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  • Writer's pictureElliot Leigh

Guaranteed Rent Scheme vs Traditional Letting Agents: Which is the Better Choice for Landlords?


A Guaranteed Rent scheme provider is a type of property management company that offers a service where they guarantee to pay the landlord a fixed rental income for a set period, usually between 1 to 5 years, regardless of whether the property is tenanted or not. Read on to discover some potential benefits of using a Guaranteed Rent scheme provider compared to a traditional letting agent.


Guaranteed Rent Advantages:

  1. Guaranteed Rental Income: As mentioned, the main benefit of using a Guaranteed Rent scheme provider is that they will guarantee to pay the landlord a fixed rental income, even if the property is vacant. This provides landlords with peace of mind knowing that they will receive a steady income and not have to worry about periods of rental voids or chasing rent payments.

  2. No Tenant Management Hassles: A Guaranteed Rent scheme provider will handle all aspects of tenant management, including finding tenants, conducting viewings, referencing, and managing the tenancy agreement. This means that landlords don't have to deal with the day-to-day responsibilities of managing tenants.

  3. No Fees: Guaranteed Rent scheme providers do not charge any fees, which can result in significant savings for landlords.

  4. Property Maintenance: Many Guaranteed Rent scheme providers also offer property maintenance services, meaning they will take care of repairs, maintenance, and any other issues that may arise during the tenancy. This can be particularly beneficial for landlords who don't live in the same area as the property they are renting out.

  5. Long-Term Tenants: As Guaranteed Rent scheme providers usually offer tenancies between 1 to 5 years, this can result in longer-term tenants who are more likely to take care of the property and treat it as their own. This can reduce the amount of wear and tear on the property and potentially save landlords money on repairs.


Letting Agent Disadvantages:

  1. High Fees: Letting agents typically charge landlords a range of fees, including administration fees, referencing fees, tenancy renewal fees, and inventory fees. These fees can quickly add up and eat into the landlord's rental income.

  2. Limited Control: When using a letting agent, landlords may have limited control over how their property is managed. The letting agent will typically make decisions on behalf of the landlord, including setting the rental price, selecting tenants, and managing the tenancy agreement.

  3. Lack of Personal Involvement: Some landlords prefer to be more hands-on with the management of their properties, but using a letting agent may result in less personal involvement in the day-to-day management of the property.

  4. Potentially Longer Rental Void Periods: When a property becomes vacant, the letting agent will typically advertise it and arrange viewings to find a new tenant. However, this process can take time, resulting in a longer rental void period where the landlord does not receive any rental income.

  5. Potential for Mismanagement: While most letting agents are reputable and professional, there is always a risk of mismanagement or even fraud. For example, a letting agent may fail to properly reference a tenant, resulting in a problem tenancy, or may fail to pay the rent to the landlord on time.

It's worth noting that not all letting agents will have these drawbacks, and clearly there are landlords who have a positive experience with a letting agent. However, it's important for landlords to carefully consider the potential drawbacks and benefits before deciding whether to use a letting agent or a Guaranteed Rent scheme provider.

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