14:02 PM, 26th October 2022, About A year ago 8
Hello. Private “Rent 2 Rent” operators generally have a bad reputation, there are a lot of operators that have little or no experience, and have simply been “sold” the idea on a training course. Many have little or no capital to back them up when things go wrong, and there’s very little to stop them simply ditching the property and leaving the owner landlord with the headache of removing bad tenants, and repairing damaged property.
There are of course some who are much better than this and who may be operating ethically, BUT, it may also be that they’ve been lucky enough to find great tenants and have virtually no voids, so they’ve not been in a position whereby they’ve defaulted.
Social “Rent 2 Rent” operators generally have a much better reputation, they may have much more experience of letting to their specific tenant cohort, and they have access to the staffing and funding of their organisation (housing association, charity, council, etc). Social “Rent 2 Rent” is often called by other names, e.g. “private sector leasing scheme”, but it is essentially the same business model, i.e. lease from a private owner landlord, and sublet (in whole or in part) to tenants.
However, even with the back up of the organisation, there are instances where the owner landlords have been disappointed by the deal, e.g. lower rents, poor management, repairs/maintenance not carried out, property handed back in poor condition (with no financial recompense). There are of course ethical social/charitable rent 2 rent operators who may have been operating for many years and go out of their way to keep owner landlords happy, but their reputations are tarnished by those who do not operate to such high standards.
What could be done to make the Rent 2 Rent proposition more attractive to owner landlords?
As the Director of a housing association that operates a Rent 2 Rent model in Sheffield (for use as supported housing for the homeless), I’ve been asking myself this question, and here are the ideas I’ve come up with (so far):
1. Pay a rent/damage bond equal to 6 months rent. As a landlord to housing association lease is not covered by the Tenant Fees Act 2019, there is no 5 week maximum deposit/bond limit, so the parties to the lease can agree whatever deposit/bond they wish.
2. Ensure that the lease agreement is fully understood by both parties, and give examples of what would happen in “worst case” type scenarios. Ensure that issues such as redecorating and repairing responsibilities are clear.
3. Offer a personal guarantee to “back up” the business guarantee, e.g. if the housing association defaults on the lease then the Director can be held jointly responsible for costs. This would perhaps be equivalent to a “rent guarantor”.
I’m not aware of any organisation that currently offers 1 & 3 above, but if they did, would this be sufficient?
What other reassurances would an owner landlord ideally want from a Rent 2 Rent operator, to make a Rent 2 Rent offer more attractive?
If you would NEVER consider a Rent 2 Rent offer, regardless of the incentives and guarantees, why is this?
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