Rent-to-rent: late payments, ending the agreement
Arrangements where members source properties for clients to set up a rent-to-rent business are becoming increasingly more common. They are however very complex contracts, involving multiple parties and responsibilities, so can easily go wrong. This case study on rent-to-rent will give you an idea of how we deal with different situations.
Resolution wanted: All outstanding rent and the property returnedAward: £7,200Resolved by: Early resolution
he has consistently received rent late from the agent, for both his properties for the last five months, and it is now getting worse
he received an email saying that this month’s rent was being transferred, but it’s still outstanding
he is about to fall into arrears with the mortgage payments on the two properties
he cannot access the contract as it was online, and permission has been withdrawn
he discovered one of the properties had a dog living there, without consent, which the agent would have found if they had carried out the regular inspections as agreed
he is suffering from stress, anxiety and sleepless nights due to the lack of responses to calls and emails about late payments
he feels he has no choice and would like to end the agreement and take the properties back
there have been delays in passing on the rent due to cashflow issues as some tenants have had their Universal Credit accounts frozen
the properties have now been returned to the owner landlord, with vacant possession
Emails
Guaranteed rent agreement
Tenancy agreement
The signed guaranteed rent agreement confirmed that rent was payable on the first of every month
The complainant later agreed to accept payments on the tenth of the month but had to routinely chase these and now there is £7000 outstanding, with each payment being made later and later or not at all
Under the rent guarantee agreement, the agent is responsible for paying the complainant the agreed rent each month and it is immaterial whether the agent had collected the tenant’s rent
The agent provided no evidence that they carried out any property inspections during the management period but have now handed both properties back to the owner landlord
The agent’s service to the complainant was also poor, with the complainant having to chase the agent for the rent, whether it was for an update on when the payment would be made or chasing a shortfall in the payments that were made. The evidence also showed that the agent was still making rental payments at the point of making this decision.
Awards were made for the poor service - £200 award plus the outstanding rent - £7000
Guaranteed rent agreements are great when they go to plan!
Owner landlords need to understand exactly what these agreements mean and what happens when things go wrong
Owner landlords asking to end the rent-to-rent agreement and for their property back with vacant possession is not straightforward if a tenant is still living there
Agents need to know the rules if the property is an HMO, understand any restrictions on leasehold properties and have professional indemnity insurance
Visit the resources section on the Property Redress Scheme’s website to read our guides on the topic of rent-to-rent.
For more information on what constitutes material information and how is it changing read here. You can also view the guide to consumer protection: unfair trading regulations.
