Is The Rent-to-Rent Model Worth Exploring?

Renting a property that you have absolutely no intention of living in might seem bizarre, but it’s something that is becoming increasingly popular in the current economic climate.

How Rent-to-Rent Works

In the rent-to-rent model, you agree to pay a landlord a fixed sum for a number of years in rent. But rather than moving into the property yourself, you then proceed to rent it out yourself at a profit, creating a new income stream for yourself, a home for your tenant and regular income for the owner of the property.

Of course, as with anything to do with property, there is a certain amount of risk involved, particularly if you don’t do your homework sufficiently before taking the plunge. But there are significant rewards to be had too.

Things to Consider

Taking a home that is currently aimed at a single tenant and turning it into an HMO (House of Multiple Occupancy) can pay big monthly returns, leading to excellent profits in some cases. But on a cautious note, do be wary of making assumptions. According to a recent article on the London Property Licensing website, it’s crucial to establish exactly who is responsible for the HMO licence – both the property owner and the primary tenant could be prosecuted in the event that no valid licence has been issued.

In the event that you fail to find suitable tenants, you are still liable for paying rent to the owner of the property, so you need to select somewhere that’s popular to ensure a steady stream of tenants.

Rent-to-rent can take up a lot of your time, so seek out anything that makes your life easier. Property inventory software, for example, makes light work of inventories, check-ins and check-outs – have a look at inventorybase to see examples of what is available.

You will normally be required to pay for any improvements and enhancements that are needed to bring the property up to an appropriate standard, although you will not usually be responsible for structural defects and repairs. You may also be responsible for paying the bills, particularly if you go down the HMO route, so these costs need to be factored in.

Ensure that both you and the property owner sign a legally binding document setting out the terms of your agreement.

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