NRLA boss Ben Beadle has advised would-be investors to avoid ‘too good to be true’ rent-to-rent schemes and called for greater scrutiny and regulation of the sector.
Speaking at the recent Property Investor Show, Beadle warned them not to believe all the rhetoric.
“Whenever there’s a big problem it normally links back to rent-to-rent done badly,” he said.
“If it’s too good to be true it’s probably best to do something else…as it invariably ends in tears and out of pocket.”
Two high profile cases have made headlines in the last month alone. Sam Eustace, boss of guaranteed rent business Kingsman Property Ltd, was handed an 11-year ban for scamming £6.7 million from investors, while high-profile property investor Ben Brand, who was hailed as a rent-to-rent success story, put his company StayBC Ltd into liquidation, owing creditors nearly £1.5 million.
Property Tribes’ Vanessa Warwick said that letters received by landlords looking for customers would almost certainly be from someone fresh off a course with no experience, who was promising to guarantee rent.
She added: “If you check them on Companies House you will almost certainly find their company was set up in the last few months.”
Warwick pointed out that the Advertising Standards Authority had just ruled that sending unsolicited letters to property owners is illegal if the landlords being targeted have opted out of direct mail.
Beadle also objected to rent-to-rent operators using HMO licence lists to target landlords.
He explained: “It’s an outrageous breach of what the list is there for. HMO schemes are there to raise standards, not to give people a quick route to a customer base.
“I worry about landlord registration – we need to make sure that we’ve got robust control over that data.”