Is rent to rent legal?
Is rent to rent legal?
Today we’re getting serious.
And I’ll be answering the question ‘is rent to rent legal’ and helping you stay on the right side of the law.
This is such an important topic because there is so much misinformation out there.
By the end of this episode you’ll be well informed on this topic.
Is rent to rent legal?!
I could answer this question in one word.
Yes!
Or in six words…
Yes rent to rent is legal.
But I know that your forehead is still furrowed so I’m going to explain a little more.
Rent to rent has been used in commercial property since the pyramids were built.
Oh, OK maybe not that far back.
But almost.
Commercial leases are long-term leases which give a commercial property tenant (usually a business) the right to sub-let and typically are on a ‘full repairing and insuring lease’, where the tenant takes on all of the costs of repairing and insuring the property.
This is what the rent to rent model is based on.
This model came over into residential property and has been adapted to give residential landlords similar guarantees as commercial landlords.
The reason why some people think rent to rent might be illegal is that sub-letting has a bad name.
Sub-letting comes to public attention when it’s in the news because someone has done it illegally without the knowledge of the property owner.
That is not what we want.
Rent to rent is legal when it’s done with the full knowledge and consent of the owner and when the correct contracts are in place.
We’ll come on to contracts further in a later episode.
Click here to find out more about the right contracts for rent to rent
If you still have an eyebrow raised and are thinking ‘well she would say that wouldn’t she?’
You might be swayed by the fact that rent to rent is recognised by the government property ombudsman the Property Redress Scheme (PRS).
PRS definition of rent to rent
Rent to Rent is where an individual or company, known as the agent, rents a property from a landlord for a specified period of time during which the landlord receives a fixed guaranteed rent from the agent.
This can be attractive to landlords who want a hands-off investment with guaranteed income.
The agent then lets the property, generally on a room by room basis and manages the property.
PRS - An Agent Guide to Rent to Rent or Guaranteed Rent
The fact that so many people dismiss this strategy out of hand means there’s more opportunity for you.
When people you don’t know or care about tell you all the reasons rent to rent is wrong, just smile sweetly.
Don’t expend your precious energy in correcting them.
But if you do want to correct them, you have all the ammo you need right there from the government’s ombudsman body.
What you know and act upon will change your income and your impact.
You don’t need everyone else to understand that rent to rent is legal and ethical but know you have the tools in your toolbox if you need them when speaking with people you do care about and with agents or landlords you’d like to help.
OK you say, I got it.
I understand how rent to rent works and I know that it’s legal but…
“Why would a landlord give a property to me?!”
Well I thought you might say that so I’ve got all that good stuff ready for you in episode 5.
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See you next week, and remember,
Believe Bigger, Be Bolder and Be a Gamechanger!
See you soon.
Stephanie & Nicky
xx
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