Ask These Questions Before Signing a Guaranteed Rental Agreement

There comes a time when landlords renting traditionally may not see the same returns they once did, hence the transition into guaranteed rent.

1. What Does Guaranteed Rent Cover?

If you are a landlord new to guaranteed rent schemes, before you sign your property away to a management agency for the next 1-5 years, it is a good idea to get an understanding of what exactly you’re opting into.

• Does the payment cover void periods?
• Are maintenance repairs included, and if so, to what extent?
• Does the rent cover bills?
  
  With most guaranteed rent schemes, the partnering agency will pay you a rental income regardless of the occupancy status of your property. They will also usually cover maintenance and repair costs however, the extent of liability may vary but usually the agreed rent will cover bills.
  
  However, every agency will operate differently, so to avoid misunderstandings, it is good to know what the agreement covers beforehand.

2. How Are Tenants Vetted and Selected?

The quality of tenants living in your property is important for both you and the agency. It has a vital role to play in the longevity of the property’s condition and value.

• Are background checks and credit assessments done?
• How do you ensure a tenant is suitable for the property?
• What happens if a tenant damages the property or breaches the contract?
  

Seeing as you will be getting paid regardless of the property’s occupancy, this may not be as important to some landlords. However, it is a good idea to understand your agency’s screening process.

It is worth noting that many guaranteed rent agencies work with the council, so they won’t carry out processes like credit checks and background checks because the council will have already vetted the tenants.

However, most agencies will still conduct their form of screening as it is also in their best interest to get the right tenants for the property.

3. How Long is the Agreement and What are the Terms for Renewal?

The duration of the guaranteed rent agreement is decided between you and your agency. Usually, they fall anywhere between 1 to 5 years but before signing the contract it is worth asking:

• What happens at the end of the agreement?
• What are the penalties for early terminations?
• Is there a possibility to extend the agreement and renegotiate the rent?

It is good to have clarity over this before signing your agreement this way you can ensure you are in a position to commit and also plan for the future.

4. How Often Are Property Inspections Conducted?

It can be nervewracking handing over your property to the management of someone else, however with guaranteed rental agencies, the idea is that you will be leaving your property in the hands of professionals.

Most agencies will have a plan and team in place responsible for property inspections and maintenance, however, it is worth asking:

• How often will the property be inspected?
• What is covered during these inspections?
• Who is responsible for the repairs and the costs incurred?

Your agency should seek to carry out regular inspections. However, it is worth realising that constant inspections can feel overbearing for tenants and could affect the relationship between them and your agency.

The idea is to understand your agency’s process to ensure that your property will be properly looked after under their management.

5. Who is Responsible for Legal Compliance and Requirements?

In order to rent your property, you must ensure that all legal regulations and requirements are met. As part of the agreement, most agencies will take on this responsibility. For better clarification of what is involved regarding legal compliance you should ask questions along the lines of:

• What are the legal requirements are needed to rent the property?
• Who is responsible for keeping up with compliance and updating certificates?
• Is there a legal team to support in the event of a legal dispute?
  

Not keeping up with the legal requirements of your local council can leave you vulnerable to hefty fines. In theory, as the homeowner, this is your responsibility. However, as part of the agreement, your agency will likely take it upon themselves to ensure compliance.

6. Are There Any Additional Costs or Hidden Fees?

One thing many landlords fail to believe is the lack of upfront costs involved in the onboarding process of a guaranteed rental scheme. All the fees are factored into the rent offered by the agency, hence why the rate seems to be below the market average. In most cases, it’s simply the fact that the cost of service has already been accounted for. That said, ask:

• What costs upfront costs are there?
• Are there any additional fees for maintenance or other services?
• Are there any hidden fees to be made aware of?
  

Good agencies are very transparent about potential costs that may be incurred, if any, before making you sign the agreement. However, it is good to make sure you have asked to avoid being blindsided

7. How Does the Onboarding Process Work?

If you are confident that a guaranteed rent scheme is the best property investment strategy for you, then understanding how the onboarding process works is the next step. To get a better understanding of this, it is good to ask:

• What documents and certifications are required?
• How long will the onboarding process take and when will the first payment be made?
• What standards does the property need to meet?

Every agency has its standards and requirements that must be met before taking on a new property. Meeting these requirements, as well as being able to provide necessary documentation for the property, could affect the length of the onboarding process.

Some agencies have a 24-72 hour turnover period. However, this varies depending on the situation. So, asking these questions ahead of time will allow you to get everything in order to ensure a smoother onboarding process. The smoother the process, the quicker you will receive that first payment.

Conclusion
There are millions of questions that you may have when speaking to a guaranteed rent agency. We’ve just highlighted key questions that most new landlords ask.

If you have further questions or are interested in exploring this investment strategy in more detail, our team are always willing to support you. Give us a call or book a free consultation with us today, and we will be happy to help you on your investment journey.