top of page

Maximise your rental income!

How to Choose a Guaranteed Rent Scheme

In these uncertain times, more and more landlords are deciding to work with agents that offer guaranteed rent schemes. A guaranteed rental scheme is where the landlords start collecting rent from the moment that they give the keys to the property to the agent. This is because the agent acts as the tenant, guaranteeing that the landlord will receive their rent for the duration of the lease, regardless of if the property is empty.

How Does Guaranteed Rent Work?

As Upperkey explains, guaranteed rent for landlords takes a lot of the hassle out of the process of renting a property. The agent manages everything on the behalf of the landlord with guaranteed rent. They will find the tenants, vet the tenants, and then pay the rent into the landlord’s bank account.

Since the property management company is acting as the tenant, they will pay this monthly rental payment regardless of whether the property is filled or not, and regardless of when the tenant living in the property makes the payment. They take on the risk of rent not being paid by the tenant in the property and will take on viewings and inspections on behalf of the landlord, making sure that the property is returned in the same condition.

UpperKey handling property checks on behalf of landlords
Guaranteed rent payment regardless of Tenant's payment.

How Much Does Guaranteed Rent Cost?

With many guaranteed rent schemes there are no fees. However, landlords can expect to earn slightly less in rental fees compared to renting the property to tenants privately, as the agent will usually pay less rent and keep the difference as profit when the tenant living in the property makes the rental payment. However, for guaranteed rent each month, many landlords consider this to be a worthwhile arrangement, especially as they will not be responsible for any utility bills or council tax either since the agent will also take on this responsibility if needed.

The agent will also take care of any legal expenses, eviction costs, and rent arrears if necessary. This makes it worth it for the landlord’s peace of mind and additional reassurance that they will not need to worry about losing money while going through a lengthy eviction process. Since the agent will lose out if the tenants do not pay, you can often expect more care and attention to be put into vetting and choosing the right tenants for the property.

UpperKey property management blue banner

What are the Pros and Cons?

With a guaranteed rent scheme, there are several benefits, one of which is a guaranteed monthly income. This allows you to have peace of mind regarding one of the biggest issues that landlords face: unpaid rent. With a guaranteed rental scheme, you will have the rent payment made to your account monthly regardless of whether or not the tenant living in the property pays, or whether there is actually anybody living in the property at the time.

Ultimately, guaranteed rental schemes mean less stress for landlords as you can rely on a third party to deal with any issues that might arise during the tenancy. It is a good way to make a passive income as any work that is expected of the landlord, such as maintenance checks and responding to emergencies, will be taken on by the third party tenant. Along with this, the third party tenant should also be responsible for regulations such as gas safety checks.

On the other hand, there are some cons. Landlords entering these schemes have no control over the tenants that are living in their property, and there is also the risk of scams and unreliable agents that can cause a lot of trouble in the long run. Knowing what to look out for is crucial in ensuring that you experience more pros than cons if you are interested in a guaranteed rental scheme for your property.

What to Look for in a Guaranteed Rent Scheme

If you are a landlord, looking for the best guaranteed rent scheme can make all the difference to your investment. Whether you already have a property that you are interested in renting out through a guaranteed rent letting agent, or are looking for a guaranteed rental property investment, it’s important to ensure that you know what you are looking for and what the best guaranteed rent companies should offer.

Along with this, like anything, there are some downsides to guaranteed rent, so when you are looking for guaranteed rent property management or letting agents guaranteed rent, it's worth going over the pros and cons to make sure that it is the right company for you.

The positive impact of guaranteed rent for landlords
Choosing the best guaranteed rent scheme for landlords.

What to Expect

When choosing a guaranteed rent letting agent for your property, there are a few perks and benefits that you should expect to receive as a landlord. These include:

Guaranteed Payments: Since the letting agent or third party is paying the rent to you rather than the tenant who is living in the property, you should expect the rent to be guaranteed each month. The money for the rent should be paid to you each month regardless of whether the tenant living in your property pays, or whether there is somebody living in your property at all.

Maintenance Checks: You should not have to worry about performing any maintenance inspections or checks. In some cases, you may not need to worry about maintenance costs either since this falls under the responsibility of the third party in some contracts.

No Emergencies: When renting privately, property emergencies can be a nightmare for landlords. With a guaranteed rental scheme, emergencies like flooding or fire will usually fall under the responsibility of the third party. You should have the convenience of not being contacted at unsociable hours to deal with such things.

Regulations: You should also have peace of mind when it comes to regulations such as health and safety, as these will be the responsibility of the third party.

UpperKey property management blue banner

What to Avoid

As with anything, there might be some guaranteed rental schemes that you come across that are not as good as they are made out to be. There are some cons of guaranteed rent schemes, so it is best to go into finding a scheme aware of what these are and how to spot them.

Scam Risks: Before agreeing on a guaranteed rental scheme, it’s important to make sure that the third party you are renting the property to has a good reputation. You will be entering into a contractual agreement with them, so make sure that you do your research into them beforehand. Don’t enter into any contracts where you feel that there may be a risk that the third party will not make regular payments to you or will exploit tenants.

Property Devaluation: If the third party breaches their contract or mismanages your property leading to unrepaired damage, this could cause it to lose value. For example, this could happen if the third party fails to perform regular maintenance checks or uses low quality contractors.

Not Checking Tenants: The third party that guarantees your rent will be responsible for choosing and vetting tenants to live in your property. As a landlord, this means that you have no say in who is living in your property. It’s important to ensure that you choose a third party that has a good reputation for conducting extensive tenant checks and choosing tenants to live in the property that are responsible and will take good care of it.

Liabilities: Although a guaranteed rental scheme means that you are no longer responsible for property maintenance, you still own the property, which may mean that you are still liable for any claims made against you for injuries at the property. It is important to agree on reasonable timescales with the third party to deal with any property issues that might arise depending on their level of risk to tenant safety.

Limitations: Finally, it is important to be aware that when you enter into a guaranteed rental scheme contract, it can last for several years. You will need to be prepared to have little say on what happens to the property that you own for that duration, including renovation work.

Making an informed decision about guaranteed rent schemes
Key considerations for guaranteed rent schemes.

Before Signing the Contract

If you are interested in using your property for a guaranteed rental scheme, then it’s important to have the following in place before you make such a big decision:

Extensive Research: When you sign up for guaranteed rent or rent-to-rent, you’re taking on a big decision that involves allowing somebody else to manage the property on your behalf. Before you choose who is going to be the third party tenant, it’s important to conduct extensive research into them and what they offer. Make sure that they have the right qualifications, license, and experience to take good care of your property and offer you peace of mind.

Payment Plan: Before making any agreements, it is a good idea to clearly outline any financial transitions with the third party. Make sure that you are very clear on how you want the payments to be made into your account, including when they should be paid and the method of payment that should be used.

Solid Contract: It might be a good idea to get legal advice when drawing up a contract with the third party tenant. As you have a lot of investment in the property, it is important to make sure that the contract covers you thoroughly. The details of the contract should ensure that your property and your income is protected.

When you know what to look for, thoroughly vet the third party tenant, and have a solid contract in place, a guaranteed rent scheme can be a worthwhile option for earning a passive income and reducing any stress related to your rental property. Speak to UpperKey to learn more about the advangates of using a property management company.


Determine your property's rental value with UpperKey as your tenant

bottom of page