nigel lewis

Many landlords are probably dimly aware of the burgeoning army of ‘property gurus’ who offer courses on how to make money from operating rented homes in the UK.

But at the least scrupulous end of this market, they present a serious risk to wider landlord community and sector.

Not all are a problem. Many of these property educators are legitimate and laudable, offering tips and advice on how to become a buy-to-let landlord and the different routes to market whether it’s traditional, rent-to-rent, short-term lets or HMOs.

But there is a growing number of self-styled gurus who offer extremely expensive paid-for courses on how to create wealth exclusively from rent-to-rent, aimed squarely at inexperienced and naïve investors.

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Rent-to-rent

Rent-to-rent is a legitimate sub-sector of the property market, although service levels vary hugely as LandlordZONE has reported in the past.

These specialists offer guaranteed rent on two or three-year contracts, paying rent to landlords that’s usually below market rate in return for ‘peace of mind’.

But this sector is unregulated, and in recent years a small army of rent-to-rent ‘deal-makers’ have rushed in, offering sub-letting contracts to landlords.

It’s not a new idea, but rent-to-rent is being presented increasingly as a new route to ‘easy money’ by these gurus, whose courses are all about how to put these so-called ‘deals’ together.

The self-styled academies are unregulated and charge thousands of pounds for courses that offer information and advice readily available elsewhere, often for free.

If people want to pay such huge fees, that’s their problem, but there are two aspects of these operations that the UK government needs to address.

Financial risk

The first is that these ‘educators’ urge people to get involved in risky rent-to-rent contracts that offer guaranteed incomes to landlords. But, if the market were to hit the buffers or a tenancy/property turn out to be more expensive to operate than expected, these contracts would lead to huge financial problems for all concerned including the landlord and tenants. And too often, they do.

But, because thee gurus are not offering advice on regulated financial products such as mortgages or pensions, the Financial Conduct Authority isn’t interested.

The good news, I hear on the grapevine, is that officials within HM Treasury and the ministry of housing are waking up to the financial carnage caused when rent-to-rent contracts go awry.

Tenants are particularly exposed by rogue and inexperienced operators. When these contracts end badly, tenants often lose their deposit, any rent paid in advance and face being made homeless.

Misleading marketing

The other key issue is that many of these gurus use YouTube videos to lure in students by using misleading claims and sometimes made-up case studies that they argue are illustrative but that, to the wide-eyed viewer, come across as real.

As any experienced landlord knows, operating a rental property is not easy and nor is it armchair ‘passive income’.

But despite many people’s efforts to flag up these misleading claims to the Advertising Standards Authority, no action has been taken despite the huge cost of the courses and financial risk to those who attend them.

Unless something is done soon to bring governance to bear on these gurus, their courses and the activities they promote within the private rental sector, it’s a problem that will eventually blow up in the everyone’s face.

There has already been one widely-reported suicide connected to the debts amassed by one student after attending a course. How many more horror stories must there be before the authorities act?

Nigel Lewis, Editor – LandlordZONE
editor@landlordzone.co.uk


4 COMMENTS

  1. Hello, I have been trying to register with with your forums but unable to do so. My account is created but you do not send me my confirmation email and I am unable to private message a board admin. Can you explain what the problem is, because I see other new users posting every day.

    Thank you.

  2. Most R2R is fraudulent in that a mortgage lender; freeholder, and insurer rarely allows R2R.

    With unmortgaged R2R properties rarely are are insurers advised.

    That leaves the owner LL effectively uninsured.

    There are only a few providers that do R2R correctly and they tend to have been doing it for 25 years.

    It surely should be the case that R2R landlords are fit and proper persons.

    The risks to victim tenants are excessive.

    R2R certainly needs to be regulated.

    R2R LL have very little ‘skin in the game’

    This can leave tenants very vulnerable.

  3. Well said Paul. Recently a letting agent we had dealt with for some time tried to pressure us into going with a company which would rent our properties and sublet them, presumably because the agent got a cut. Apart from the snake-oil-salesman-like nature of the guy running the company which sublets, our buildings insurers said, and I quote: “if you do that, look for new insurers”.
    Wait until some greedy landlord has a property damaged/burned down and tries to claim on his/her insurance when the property is RtoR

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