The textbook definition of guaranteed rent is where an individual or company takes an interest in a property for a period of time and guarantees to pay a fixed rent to the property owner. The owner then gives consent to the individual or company (the third party or ‘the Renter’), to then rent the property to other tenants.
On the other hand, rent guarantee insurance is a type of insurance policy designed to protect landlords from financial losses incurred by tenants failing to pay their rent. A typical policy may cover missed rental payments and legal fees arising as a result of having to evict the tenant from the property.
In short, one is a property management arrangement and the other is an insurance policy. They both have the goal of providing assurance and security to the landlord -but on different levels.
Amalida Properties Guaranteed rent is so much more.
Yes of course you will get a predictable and recurring monthly rental income but the difference is we will not make deductions nor take commissions. You will have no-hassle and no maintenance cost. Let’s break it down:
How does it work?
We sign a management contract guaranteeing to pay an agreed monthly income to the property owner in return for taking full management control of the property. A common mistake by many new Guaranteed Rent companies (who also call themselves Rent to Rent companies) when creating these types of contracts is using an AST instead of a commercial or custom management contract written by a specialised solicitor. If an AST is used it is likely that the tenancy agreement will not contain all the terms needed and will contain a lot of irrelevant clauses. It also does not give the company any rights to and leaves the landlord unprotected so it may become void.
We ensure that this does not happen by using a specific custom contract written by solicitors specialised in Guaranteed Rent that covers all areas and is specifically crafted to offer equal protection for both us and the property owner while still meeting both of our needs.
As we now become the landlord we can market the property to find renters, do all of the tenancy administration (including a thorough vetting of the potential tenants), handle any property maintenance, ensure that the property is compliant with all relevant legal requirements and take care of legal proceedings in the event that the renters living in the property don’t pay the rent and/or need to be evicted. In a typical lettings agreement, a cost would be incurred for each of these services which are all part of our all inclusive guaranteed rent management contract.
Why choose our guaranteed rent services instead of just rent insurance?
- You as a property owners no longer need to focus on tenant management -leaving you to spend your time in other ways. What we do for you includes selecting the tenants, vetting them, protecting deposits and more. As well as you having no more tenant find fees, check-ins or check-outs, there is no more tenant damage to cover. It’s on us. If you opt for rent guarantee insurance you may still have to pay tenant find fees as well as having to deal with tenant queries and complaints.
- No more organising maintenance and repair or the associated costs! We step in and do it for you. As well as that, when we return your property to you it will be in the same condition or better so rest assured; your asset is protected. With rentguarantee insurance while your monthly income may be protected you will still have to pay and take time out of your day for the maintenance and upkeep of your property. We know time is money and this may be more costly in the long run.
- We ensure you get a recurring and predictable income so you can bank on money that is actually there. There are no void periods for the property owner as per the contract you still get paid that month and on time even if we don’t. This differs from rent guarantee insurance because the insurance company may only start paying arrears 2 months after the tenants refusal to pay so you may be out of pocket for a period of time. With a typical lettings agreement, the risk is all on the owner’s side. With Guaranteed Rent, we take the risk and give a guarantee to the owner that their rent will be paid no matter what.
Can you really put a price on peace of mind?
While handling it all yourself may feel like a cheaper and better alternative a lot of the time property owners find that the time they used to take up doing all the maintenance and admin can now be spent with family, doing things they love.
Since they both offer security and peace of mind, why wouldn’t I just get rent guarantee insurance as it enables me to retain a higher monthly profit from the property and would give me more over time?
While this may be true in some cases as mentioned previously extra and unnecessary fees added by other management companies add up and may leave you with less so while you may get less income with guaranteed rent, the cost of tenant find, maintenance and repairs and the rent guaranteed insurance can add up. To see how our guaranteed rent services compare to traditional lettings cost you can check out our elephant in the room blog linked here.
Please make sure you do your due diligence.
If you have any questions on guaranteed rent or any other service we provide please call us on 0113 519 1369 alternatively you can email us at info@amalida.com for more details.
You can find more information on other questions here.
