Mis-sold Rent 2 Rent – now an investment loss?

Mis-sold Rent 2 Rent – now an investment loss?

9:06 AM, 19th June 2023, About A year ago 6

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Hello fellow landlords. A year ago I was sold a ‘fully hands off’ rent-to-rent 5 year lease on a property to run as serviced accommodation, the ‘sourcing fee’ was paid to an investment arm of the letting agent which would be also acting as the Landlord in the agreement and charge a management commission fee.

The whole thing is negotiated, packaged and checked then presented with conversative but lucrative financial forecasts.

A year on and among other issues, the return is not there. Basically there is none. The property has made a loss nearly every month but the owner and agent always make a profit.

This can’t be blamed on a sudden drop in the market due to the scale of shortfall, it can’t be blamed on the property as the same is happening with multiple very different units. That can only mean it is down to the hugely inflated predicted returns either intentionally or mistakenly, either way it is not due to anything the other 2 parties have done.

The notice period for the break clause has passed and I can’t afford to keep paying rent for 5 years at this loss. Is there any redress or way of exiting the agreement?

The contract states it is not an AST therefore doesn’t abide by the Housing Act but then quotes the HA 2005 in that they will provide the TDS details in 30 days, as well as providing buildings insurance policy before signing, these were not done, therefore, is the whole thing void from the start?

Does anyone know of a precedent case of negligence with due diligence or mis-selling like this?

I managed to cancel another contract before it was signed, their refund policy is 60 days from approval of a request but I’m sure the Consumer Rights Act allows 30, of course it was repaid on the 60th day.

Any help is appreciated.


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10:18 AM, 19th June 2023, About A year ago

Read “Dr Faustus”; it teaches you that you should never sign anything with anyone, especially those who promise you The Earth!
Where buying property is concerned there are three rules: location, location, location and where running property is concerned the rules are: DIY, DIY, DIY!
Trust no one. Be cynical! Go to the paranoia store and buy up the entire stock! The first lesson of Genesis was “beware the viper”!

David Smith

11:47 AM, 19th June 2023, About A year ago

How can Rent to Rent ( Subletting) be “Hands Off”.
The very point of Subletting is that you put the work in to make the profit on top of the normal rent.
It seems to me that you have Sub-letted the property back to the very organisation who Sub-letted the property to you without any risk to themselves.

This can’t be right!!

Robert Hearns

11:48 AM, 19th June 2023, About A year ago

I suggest to get legal advice to see if you can sue for breach of contract based on the mis-selling. Perhaps do some searches online to see if basic advice from a firm does not cost the earth and if services are provided. Also, if you know anyone else that was also mis-sold from the same company then split the costs. I enquired myself about rent to rent deals awhile back and including with the prospect of paying a large source fee and as a whole my gut feeling was that it looked risky.

Simon F

11:52 AM, 19th June 2023, About A year ago

Also look into reporting to FCA as it was sold as an investment. Sounds like a new version of the old Time-share con. So look up what protections are supposed to be there for Time-share investors.

Dylan Morris

10:11 AM, 20th June 2023, About 12 months ago

Does your mortgage lender allow you to do this ? Most lenders insist the property is let on an AST (not a commercial contract) for maximum of 12 months with no sub letting allowed. You may well have fallen foul of your mortgage terms and conditions.


11:06 AM, 20th June 2023, About 12 months ago

I see shocking illustrative figures used by sourcers who are interested only in reeling people in and offloading the deal. Out of curiosity I've questioned a couple of the most bizarre and the sourcer usually goes quiet when faced with the real, and very different situation. You definitely need to do your own due diligence in these situations.

As a poster above has pointed out, R2R usually work best when you're doing the leg work. If the landlord / agent are doing this, why do they need you in the deal ? I'd also question how good the agent was at SA.

I can't answer on the legality of the contract but it may be worth talking to other management agents, maybe they can increase income if you decide to give this another go. I do think the "missold deal" has more traction if the same team that sold you the deal is managing it though and other posters have given some good routes to explore.
Best of luck.

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