Rent to rent deals are arrangements where an operator takes a property from its owner on a guaranteed rent, usually for a term of years, and lets it on, room by room or as a serviced let, keeping the difference. Rent to rent deals uk operators chase are found the way purchases are, through tired landlords, letting agents and the HMO stock of a town, and appraised differently: there is no purchase price and no deposit, but there is a guaranteed rent to pay whether or not the rooms are let, a set of works to make the property lettable by the room, and the licensing and the duties of a landlord without the title. This page sets out how to find rent to rent properties, what the appraisal has to carry, and what the record keeps.
How the properties are found
The landlord who is tired of managing, found through the letting agent who manages for them; the property that has stood empty because the owner cannot face the works; the HMO whose licence is due and whose owner would rather not; the agent who has a landlord asking for a guaranteed rent. How to find rent to rent properties is a sourcing question with the same routes as a purchase and a shorter list of owners who will say yes, and the operator's reputation for paying on the first of the month is the only thing that makes the second deal easier than the first.
What the appraisal carries that a purchase does not
The guaranteed rent to the owner, paid in every void; the works to bring the property to the standard the room rents assume; the licence, where the council requires one for a house in multiple occupation; the management, which is the operator's own time or a fee; and the room rents, which are worked from the comps for rooms in that town, not from the comps for whole houses. The rent comparables sheet on this site works a rent per square foot from three lets, and for a room-by-room let the comps are the rooms. The margin is the room rents less the guaranteed rent, the works spread over the term, the licence, the management and the voids per room.
The record: term, owner, works, rooms, and the day the guarantee is due
A rent-to-rent operator with three properties has three owners to pay on three dates, three sets of works to recover over three terms and a dozen rooms to keep let, and the record that holds them is the difference between a business and a set of promises. Yieldzo Pro keeps each arrangement as a deal with its owner, term, guaranteed rent, works, room comps and appraisal, and the guide here stops at the appraisal: the licensing, the tenancy paperwork and the tenant's rights are the landlord-records territory, and GOV.UK's private renting pages are where the duties are stated.
Questions people ask about rent to rent deals
Are rent to rent deals legal in the UK?
The arrangement is lawful when the owner's lender and the owner agree to it, the operator holds the licences the council requires and the tenants get the rights the law gives them. Any of those missing is a problem for the operator, not the owner, which is why the appraisal has to carry them.
How is a rent to rent deal appraised without a purchase price?
On the margin: the room rents from the comps, less the guaranteed rent, the works over the term, the licence, the management and the voids per room. The cash in is the works and the deposit to the owner, and the return is the margin on that.
Is rent to rent the same as guaranteed rent from a letting agent?
The same promise from the other side: an agent guaranteeing rent to a landlord is running a rent-to-rent business. The investor's question is which side of the guarantee they want to be on.
Sources
- GOV.UK, Private renting: the tenant's rights and the landlord's duties, the rules a rent-to-rent operator takes on
- GOV.UK, Renting out your property: the landlord's legal responsibilities in England
- ONS, Private rent and house prices, UK: the monthly Price Index of Private Rents and House Price Index by area