Agents paying landlords 6 months rent up front to secure new businessMake Text Bigger
Since running an article about rent in advance earlier this week I have received a number of telephone calls asking me to clarify whether this really is a lettings product/service which genuinely pays landlords 6 months rent up front despite charging rent to tenants monthly.
Many of the people who asked me about this are surprising when I tell the that the answer to their question is YES!
I thought I’d save myself some time explaining how it works over and over again on the telephone by writing a personal of the scheme. NOTE: Advanced Rent is not our scheme.
The people behind Advanced Rent Limited have a very strong pedigree in both property and insurance.
I would personally describe their product/service as a hybrid between a rent collection agency, a letting agency an insurance company and a bank.
This is how the model works:-
- Landlord advertises property and does the viewings
- Advanced Rent Limited reference the tenants and assuming all is in order provide contracts
- Landlord collect and protects the tenants deposit.
- Landlord deals with tenant move in, informing utility companies, arranging inventory etc.
- Advanced Rent Limited pay the landlord six months rent up front, less their fees. Payment is made when the first rent is paid to Advanced Rent Limited. The first payment of rent can be paid directly to the landlord or to Advanced Rent Limited.
- Tenant pays the next five months rent monthly to Advanced Rent Limited
- If tenants don’t pay, Advanced Rent Limited accept that as their risk and their potential loss. Therefore, they are empowered to chase rent and serve notices. Any costs associated with this are borne by Advanced Rent Limited.
- Tenants are issued with an emergency telephone number by Advanced Rent Limited so that landlords need not be contacted by tenants in the event of an emergency such as a lost key, faulty boiler, burst pipe etc. The cost of emergency repairs are insured by Advanced Rent Limited.
The cost of using Advanced Rent limited is very similar to what you would pay to a conventional letting agent. They quote on a case by case basis so you will need to complete the enquiry form below to get a quote.
The advantage of the scheme is certainty of receiving the rent.
The scheme will appeal to landlords who want to retain some involvement of the management of the property but don’t want the hassle and risk associated with rent collection, potential arrears and the cost of evicting a tenant who does not pay on time.
I have obtained a quotation my family as between us all we have a very large portfolio. In our case we felt that our economies of scale resulted in us being able to manage cashflow and risk at a slightly lower cost than Advanced Rent Limited quoted. That said, it was close and the difference wouldn’t have left a very big profit for Advanced Rent Limited despite my family having a very large portfolio and procedures and experience of over three decades in this business. Therefore, I do genuinely believe that that the product/service provided by Advanced Rent Limited will be very appealing to a wide audience of landlords. An interesting example is an existing client of Advanced Rent Limited who is a London based sports law Barrister. The nature of his work means that his income comes in fits and starts so the additional cashflow provided by Advanced Rent comes in very handy to him for budgeting purposes.
Advanced Rent Limited also offer this scheme via letting agents to landlords who require a full management service. Obviously this costs more but it does go to show how flexible the scheme is. They are currently piloting the scheme via one very large National letting agency and are looking to work with other letting agents as well as directly with landlords.
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