Rent to Rent Discussed on Radio 4 today in the next few minutes!

by Property 118

8:47 AM, 16th October 2013
About 6 years ago

Rent to Rent Discussed on Radio 4 today in the next few minutes!

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Rent to Rent Discussed on Radio 4 today in the next few minutes!

This Broadcast was meant to be last Wednesday but is instead being run today  between 12pm-1pm.

Paul Shamplina, Founder of Landlord Action will be taking to the airwaves on BBC4’s You and Yours show, to highlight the shocking risk to landlords of the latest money making strategy to sweep the property industry, “Rent to Rent”.

It’s a simple concept: Rent a house, then sub-let the rooms to sub-tenants and make as much profit as possible. Rent to Rent Discussed on Radio 4 today

This is a mushrooming phenomenon which has seen hoards of “experts” writing blogs, books and seminars on how to get started and even running courses costing up to £500 on how to bring in tens of thousands of pounds with virtually no out-lay. One such “guru” includes Daniel Burton who claimed he earned £35,000 a month from the get-rich-quick scheme.  Last week, The Guardian revealed he has gone missing, leaving tenants and landlords across London hundreds of pounds out of pocket.

The idea behind how it works involves a tenant (or “renter”) offering a landlord a guaranteed amount of rent for a set period, say three years. “This amount is likely to be less than its actual market value but the landlord, in theory, is happy because the property is let and he does not need to worry about lost rent, void periods or tenant issues for the foreseeable future” says Paul Shamplina.  The tenant agrees to look after the property, take care of maintenance issues and in some cases even carry out a refurbishment on the property. Then, the tenant sub-lets as many rooms as possible to willing sub-tenants who are happy to rent a converted lounge or dining room and live in a house shared with six other strangers. The “renter” then creams a profit on the difference between the rent he is paying the owner/landlord and the rent coming in from the sub-tenants as a result of the multi-let.

Mr Shamplina has been asked to discuss the latest craze and how landlords might get unwittingly caught up in this scam and, what they should do if they are. He comments “I have several concerns over the legal practices of this process and how it affects the very landlords it claims to ‘support’. In my view, if it is not carried out diligently the landlord loses control of the property which is where the problems begin.  I suppose I speak from being at the sharp end of dealing with evictions but I would advise any landlords entering into such an agreement to tread very carefully.”

To hear Paul’s views on rent to rent, tune in to You and Yours on Radio 4 from 12pm on Wednesday 16th October 2013.

In the pre-recorded interview Paul Shamplina mentions various tips for property owners considering Rent to Rent, one of which is not to accept Assured Shorthold Tenancy Agreement as these are not the appropriate contracts. Recently, Landlord Action announced they are now an alternative business structure regulated by The Law Society and have joined forces with The Law Department, headed by solicitor Justin Selig whose name you will recognise if you are a party to the Class Action groups fighting the West Brom Mortgage Company and Bank of Irelands decisions to increase the margins on their tracker mortgage products.

Having recognised a need for a professionally drafted commercial lease template to be readily available to Rent to Rent companies and property owners Property118 teamed up with Justin Selig to produce one.

The lease contract templates, guidance notes and notices are now available for immediate download for just £97 exclusively via Property118.com

The reason the contract templates are so competitively priced is due to economies of scale, the real cost of drafting a contract of this nature is thousands. Sufficient pre-orders of the contract template via Property118 made it viable to produce the documents and to share costs to arrive at this incredibly low figure.

If you are a property owner and you are being offered a “Guaranteed Rent” deal which allows your tenant to sub-let then this lease template is also for you as it protects your interests. If your tenant wants permission to sublet and you’re being offered a Company Letting Agreement or an Assured Shorthold Tenancy, that’s the wrong contract and should sound warning bells.
Guaranteed Rent to Rent Lease Contract Templates now available for download

Order the "Rent to Rent" lease contract template

  • Price: £ 97.00

 



Comments

Ben Reeve-Lewis

8:58 AM, 16th October 2013
About 6 years ago

Yeah I'm seeing more and more of these lately.

Last week a landlord came in for advice. He had been renting a 3 bed apartment for £1,600 to two blokes. Two years in and with no a penny in arrears he had taken £38,400, thank you very much.

He decided one day on a whim to pop around to chat to his model tenants, only to find 11 people living there and his tenants acting as their landlords. I went around and saw them myself and ascertained that they were all paying £350 per month bringing in £92,400.

Subtract the rent from that and the tenant/landlords made a cool £54,000 profit.

The thing is they werent even underground players, they have a high street letting agents office nearby. I advised the landlord that they hadnt actually broken the law, just the contract. They had deliberately overcrowded the place but join the club....this is London 2013 and most EHOs wouldnt bother with it.

simon Bruce

9:33 AM, 16th October 2013
About 6 years ago

We have a situation whereby 6 or so years ago, through an agent, we rented a new 4 bedroom house to three Polish people. They have had the house since and never missed a rent payment.

We have received complaints from the neighbours of rowdy parties and lots of cars parked outside.

The agent visited and of the original tenants, only one is recognisable, from what we can see, they are using it as a hostel or staging house, each bedroom is equipped with a double bed, wardrobe and desk. We suspect that the rooms are let individually but the language barrier makes it hard to know.

We are not really sure what to do, if we gain possession, we will no doubt loose the last couple of months rent and it will cost £5k to re-decorate and re-carpet the place but in the meantime they continue to pay the rent.

We are of course also not sure who we would issue against as we dont know who is living there. rightly or wrongly, we have let sleeping dogs lie and we continue to receive the rent!

Kirsty McGregor

9:33 AM, 16th October 2013
About 6 years ago

I'll be listening in to Radio 4! Well done Paul for continuing to expose malpractice and drive up standards (& Ben too!)

patrick maher

10:43 AM, 16th October 2013
About 6 years ago

I'd just like to pick up on one aspect-the production time of the template. I have no quibble about the £97 cost-very reasonable-but "the real cost of drafting a contract of this nature is thousands" ?
I'd be interested to know how many man hours/days/weeks went into it.
I have this image of a team of people scratching their heads over a pile of dusty old books.
Would producing a contract to deal with a (albeit new ) situation of this nature be that time consuming for an expert?

Mark Alexander

11:29 AM, 16th October 2013
About 6 years ago

Reply to the comment left by "patrick maher" at "16/10/2013 - 10:43":

Hi Patrick

You would be hard pressed to find a decent contract lawyer who charges less than £250 + VAT per hour for their time so it doesn't take long to run up a bill of 1,000's at those rates. Of course there are cheap options but you get what you pay for. We went for a solicitor who is registered with The Law Society, carries appropriate PI insurance and has a good pedigree in the Private Rented Sector. At least 50% of the time taken to prepare a decent contract is understanding the issues which can and often do arise. Justin Selig was the perfect solicitor for us to approach as he is the business partner of Paul Shamplina who runs the most established tenant eviction business in the UK and comes across these problems frequently.

You can of course pay more for the contract and many do by leaving a donation towards the running costs of Property118. We appreciate that we could charge a lot more for the contract template but we run this website for the benefit of our members on a not for profit basis and rely of goodwill and generosity to fund future development and expansion of our services available to members. Please see >>> http://www.property118.com/donations/43590/
.

Vanessa Warwick

11:31 AM, 16th October 2013
About 6 years ago

Just wondering what is stopping tenants undertaking Rent2Rent and cutting out the middle man?

Rather than rent a room under the control of a R2R landlord, they would just rent a big house, sub-let the rooms to people they actually want to live with, and probably live rent free themselves as a result.

The only difference between a R2R'er and a tenant is entreprenuerial flair!

@Ben

Those figures you quote will sadly only serve to fuel the "get rich quick" aspect of R2R! When greed comes before the rights of the tenant, it's unlikely to be a happy outcome for anyone as proved recently with the failure of Daniel Burton's Unida Place R2R agency.

Mark Alexander

11:44 AM, 16th October 2013
About 6 years ago

Reply to the comment left by "Vanessa Warwick" at "16/10/2013 - 11:31":

It's a very good point you make about tenants cutting out the middle man Vanessa. It also has some major advantages such as the tenant being a live in landlord and being able to let on lodger agreements as opposed to AST's. The big advantage here of course is the ability to obtain possession quickly.

To avoid tenants being in breach of contract they should also use the Rent2Rent commercial lease template drafted by Justin Selig as AST's don't generally allow for sub-letting. If it's all done above board then entrepreneurial tenants could find they end up living rent free as you say, possibly even making a profit for their troubles.
.

Paul Willetts

0:40 AM, 17th October 2013
About 6 years ago

Reply to the comment left by "simon Bruce" at "16/10/2013 - 09:33":

If you are going to let 'sleeping dogs lie'.... Increase your rent and take a piece of their pie?!

What is stopping landlords doing this? Another way to cut out the middle-man?!

Vanessa Warwick

12:46 PM, 24th October 2013
About 6 years ago

The programme just aired and was short and somewhat generic. I have posted a full review on Property Tribes if you missed it.


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