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Guaranteed Rent Pros & Cons: Guide for London Landlords

What is Guaranteed Rent?

Guaranteed rent means a landlord gives their property to a company or agency to manage. In return, the landlord gets a set amount of money every month, whether the property is empty or not. This deal takes a lot of work off the landlord’s shoulders. They don’t need to find tenants themselves or deal with their problems. 

The company looking after the property handles all that. It’s like hiring someone to take care of your house and ensuring you still get paid rent​. This can be handy for landlords who don’t have the time or don’t want the stress of dealing with tenants and maintenance.

The Pros of Guaranteed Rent

  • Steady Income: One of the biggest wins for landlords is the constant cash flow. Whether the flat sits empty or the city sees a dip in demand, your bank account doesn’t feel the pinch. You get your rent on the dot every month. This financial predictability is gold, especially in a bustling but unpredictable market like London’s​.
  • Fewer Landlord Duties: Say ta-ra to the endless list of landlord chores. From chasing late payments to fixing a leaky tap at midnight, the scheme takes these off your plate. You hand over the keys and the headaches, letting you focus on other priorities or investments. It’s like having a property manager without the hefty fee​​.
  • Covered Costs: Usually, when a pipe bursts or the boiler goes on the blink, it’s down to you to sort it – and pay for it. Not with guaranteed rent. The company running the scheme covers repair costs, utility bills and even ensures the property meets all those niggly legal standards. For landlords, this means fewer surprises and unplanned costs eating into your profits​.

Each benefit adds up to a more streamlined, stress-free approach to renting out your property. While guaranteed rent might not be the perfect fit for every landlord, especially those who prefer hands-on management or aim for the maximum possible returns, it offers a compelling package for those seeking stability and simplicity in their rental ventures.

The Cons of Guaranteed Rent

  • Less Control Over Your Property: When you sign up for a guaranteed rent scheme, you hand over the reins to someone else. This means you don’t get to choose your tenants or make day-to-day decisions about the property. This can be a setback for landlords who like to be involved and know who’s staying on their property. You trust the company to make the right calls, but it might not always match what you would have done​.
  • Fixed Income Could Be Lower: The flip side of getting a guaranteed monthly cheque is that it might not be as much as you could earn otherwise. The company paying your guaranteed rent wants to make a profit, so they might pay you less than what you could get if you managed the property and filled it with tenants. Especially in London, where rent prices can go high, you might feel like you are missing out on extra income​.
  • Potential for Property Neglect: Even though the company is supposed to take care of your property, they might love it differently than you do. If they’re looking after many properties or trying to save money, they might not fix things quickly or to a high standard. Over time, this could mean your property gets worn down, lowering its value or costing you more in the long run​.

While guaranteed rent schemes offer some appealing benefits, they’re not without their downsides. The potential for lower earnings, reduced control, and concerns over property maintenance are significant factors to weigh up. For landlords, it’s about balancing the desire for a steady income and fewer headaches against the wish to keep tight control over their investment and maximise returns.

Considering Guaranteed Rent Schemes

Doing your homework is critical when considering a guaranteed rent scheme. Research different companies offering these services and check out their reputations. Knowing who you’re dealing with is important, as you’re trusting them with your property. Always read the contract carefully before you sign it. 

Ensure you understand every part of it, especially the bits about who’s responsible for what. This can save you a lot of hassle later on. Chatting with a legal expert can also help. They can advise you on the contract and ensure it protects you and your property. 

Platforms like City Borough Housing offer lucrative guaranteed rent schemes in London. Remember, guaranteed rent schemes can make life easier in many ways, but make sure they’re right for you. Think about what you want from your property and whether this kind of arrangement matches your goals​​.

Final Verdict

Guaranteed rent schemes offer appealing benefits and potential drawbacks for London landlords. While they promise consistent income and reduced management burdens, the loss of control and the possibility of lower returns warrant careful consideration. Landlords can make informed decisions aligning with their investment goals and personal preferences by researching diligently and seeking legal advice.