The title alone is something that may very well compel landlords.Since the pandemic and the financial insecurity in recent months, manylandlords are becoming concerned about arrears due hardship faced by tenantsand the increased cost of living. Many landlords are frustrated with theirproperty sitting empty or with a high turnover, and their investment not supportingthem as it should, but this is where guaranteed rent schemes are stimulating alot of interest. What are guaranteed rent schemes, how do they work, and howcan landlords reap the benefits?
Guaranteed rent, is where a landlord will sign over their rentalproperty to a third party. This could be a letting agent, another professional,an institution, or a company like Ghoatand they would do this for an agreed period of time in exchange for aguaranteed monthly income. The third-party renting the property from thelandlord will then lease the property to a tenant and are in charge of allaspects of managing that tenancy and property, but the landlord does not needto do anything, although they are legally the owners of the property (includingapplying and maintaining potential licenses request by different councils).
A guaranteed rent scheme involves a professional or company likeGhoat signing a contract, similar to a letting agreement, where they would paya set monthly amount to the landlord, but take full control of the managementof the property. They would also conduct all the groundwork in rentalproperties, including finding occupiers, administration, maintenance, and allthe legal requirements.
Many landlords are becoming interested in guaranteed rent, andit’s easy to see why. The ongoing uncertainty in the current financial climatedue to the rising costs of living has meant many landlords are, understandably,concerned about the future. Guaranteed rent schemes have a number of fantasticbenefits:
For any landlord, this can be music to their ears. The thirdparty, or “middle tenant,” such as Ghoat or a local authority, would pay thelandlord regardless of the current state of the property.
If the property is unoccupied for long periods of time, a landlordwould feel anxious because they are not getting an income. A landlord canbenefit from using a guaranteed rent scheme as this would have no void periods.Therefore, the landlord can continue to earn on that property, tenant or notenant.
Landlords can be a tumultuous career choice at best. This isfurther exemplified in the modern financialclimate due to the lack of tenants, however, when there is a tenantin the property, the ongoing maintenance is associated with damage and repairs.From plumbing to wear and tear, a landlord can find it frustrating to deal withthese ongoing issues promptly to ensure their tenant is happier.
A middle tenant company such as Ghoat would be dealing with all ofthe day-to-day maintenance and upkeep associated with the property, but wouldalso be dealing with the tenants, rather than the landlord. When a tenant has adirect line to a landlord, this can mean an excessive amount of voicemails,texts, and calls at all hours of the day. A guaranteed rent scheme completelybypasses these ongoing frustrations. Similarly instead of having to deal withmany tenants and properties, the landlord has a single point of contact, makinginteractions more efficient.
Typical landlords have to be involved with their tenants, and thismeans a lot of administrative work, and there will be times when landlords donot have the capacity to deal with everything to the best of their ability.Landlords cannot afford to be hands-off unless they are using a guaranteed rentscheme via a middle tenant.
Many landlords have no desire to be part of the lettings process,partly because they may find themselves inundated with a number of legalproceedings. When a tenant is violating the terms of acontract, a landlord may need to start legal proceedings due toarrears or an unreliable tenant. If a landlord wants to be hands-off and notenter the hassle of legal proceedings and dealing with arrears arising frompoor tenants, a company that uses a guaranteed rent scheme like Ghoat can beinvaluable.
Many landlords are using properties as a nest egg for retirement,and therefore, they want to have as little hassle from the tenants as possible.Liaising with a third-party company like Ghoat can help to preserve this nestegg as the company would provide rigorous screening of the occupants but also includerent increase in their lease agreement, helping with cashflow management.
At Ghoat, we have very strict criteria, with occupants being youngprofessionals working in a number of industries like marketing and finance thatare screened for their right to rent in the UK, or their financial capacity topay rent and previous landlord references.
There are many significant benefits to being part of a guaranteedrent scheme, but it's important to recognise that the scheme is a legallybinding contract not between the landlord and the tenant but with the thirdparty managing all of the associated aspects.
It's critical for any landlord considering guaranteed rent to workwith a company that provides transparency. At Ghoat, we provide a guaranteedrent service that doesn't just guarantee rent 365 days a year, as well as theassociated maintenance, but we also provide regular reports on the propertythat ensures you are kept up-to-date and understand that it is something thatshould benefit to you in many different ways.
It's important to remember that the landlord is the individualthat is liable, which is why we prioritise a transparent service to ensure thatyou understand the practice of getting the right tenants and ensuring yourproperty is properly maintained.
If you are managing a portfolio of properties, it can soon turninto a full-time job. Because of the various responsibilities landlords face,from property maintenance to paying utility bills, inspections, and findingtenants, a service like Ghoat can be invaluable, as a guaranteed rent scheme isa lifeline for many landlords, especially in the current climate.
