How Rent Guarantee Schemes Can Help You Weather Rental Voids

Landlords, specifically individuals and startup property management companies, might think that once a tenant is in place, life will be a bed of roses and steady income. After all, there are plenty more prospects to fill the gap should your first tenants leave. 

However, especially in the uncertain markets of recent years, and the likelihood of economic traumas to come at both a local and national level, there is no such thing as a sure bet when it comes to renting. In short, landlords and letting agents need to ring fence as much of their income as possible, and focus on maximising their return on investment (ROI) across their portfolio. 

Workers are moving for new jobs and being made redundant due to the economic uncertainties. Families are upsizing to better properties, but then having to move out due to changes in their personal situations. And then there’s the ever-changing shift between parts of a town sliding out of favour and those hot spots that everyone wants to live around. 

Secure Your Income With A Rent Guarantee

No matter how solid your current rental income, and your book full of good prospects on the lookout for a new place, that situation can change almost overnight. Especially if a major employer moves out or goes bust, or promised investment fails to materialise. These stories might be front-page news, but they can affect landlords just as much as the workers and many related services that rely on them. 

To protect your business, your mortgage payments and livelihood there are many ways you can cover your income. Reducing rents and going on an active hunt for new tenants is one way, but a more assured and stress-free method is making use of a guaranteed rent        scheme. 

Peace of Mind With Rent Guarantees

Whether you have struggled with particular tenants in the past, or had a fallow period on filling your properties, the best time to start using a rent guarantee is now.  

A rent guarantee scheme is typically provided or offered by property management agents or insurers, even though rent guarantee is not actual insurance. Whoever provides the guarantee promises landlords a fixed rental income, regardless of whether the property is vacant or the behaviour of an existing tenant. 

If the tenant defaults on payments for any reason, due to unemployment, illness or another reason. Or, they vacate the property unexpectedly and it remains vacant for a period, the landlord still gets their rent paid. 

Some schemes also provide legal expenses if there’s a dispute with the tenant or some damage to the property. But a rent guarantee only provides finite levels of cover, so you need to double-check the small print and find the best rent guarantee product for your business and properties. 

Some rent guarantee policies can be sold (with or without legal protection, depending on your budget or needs) alongside a typical landlord property insurance policy. Or, you can find a specialist provider. Whatever the source, they are a popular and pragmatic choice to protect your landlord or property management business. 

Making Your Business Secure and Efficient

A typical example of a rent guarantee can see them paying out up to £2,500 per month for rent for 12 months. That should be plenty of time to get a new tenant in, whatever the overall economic situation. On the legal side, protection up to the value of £50,000 for costs and fees incurred in property dilapidation, tenant eviction, fraud and a few other legal areas can be covered. Again, check the specifics of each product. 

They will appeal to landlords who may have had problems, even having been through enhanced or streamlined tenant vetting services, in the past. Whatever the process, they ensure the landlord gets paid, regardless of the number of prospects, and the suitability or quality of tenants.

Landlords can build up good relations with insurers and rent guarantee providers, which might lead to discounts as their business grows, and they may also be able to tailor products for each property’s particular situation. However your business grows, securing income now will put you in a better position to meet future opportunities. 

In any modern business, cash management and operational efficiency are the keys to success and growth. Landlords, even smaller operators, need to focus on those aims, and developing the business with guaranteed rental income can prove vital during any rough patches. 

Using a rent guarantee also shows the landlord takes the business seriously, which can improve their access to further growth opportunities, mortgages and insurance schemes. 

A rent guarantee scheme provides efficient financial security, saves the landlord time, and reduces the hassle with problem tenants, and makes for smoother administrative processes. That combination enables landlords to focus on their broader growth plans, helping them focus on long-term property goals rather than short-term tenant challenges, which can eat up significant amounts of time for the unprepared. 

Conclusion

Whatever the future throws at the markets, properties from new builds to traditional housing stock, having a rent guarantee makes your business more secure. In an increasingly competitive climate for landlords, you can maximise your income and revenue, while looking to outcompete rivals when it comes to expanding your business.