Guaranteed rent explained: how it works and who it suits

Guaranteed rent goes by several names: guaranteed rent schemes, company lets, corporate lets or rent-to-rent. The idea is the same. A company agrees to rent your property from you for a fixed monthly amount over a set term, then takes on the job of finding and managing the people who live there.

How the money works

You and the company agree a monthly figure before the agreement starts. That figure is paid to you every month for the length of the term, regardless of whether the property is occupied, and regardless of whether the occupants pay on time.

The company makes its money from the difference between what it pays you and what it collects. Because it carries the risk of empty months, arrears and day-to-day costs, the figure you receive is normally lower than the full market rent you might achieve by letting the property yourself.

What landlords like about it

• Predictable income. The same amount on the same date makes budgeting and mortgage payments simple.
• No void periods. A month between tenants doesn't cost you anything.
• Less involvement. Tenant calls, repairs and inspections are handled for you.
• No fees. There are usually no letting or management fees taken from the rent.

What to weigh up

• A lower headline rent. Compare the guaranteed figure with what you'd take home under full management after fees and a realistic allowance for empty months.
• A longer commitment. Terms of three to five years are common. Check what happens if you want to sell part way through.
• Who the company is. The guarantee is only as good as the company giving it. Ask how long they have been operating and how many properties they manage.

Questions to ask

1. How long is the term, and when can either side end it?
2. Which repairs and maintenance costs are covered?
3. Who is responsible for safety certificates and any licences?
4. How will the property be used, and how many people will live there?
5. What condition will it be returned in, and how is that checked?
6. Do you need consent from your mortgage lender, freeholder or insurer?

Is it right for you?

Guaranteed rent tends to suit landlords who live far from their property, have had problems with arrears or empty months, or want to step back without selling. If you'd rather maximise income and don't mind some risk, full management may suit you better.

More landlord guides

• Full management, part management or tenant find?
• How much rent can I charge for my property?
• Renters' Rights Act: what landlords in England need to know
• How much do letting agents charge landlords?
• Common landlord questions, answered