent?
Guaranteed rent is an agreement whereby an individual or organisation (usually a property management company) rents your property at an agreed rate for a certain period of time. The landlord then gives this party consent to sublet the property to other tenants, either on a long-term basis or as a holiday let.
Having a guaranteed rent agreement is a great way to let out a second home without the risk. It means that you’ll always receive rent at a fixed rate every month. This is the case regardless of whether the tenant pays in full or on time, or even if they don’t pay at all. It even applies while the property is vacant.
Benefits of a Guaranteed Rent Agreement
There are many benefits of guaranteed rent, the biggest of which is the stability and financial security that it brings. This is because:
- You’ll never have to worry about a missed payment or a drop in income, regardless of changes in the housing market, tenant turnover or any other factors
- You’ll be able to plan your finances more effectively, with a guaranteed rental income that won’t change for the duration of the contract
- You won’t have to spend time and money on advertising your property, finding new tenants, or dealing with tenants that don’t want to pay
Furthermore, the property management company will be the point of contact for the tenant, rather than you. This means they’ll take care of any issues that may arrive, from day-to-day repairs to evictions.
How to Maximise the Benefits of a Guaranteed Rent Scheme
When considering taking out a guaranteed rent scheme, it’s important to weigh up all your options first.
First off, it’s worth researching the typical rent in your area and crunching some numbers. It’s important to be aware that you may not receive as much from a guaranteed rent scheme as you would letting out the property yourself. That’s because the property management company will take a share of the profits.
However, the peace of mind you’ll receive (and time you’ll save) may more than make up for this. Unlike using a traditional letting agent, guaranteed rental agreements usually do not incur any service charges or similar. You’ll typically be able to extend the agreement from 3-5 years, and the renter will be responsible for maintaining the property.
How to Find a Reliable Guaranteed Rent Provider
When choosing a property management company to set up a guaranteed rent agreement with, it’s important to do some research first. Look at reviews from past customers, speak with other landlords in the area, and ask questions about their experience with the company.
Once you’ve found a few reputable guaranteed rent companies, compare their rates and services to make sure you get the best deal possible. Make sure you fully understand the terms of the agreement before signing it. You may have to pay a penalty if you wish to break the contract early.
Frequently Asked Questions About Guaranteed Rent
Q: What happens if my tenant stops paying?
A: If your tenant stops paying rent under a guaranteed rent agreement, the property management company will take responsibility for ensuring that you receive your rental income. They may need to take legal action against the tenant to recover the money or cover the costs of any outstanding rent themselves. The management company are responsible for evicting tenants that don’t pay, so you don’t have to worry about it.
Q: Will I still own my property when it’s under a guaranteed rent agreement?
A: Yes, you will still own your property if it’s under a guaranteed rent agreement. The property management company isn’t buying your home, but merely renting it from you for a fixed period of time, and subletting it to tenants throughout. You’ll remain the owner of the property, though you will usually have to wait for the contract to end before you can sell it or move back in.
Q: What kind of fees do guaranteed rent companies charge?
A: Different companies charge different fees, so it’s important to shop around and compare quotes before signing an agreement. Generally speaking, fees are taken out of the monthly rent to cover things like day-to-day management and legal costs. It’s also important to check what else is included in the agreement, such as whether or not you receive additional services such as maintenance assistance.
Choose 53 Degrees for Guaranteed Rent
By understanding how guaranteed rent works, landlords can make sure that their investment is protected and that they continue to receive a reliable income from their properties. With the right provider and an informed approach, taking out a guaranteed rent scheme can be a great way to make sure your rental income remains steady even in uncertain times.
With 53 Degrees Property, you can enjoy the benefits of a guaranteed rent agreement without any of the hassle that comes with being a private landlord. If you’re interested in finding out more about our guaranteed rent scheme, contact us today. Our team of experienced property advisors will provide you with all the information you need to make an informed decision.
