What is rent to rent and what are the pitfalls?

October 22, 2020

‘Rent to rent’ is something which has become increasingly common in recent years and is often promoted by property ‘gurus’ as a way of earning a lot of money from property without having to lay out a lot of capital.

It is where someone rents a property, not to live in themselves, but so they can rent it to tenants, or (from the point of view of the property owner) subtenants.

It can work out well and examples of successful rent to rent schemes include some offered by:

  • Letting agents – who take over the management of your property as a tenant rather than as your agent
  • Local Authorities who use the properties to house homeless and other people on their waiting lists, and
  • Universities and colleges, who use the properties as accommodation for students

The best of these schemes work well as they have been properly thought out and those offering the schemes have invested in decent documentation.

Where it all goes wrong

Problems often occur when people try to do rent to rent ‘on the cheap’ without taking advice and without using proper documentation.

For example, the tenancy agreement between the property owner and the ‘rent to renter’. People often use just any old assured shorthold tenancy agreement, perhaps a free agreement downloaded from the internet, and cross out the bits they don’t like.

This can cause big problems, particularly if you are the property owner. For example:

  • You may find you can’t recover possession of your property – even if your tenant is not paying any rent, and
  • You can’t claim relief under any of the ‘consumer’ legislation, for example, the unfair terms rules, because as the property owner you are not deemed to be a ‘consumer’

From the ‘rent to renter’s point of view, you may find that you have failed to account properly for all the expenses involved in being a landlord. For example, the various inspections and certificates you have to pay for, the cost of keeping the property in repair and (for most rent to rent situations) the cost of HMO licensing.

You may find that you are paying out more in expenses than you get back in rent.

Criminal rent to renters

Property owners also need to watch out for the following:

  • People who offer you what sounds like a fantastic deal, but then get you to sign a tenancy agreement which has been adapted to remove all your rights, and
  • People who sign up as a normal tenant but then illegally sublet to tenants without your consent.  Which can get you into trouble with your mortgage lender and insurer and may make you liable for penalties for failure to get an HMO license.

What can you do in these situations?

The Landlord Law Rent to Rent Training Day 2020

To help inform landlords and property owners wanting to set up a decent rent to rent arrangement and also to assist people stuck in a problematic arrangement, we are running a special ‘rent to rent’ day on 4 November 2020.

This will feature talks from solicitor and rent to rent expert David Smith from JMW Solicitors along with talks from other solicitors from JMW. The talks will cover all aspects of rent to rent, and provide a Q&A session where you can ask your questions, plus you will have the opportunity to purchase a special ‘rent to rent’ tenancy agreement.

You can find out more about the day and the full program here.

Booking your place

Attendance on the day will cost you £120 (inclusive of VAT) for the event only or £420 for the event + the special ‘rent to rent’ tenancy agreement. Although readers of this post can claim a £10 discount with coupon code LLSL5FP4.

Landlord Law ‘Business Level’ members will also get an automatic 10% discount – provided you are logged in as a member when you book.

You book your place by paying online – you will find the links at the bottom of the  event information page here. You can pay by card (debit or credit) or by pay pal if you prefer.

Once you have booked your place and paid the fee, you will get immediate access to our Delegates Information page. This has a bonus video from David which you can watch on ‘rent to rent’ and the problems associated with it, and a couple of other videos which might interest you.

This is going to be a very special event. I hope you will decide to join us and I look forward to welcoming you on 4 November.

Learn about 'rent to rent' and the pitfalls involved with the #landlordlaw Rent to Rent Day 2020

Not a Landlord Law member?  Find out more here.
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