Are Guaranteed Rent Schemes Worth it?

Platform Stays
Feb 14
3 min read

Without a doubt things are getting harder for Landlords We are all familiar with the every day issues . Your tenants may fall behind on rent or move out suddenly, leaving your property empty. Not to mention, when unexpected issues crop up, you’ll have to foot the repair bill.

Now with a raft of new current and proposed legislation . It is not surprising many landlords are choosing to sell up. Fortunately, there is a solution: guaranteed rent. This means giving consent for a third party to sublet your property in exchange for a fixed monthly fee. It’s a way of ensuring you receive an assured rental income every month, even during void periods. But is guaranteed rent worth it? Are there any potential downsides? Below, we explore the pros and cons of guaranteed rent so that you can decide if it’s right for you.

Pro: Financial Security

Throughout the contract, you can rest assured that you’ll be paid on time every single month. Your income is 100% guaranteed, even if:

The property is temporarily unoccupied
The tenants are late paying their rent or fall into arrears
An accident or emergency occurs rendering the home uninhabitable (e.g. fire)

This means you can plan your finances more effectively. It also provides valuable peace of mind, especially if you rely on rent to cover your living expenses.

Con: Potentially Lower Rental Yield

Of course we are all aware that nothing comes Free You will need to accept that in most cases a reduced return. This is because the management company takes a small cut of whatever income the property generates. It’s worth comparing quotes from different guaranteed rent providers, as some may pay more than others. Companies that let properties as short-term holiday rentals often prove more lucrative.

Pro: Long-Term Contracts

Most assured shorthold tenancies only last from 6 to 12 months. Periodic or ‘rolling’ tenancies are even shorter, operating on a month-by-month basis. This means that private landlords must be prepared to deal with a high tenant turnover. The moment they give notice to leave, you’ll need to start marketing the property and arranging viewings. If you can’t secure a new tenant in time, you may be faced with void periods of no rental income. You can avoid all of this stress and hassle by choosing a guaranteed rent scheme. At Platform Stays we offer a risk free contract from 3 to 5 years.

Con: Limited Control

With guaranteed rent, property management companies are responsible for finding and vetting tenants on the landlord’s behalf. This makes life easier for you, but also means that you won’t have control over who rents your property. Some landlords may be apprehensive at this idea. Remember, though, that the guaranteed rent company must pay you a fixed monthly income – even if the tenant doesn’t pay or abandons the property. They’re also responsible for handling evictions and repairing any damage caused by occupants. This means that they’ll always have a vested interest in choosing the most trustworthy tenants possible. At Platform stays you also have the benefit that in most cases our team of cleaners are visiting your property on a weekly basis any small issues are drawn to our attention before they have a chance to cause any issues.

Pro: No Dealing with Maintenance Issues

Being a landlord often feels like a full-time job. You must be available 24/7 to deal with maintenance issues such as:

Faulty Boilers
Leaking Pipes
Leaking Roofs
Fires, electrical faults, gas and water leaks
Security concerns (e.g. broken windows or faulty door locks)

Having to respond to tenants and arrange repairs promptly isn’t always convenient for busy landlords. Guaranteed rent, however, gives you the chance to sit back and enjoy a passive income. The management company will liaise with tenants for you and take care of any problems that arise. They’ll even cover the cost of repairs and refurbishment.

Con: Not All Guaranteed Rent Agreements Are Equal

Not all guaranteed rent schemes are the same. Some companies may offer longer contracts than others, or charge extra for additional services (e.g. repairs). Terms and conditions can vary significantly, so read the small print carefully to ensure it’s the best guaranteed rent scheme for you. You should have a clear understanding of both parties’ responsibilities and what will happen if any terms are broken. Be aware that some guaranteed rent providers are more reliable than others. It’s important to do your research and choose a trusted company with plenty of positive reviews, such as Platform Stays