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What is Guaranteed Rent, What are the Pros and Cons?

Let’s start at the beginning, it might be obvious but it’s worth explaining what guaranteed rent is. When a landlord enters into a lease with a third party (a letting agent, an ethical letting agent or local authority) the responsibility for the day-to-day management of their property and the tenancy transfers. The third party then pays a fixed monthly income to the landlord over a period of time, guaranteeing rental income whether the property is vacant or not.

The Pros

  • This agreement means that a property owner doesn’t need to worry about their income or void times, knowing their income is completely secured.

  • Organisations who offer guaranteed rent are typically very experienced in managing tenancies and properties and have a vast network of support available to ensure that properties are well maintained and tenancies are successful.

  • Most third parties acquiring properties with guaranteed rent are looking to provide the property to people who really need a place to call home, meaning property owners can be confident they’re really making a difference.

The Cons

  • Guaranteed rent leases or agreements are for a set period of time. The agreement may be ended early but notice has to be given to allow the tenant to be rehoused, meaning landlords don’t have immediate access to the property should they wish to sell it.

  • Third parties will charge a fee for guaranteed rent properties that is slightly higher than without. If a property owner is confident that they could keep their property continuously occupied, that might deliver a better financial return.

Not all lettings organisations in Greater Manchester offer guaranteed rent but for those that do, like the Let Us members, the offer is very attractive for landlords wanting a straightforward management approach. Do you want to have a conversation that explores guaranteed rent within Greater Manchester? Get in touch!

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