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Property Redress Scheme Expels Guaranteed Rent Operator

Property noise assessment

The Property Redress Scheme has expelled a guaranteed rent operator after they failed to pay an eyewatering £150,000 in rent to a former landlord client.

The agent was required to pay the landlord £25,000 by the Property Redress Scheme, the maximum they can award, and has now been removed from the scheme for not complying with the final decision. The landlord will continue to try to recover the amount owed via the courts.

The case involved rent to rent arrangements for eight properties, which the agent struggled to fill due to the pandemic. The landlord agreed to reduced rent payments whilst the agent tried to find tenants, but the agent failed to comply with their contractual obligations to the landlord. The agent was also found to have used an unregistered handyman following a gas leak, resulting in the landlord reporting the incident to Gas Safe and the HSE. This all amounted to a significant financial loss for the landlord.

Following the decision, Sean Hooker, Head of Redress at the Property Redress Scheme, stated: “Guaranteed rent, or rent to rentoperators are becoming more and more common in the private rented sector, as it offers a lower barrier to entry into the property market. Whilst there are reputable operatorwho have been providing the service for many years, there is a significant proportion of the market who are less experienced and need to make sure they fully understand their obligations and responsibilities.”

The Property Redress Scheme has also reported a 43% increase in complaints relating to guaranteed rent since 2018. This data represents a warning to any landlord contemplating rent to rent. Problems such as loss of rent, damage to property and sitting tenants do occur regularly, mainly because the parties have not fully understood the complexities or made proper legal provisions in the arrangement.

Paul Shamplina, Founder of eviction specialists, Landlord Action and Chief Commercial Officer at Hamilton Fraser, says: “In my view, if the rent to rent arrangement is not carried out diligently the landlord loses control of what is happening at the property and this is where the problems begin. With many years’ experience of dealing with evictions I would advise any landlords entering into such an agreement to tread very carefully.”

Fortunately, the Hamilton Fraser group of companies, including the Property Redress SchemeLandlord Action and mydeposits, have combined their expertise to create an ‘Ultimate guide to rent to rent’. The guide includes everything a landlord needs to know about rent to rent so that if they do decide to utilise the model, they can avoid the common pitfalls. The guide is available on the mydeposits website.