Top Rent to Rent Deals | Best 2024 Opportunities

The concept of Rent to Rent Deals is for a landlord to enter into a long term lease (usually 3 years plus) with a leaseholder (Rent To Rent Company) who will ensure that the rent is paid, and that all the council tax and utilities are paid and small maintenance items carried out.

• The leaseholder (Rent To Rent Company) will then use the property for short term rentals; charging guests a higher amount for a higher standard of service, similar to what the guest would expect in a hotel.

• The landlord usually pays for any major maintenance items or replacements.

• The leaseholder (Rent to Rent Company) arranges and pays for all cleaning, laundry and all minor repairs.

•  The leaseholder (Rent To Rent Company) rents out the property to other people (termed guests) on a short term basis, thus at a higher price and making higher revenue and profit than would be possible from using the house or flat as a Buy To Let under an Assured Shorthold Tenancy. This may be done using AirBNB or Sykes Holiday Lettings, Cottages.com, Booking.com, and also by using a Channel Manager to manage bookings from different sources.

•  The leaseholder (Rent To Rent Company) may also contact local companies and large organisations such as hospitals or major projects going on nearby so that they can rent out directly to their own clients, rather than using a booking agent, thus saving on paying commissions to these agencies, thereby increasing profitability.

• The potential benefits for leaseholders (Rent to Rent Companies)  are that they do not have to outlay large amounts of money to get into the market place, by having to buy the property, they can just rent (lease) it from the freeholder or head leaseholder in the case of a flat.

•  Usually a months rent up front plus another months rent as a deposit and some minor furnishing costs , costing 6 to 10k gbp is usually enough money to invest per property, and start to earn revenue.

• The Leaseholder (Rent To Rent Company) can advertise for bookings very quickly, and get guests in very quickly, within just a few weeks of finalising the lease with the head leaseholder or freeholder.

•  The guests are able to rent short term, in accommodation that is equivalent to hotel standard.

  II. What are Rent to Rent Deals? 

• *A Rent to Rent Deals agreement is a lease agreement for a fixed period at a certain rent and with specific terms and conditions agreed between the parties, such as  a break clause (to allow either or both parties to get out of the arrangement if it is not working for them, and the responsibilities of each party., and all the necessary terms and conditions. 

V. Important Considerations Before Entering Into Rent to Rent Deals

* Legalities: 

·        Ensure compliance with local regulations and the original lease agreement.

·       Make sure to adhere to the terms and conditions specified in the mortgage contract.

·        Ensure that the duties and obligations of both parties are spelled out.

 * Financial Considerations: 

The Leaseholder (Rent to Rent company) must calculate their potential revenue and profit/loss for the property and ensure that the guests can afford the rent (they pay up front, so the renter must ensure he is competitive with his rates or he will have void periods and not make enough money.

 The Rent to Rent deal must stack up or its not worth doing it.

·        Location: the location of the property is very important in the case of Serviced Accommodation, and usually these are central locations in town or city centres or near centres of employment where there is a demand for high quality short term rental accommodation.

* Screening guests: Conduct thorough background checks and references if possible, and take money up front, with a deposit to cover any damages. If you don’t, there is always the possibility that unvetted guests may trash the property and cause a lot of expensive damage which the freeholder or head leaseholder is unable to recover from the guest.

* Clear Communication: Establish clear expectations and responsibilities in a written sublet agreement between the freeholder or head leaseholder, in the case of a flat, and the Leaseholder (Rent To Rent company).

VI. Conclusion

• Rent-to-rent deals  can be good for either Rent to Serviced Accommodation (R2SA)  or Rent to House of Multiple Occupation (R2HMO), the reason being that they are both high return on investment strategies.

• The Leaseholder (Rent To Rent company)  must have  a suitably worded legal agreement or contract agreed between the parties., ie with the Freeholder or Landlord leaseholder.

• The Leaseholder (Rent to Rent Company) must be compliant with the Property Redress Scheme, or The Property Ombudsman, also comply with EU and US data protection regulations.

• The Leaseholder (Rent to Rent company) must consult with a legal professional for specific situations.

• The Leaseholder (Rent to Rent Company- lessee) needs to be sure about the location of the property and that the economics of the arrangement will work, ie that the deal stacks up, generating cashlow (revenue less all costs = profit) whether the purpose is for Rent To Rent Deals in R2SA or R2HMO.

If you would like to discuss Rent To Rent Deals do not hesitate to Call Alan on 07539141257 or 03332241257, or +447539141257 or +443332241257, You can schedule a meeting with Alan by going to https://calendly.com/alanje or by contacting him via email at alan@alpusgroup.com.