Increasing numbers of landlords are being left out of pocket and facing the wrath of local authorities, building managers and lenders when short-let based guaranteed rent schemes go wrong.
An anonymous blogger has spilled the beans on the growing but shadowy world of companies who persuade landlords to let them sub-let properties to corporates and holiday makers in return for ‘guaranteed rent’ schemes.
The blog, written by an un-named London letting agent, warns landlords on two fronts.
Firstly, managing agents who look after large blocks of leasehold apartments are wising up to the practice, which is often in breach of the head lease, as are mortgage companies who often exclude short-lets within their terms and conditions.
The anonymous blogger, who is believed to be the boss of a London letting agency, says he recommends to his landlords that they turn down these ‘corporate let’ offers because, all too often, the intermediate companies disappear, leaving the landlord out of pocket.
“We recently took on and rented an apartment that had been let to a short let company on a ‘guaranteed rent’,” they say.
the short let company was struggling and by the time we re-let the apartment, the
Landlord was owed several months of rent.”
Paul Shamplina of Landlord Action says this kind of activity has increased ten-fold in recent years because, with rent rising dramatically, companies operating in the ‘sub-letting with consent’ market – as it is also known – are aware that there are huge profits to be made.
“There are some professional companies that do it correctly, but mostly it’s the wild west,” says Shamplina.
“At Landlord Action we see it at the other end, when the landlord is not being passed on the rent, or their property is overcrowded and breaching so many regulations…but they are on the hook for any action the authorities decide to bring.
“It’s a multi-million pound business, that will keep growing and will not be controlled, unless there is stiffer regulation and much more resource needed for stiffer enforcement”.Read the blog in full.