Guaranteed Rent: What Is It And How Does It Work?

When it comes guaranteed rent, London landlords can feel reassured that their monthly rental payments are fully secured, regardless of the financial climate. What’s more, they will also be able to take a back seat in terms of managing their property, enjoy fee-free property management services, and know that even during void periods, their income will continue.

In times of uncertainty, a guarantee of anything is always a very welcome thing. For landlords in the private rented sector, one of the biggest challenges has always been making certain that tenants pay their rent on time. After all, a landlord’s bills don’t pay themselves, and there are plenty of those to deal with.

Rent guarantee insurance is one way of protecting rental income, but it does come with a number of conditions and exclusions. An alternative is a guaranteed rent scheme. Let’s take a look at how rent guarantees work, and how they can provide a real lifeline to landlords, especially during periods of financial uncertainty.

What is a guaranteed rent scheme?

With the assurance of guaranteed rent London landlords are able to benefit from an uninterrupted rental income. This applies even when the property is untenanted, and regardless of the financial climate and whether the tenants themselves are making their payments.

Thanks to guaranteed rent London landlords, and letting agents too, are able to enjoy market value rents that are devoid of charges. What’s more, all aspects of the property management are taken care of too.

What’s included in the scheme?

There is a lot more to the homes2let guaranteed rent scheme than simply ensuring rent is paid every month.

In summary, it is an all-encompassing service that allows landlords to enjoy a hands-off investment, and letting agents to take advantage of enhanced competitive edge and a far more streamlined way of managing properties. Here’s what’s included:

• Tenant sourcing
• Tenant referencing
• Preparing a property to let
• Day to day maintenance and repairs

Imagine all of this taken off your hands, with no fees or set-up charges, legal costs covered, and zero commission to pay. You’ll receive a fair market rent, possibly very slightly lower than that which a traditional letting agent will pay. But because there are no management fees to deduct or admin charges to cover, you will actually be left with a significantly higher sum, and without all the hassle.

What is the difference between guaranteed rent, and rent guarantee insurance?

It is important for London landlords to understand the difference between rent guarantee insurance, and guaranteed rent.

Rent guarantee insurance is a type of insurance cover. It covers rental income if tenants do not pay. Some landlord insurance policies include this cover, but some will charge extra for it. It is not the same as loss of rent cover, which only pays out when a landlord cannot let a property due to damage that’s covered on buildings insurance.

Claims can be made on rent guarantee insurance usually once tenants have got behind with their rental payments by a month. The insurance will then continue to pay out for a fixed period, usually running for 6-12 months.

The thing to bear in mind with rent insurance is that it will only offer protection up to £2,500 for a maximum of 12 months. The protection will only apply if the tenant defaults on the rent; causes deliberate damage to the property; refuses to leave the property following an eviction notice, or if there is a dispute concerning repairs or renovations. Some policies will cover 50 per cent of the rental income whilst new tenants are being sourced, but only for three months after the previous tenants have been evicted.

Other considerations with rent guarantee insurance include the fact that there is sometimes an excess to pay, although this will vary depending on the individual provider. There are also some exclusions to think about. Claims made within the first 90 days of the policy life; claims not reported swiftly enough, and claims for tenants who have a history of defaulting on their rent will not usually be covered. To claim, you will need to go through the official eviction process.

A guaranteed rent scheme on the other hand offers a straightforward assurance that rent will be paid, in advance, every month by standing order for the duration of the tenancy agreement. No claims need to be made to qualify for the payment. No evictions. No worries. Even when the property is empty, the rent continues to be paid. It really is as simple as that.

How does homes2let guarantee its rent guarantee?

At homes2let we have been working closely with local authority housing departments for a number of years. We provide a fully comprehensive service, which includes sourcing, preparing and maintaining quality housing for local families. Our guaranteed rental income properties are ideal for families in need of safe, secure accommodation.

The relationships we have built up with the housing teams over the years are very robust. They provide us with a constant flow of tenants, and a sound, reliable income stream. With homes2let acting as a corporate tenant, for landlords and letting agents this is a failsafe model, allowing us to effectively guarantee our rent guarantee for the ultimate in cashflow certainty for the entire duration of the tenancy.

For guaranteed rent, London landlords can turn to homes2let

When it comes to guaranteed rent London landlords choose homes2let because we know the industry, because we genuinely care about our landlords’ properties, and because we’re dedicated to making our landlords’ lives easier. Our contracts are straightforward, and you could receive a written offer with 24 hours of us viewing your property.

To find out more about how the homes2let guaranteed rent scheme works, and how to offer your property for rent to one of our local authority housing teams with homes2let as your corporate tenant, you are welcome to get in touch.