My name is Mark King. I am a Cardiff based property buyer. I’ve been in the business for over 20 years, and bought approximately 700 properties in that time. I am doing a series of blogs based on some of the trade secrets, scams and fibs you may be been told or have personally encountered when selling your property to a property cash buyer.
RENT TO RENT’ SCAMS – HOW TO AVOID THEM.
Something that has become really popular in the last few years is a system called ‘Rent to Rent’.
Done correctly there is nothing wrong with this system, but unfortunately some people are bending the rules and not operating the system correctly.
HOW DOES ‘RENT TO RENT’ UNDER A CORPORATE SCHEME WORK?
The way “Rent to Rent” works is that if you have a property and someone offers to rent it for you, telling you it is going to run under a scheme called ‘corporate rent’, the property will be rented out to pay the rent.
The property is sub divided (say you have a 3 bedroom, 2 reception house) and it would be rented out to (for e.g.) 5 individuals. You would be paid the standard rent and the corporate renter would collect the difference from the higher rent achieved from the large volume of individuals living in the property.
Be aware and be very cautious when entering into these types of agreements.
What you have to be mindful of is that your insurance and your mortgage lender may not allow this. If someone is going to do this with your property, then please be mindful to check with your mortgage lender and your insurer that this is legal and acceptable.
You may also have to certify your property within 2 regulated areas, such as HMO, and your local council will have certain schemes for HMO properties, which may include fire protection such as fire doors & fire alarm systems etc.
If someone approaches you as you are initially looking to sell your property, or you have a property that you are looking to rent that has been on the market for some time, and somebody comes along and offers to rent it for you on a ‘corporate scheme’, just be sure to check all the details within the deal they are offering.
Ask for the details of whom the tenancy agreement is going to be named in, or for which company it will be registered too. Do some background research into that person or company, such as credit checks and company house checks and make sure to ask about the end user. Always ask for some proof of what’s actually going on in the property and what work is going to be carried out on the property.
If you do rent your property on a ‘Rent to Rent’ and things go wrong, another thing you may come across is a difficulty in evicting the tenants, as their tenancy agreement will be held with the person you rent it to, not with yourself.
This is something to be aware of initially.
However, if you are currently dealing with this situation my advice would be to seek independent legal advice. Your local property solicitor will be able to guide you on this.
TOP TIPS TO TAKE AWAY FROM THIS VLOG
• Always check with your mortgage and insurance company that ‘rent to rent’ is accepted by them
• Check with the local council about HMO regulations and ensure they are followed.
• Ask for details on the contract, tenancy agreement and end user.
• Do some simple background checks, such as credit checks and company house checks etc.
• Ask for certified plans if modifications to the house are being made in anyway.