Rent to rent occurs when a company, local authority, or an individual rents a property from a landlord owner and guarantees to pay rent for an agreed term, regardless of whether the property is occupied or not
The so-called Rent To Rent business model is well-suited to some particular properties in certain areas of the country, according to a lettings agent.
Rent to rent occurs when a company, local authority, or an individual rents a property from a landlord owner and guarantees to pay rent for an agreed term, regardless of whether the property is occupied or not.
The landlord owner subsequently gives consent to the third party to then rent the property out to other tenants. In essence, the rent-to-renter sublets the property to an occupier tenant (or tenants), usually at a higher rent than is paid to the landlord owner.
It has become increasingly popular amongst landlords who want a hands-off approach to rental market investment, as well as a steady and certain income from their portfolio.
The analysis of potential rent to rent opportunities in the current market, conducted by the agency Benham and Reeves, shows that there are 4,711 rental properties that have been on the market for some time without securing a tenant, all of which could potentially pivot to a guaranteed rent model.
Of this 4,711, 30.6% are located in the South East, suggesting that landlords within the region stand to benefit to the greatest extent by moving to the rent to rent model.
The South East is followed by the East Midlands at 16.1% and London at 12.5%, with the East of England also home to double-digit potential at 11.4% of the national total.
The area with the lowest level of potential opportunity is the North East, which makes up just 2.4% of all rent to rent investment opportunities in the current market, followed by the West Midlands (7.0%) and the North West (7.2%).
Benham and Reeves director Marc von Grundherr says: Rent to rent is arguably a model that has flown under the radar within the BTL sector, but it is growing in popularity amongst landlords and this is largely due to the benefits it can offer.