“Rent 2 Rent” strategy under the microscope
According to Francis Dolley who regularly leaves comments on this forum, “Rent 2 Rent” is being widely debated on various Facebook property groups as the latest strategy for landlords to expand their portfolio’s with minimal capital .Francis emailed me over the weekend asking me which “Rent 2 Rent” agreements I thought he should be using. I do have some views, however, this isn’t a strategy I’ve ever used which I explained to Francis.
We have since exchanged a number of emails which I have curated to provide an overview of the “Rent to Rent” strategy to debate amongst the Property118 community who may wish to share their opinions on the strategy generally and also on which agreements to use.
What is Rent 2 Rent?
Francis explained; “We seek out, in the main, distressed landlords who have owned their student let HMO’s for some time and have now become tired and jaded. Their properties are dated and proving difficult to let. We offer them a guaranteed rent, no voids, a light refurb and a long contract. To many we are their ‘knights in shining armour’. We then rent out the rooms on an individual basis. Our profit is the difference between what the tenants pay us and what we pay the landlord minus the utility bills. Our best payer is £917 net PCM.”
How did Francis get into “Rent 2 Rent”?
Francis said “I have been a landlord since 1995 renting single let properties in my local town in Somerset. Five years ago I acquired my first 6 bed student multi let. Two years ago I added a licensed professional HMO. Last year my son and daughter asked if they could work with us. To do this we needed to increase our cashflow and fast. So last year we took control of 9 large properties via a ‘Rent 2 Rent’ strategy. We took advice from 3 different solicitors as to which contracts to use and got 3 different answers. The 3 agents we work with also have their own individual way of doing things.”
“Rent 2 Rent” agreements used in the “Let to Let” strategy
Francis said “I am confident that I am using the correct contracts but have been following a few discussions on various Face Book forums that has made me consider there may yet be a better way forward with this strategy. I also believe that any subject should always be open for further discussion.”
Francis didn’t provide any details of the agreements he is using at the moment but has asked me to raise the following questions:-
1. What do Property118 readers believe to be the correct contract to have in place between the primary landlord and myself?
2. What is the correct contract to have in place between me and my tenants?
3. We occasionally have tenants wanting to stay for less that 6 months. Again which contract?
Rather than continuing the discussion with Francis by email we have agreed that open communication via the Property118 forum. The discussions might also prove useful to other readers in the Property118 community as well as challenging the thought processes behind this strategy which has prospects of becoming very popular given the current economy and difficulties facing landlords including but not limited to:-
- Needing much larger deposits to buy more properties to build a portfolio
- Larger arrangement fees and interest rate margins
- Article 4 planning rules being introduced
- Landlord licencing
- HMO fees
UPDATE – 9th August 2013
Order the "Rent to Rent" lease contract template
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Landlords Associations - a list of them all with links
Member Since November 2013 - Comments: 40
7:26 PM, 20th September 2012, About 14 years ago
I’d be interested to know who is posting as NLA?
Member Since January 2011 - Comments: 12209 - Articles: 1405
8:29 PM, 20th September 2012, About 14 years ago
It is genuine Richard, check their Twitter feed >>>
https://twitter.com/nationalandlord – I have asked them to use Twitter to log in next time so their their logo appears as an Avatar and links back to their Twitter feed for exactly this reason, i.e. to verify that it is them. TPOS post via their Twitter login so that there can be no doubt about the validity of their posts, as do other Landlords Associations and official bodies which post here.
Member Since November 2013 - Comments: 40
1:53 AM, 21st September 2012, About 14 years ago
hanks Mark. Important to verify as people post under all sorts of aliases on the internet!
Member Since January 2011 - Comments: 12209 - Articles: 1405
2:55 AM, 21st September 2012, About 14 years ago
Absolutely Richard, if in doubt, check it out. I am in regular contact with the trade organisations and regulators who post here so I would very quickly know if something untoward was being posted. I check IP Adresses against locations if I’m unsure about approving a post and I insist on corresponding by email and or telephone before I publish readers letters which may not be all that they appear to be on face value. I can confirm that all of these checks were done prior to publishing Casey’s email.
11:56 AM, 26th February 2013, About 13 years ago
or if this is the case and if on the contract the agent has put my details and signed on my behalf am i able to take over the tenants and have the tenants pay me directly
because i only have a 12 months contract with him and it has ended, please help
5:35 PM, 30th April 2013, About 13 years ago
Anybody know how to get a list of HMO landlords within a desired Borough of London?
Member Since January 2011 - Comments: 12209 - Articles: 1405
11:44 AM, 23rd July 2013, About 13 years ago
We are pleased to confirm that a sufficient number of pre-orders for rent2rent contract templates have now been received. For those who have already placed an order, the contracts, which will be professionally drafted by Justin Selig, will be sent to you on or before the end of this month (July 2013). Justin is a practising solicitor specialising in property and contract law. His firm “The Law Department” is registered with The Law Society. Justin is also the solicitor acting for borrowers affected by the Bank of Ireland decision to amend interest rate differentials on some of their tracker rate mortgages. For more details please click here >>> https://www.property118.com/rent2rent-letting-contracts/41231/
Member Since May 2014 - Comments: 1
10:28 AM, 26th May 2014, About 12 years ago
I am keen to pursue Rent2Rent in Edinburgh. In Scotland we have registered landlords and I asked Edinburgh Council HMO team the essential question of who the Landlord is – they said, simply, that it was the person who was on the deeds!
The pointed out that as a Rent2Rent ‘specialist’, I would be performing a role, not dissimilar to a Letting Agent but offering different terms. Rent2Rent offers a fixed, guaranteed return for the landlord with no voids whereas Letting Agents tend to not offer this but will charge upwards of 10% for doing very little. A 5 bed HMO property in Edinburgh can rent for anywhere between 1000 and 2500 in Edinburgh and I think this ‘margin’ in the one in which Francis operates. They key is to make the £1000 properties good enough to let for more! The rent2rent person also invests in the property making it a win-win.
However, Edinburgh has a very mature HMO market and an established 9/10 month student rental followed by 2 week spruce up and a 6 week ‘Festival Let’ which is often 4-5 times the normal monthly rental amount!
Member Since August 2014 - Comments: 10
3:45 PM, 4th January 2015, About 11 years ago
If letting to a business person on a month to month basis short term lets do you need a licence? It would not be their main residence. They would be renting a room in a house with use of kitchen, lounge bathroom etc.