About

Guaranteed Rent also known as Rent to Rent is where an individual or company takes an interest in a property for a period of time from a landlord and guarantees to pay a fixed rent to the landlord. The landlord gives consent to the third party, ‘the Renter’, to then rent the property to other tenants. The Renter and they become the tenant liable for the rent. There are several ways to legally sublet a property, usually involving commercial or corporate tenancies, management agreements, and leases or guaranteed rent schemes.

Why do landlords choose to use Guaranteed Rent rather than a traditional letting agent to rent out their property?

The benefits of the arrangement to the landlord is that their rental income is guaranteed regardless of whether the tenants who live at the property pay the rent or if the property becomes empty. The ‘Renter’ would generally also take care of any damage to the property as it is their responsibility to return the property back to the landlord in the same condition as when they took it. This all gives the landlord a peace of mind.

The landlord would not incur any letting, management or renewal fees. The ‘Renter’ would be expected to comply with all the numerous laws and compliance issues that an agent would generally deal with, saving the landlord time and money. The landlord can also request a longer contract with the ‘Renter’, being anything from 1-5 years. This provides more security for the landlord, so they can possible budget long term.

What are the benefits to The Renter?

As the Renter has taken a lease of the property they become the landlord. This gives them the opportunity to find tenants for the property and they get to keep whatever rent the tenants pay. They generally allow more flexible arrangements with the tenants. For example, properties with multiple rooms can accommodate single tenants who rent a room with some shared areas or facilities.

What legal issues should the parties consider?

The agreement between the landlord and the Renter is of a commercial nature so really they should enter into a lease of the property for the period of time the Renter is going to pay the Guaranteed Rent. Also, the parties should have clear and unambiguous terms of business as to exactly how much the Renter is due to pay the landlord and what they are responsible for in terms of the management of the property and the landlord’s compliance with the various legislation related to renting property.