Rent2Rent

Rent2Rent – also called ‘rent-to-rent’ – is where an individual or company rents out a property from a landlord, who then rents it out to a third-party. In most instances, the landlord is promised a fixed rent for a certain period of time. The person renting out the property to third-parties then does so at a higher price to make a profit. It’s also known as subletting and is most common when a tenant of a rental property rents their home to someone whilst they are away.

Though this may seem like a new idea, it’s been around for a while. It has recently gained some popularity amongst younger property entrepreneurs. It works because landlords with exhaustive portfolios can hand over some control and are still guaranteed the income they require. Plus, they don’t have to worry about tenants or the property as much. But it’s not for everybody. There’s a certain level of risk involved as the initial renter will still be obligated to pay rent in full and on time to the property owner as per their tenancy agreement, even if their renter doesn’t pay them.

Are Rent2Rents legal?

Yes – if you’ve got explicit written permission from your landlord and are following all the terms and conditions in your agreement. This strategy is most commonly used with Houses in Multiple Occupation (HMOs), such as student accommodation, which means that each room is rented out separately to three or more tenants.

Do I count as a landlord?

Technically, yes. While you don’t own the property, you are renting it out to another party in exchange for rent payments. This is usually stated in the contracts that you draw up with the owner of the property, however the terms of agreement can vary from contract to contract. If you have any questions, you should speak with your landlord and contact HMRC directly.

The profits you make count as rental income, and you would have to therefore pay taxes after you earn more than £12,570.

Benefits of Rent2Rents

• You don’t need to get a mortgage nor do you need a large, upfront deposit
• Minimal costs – no stamp duty or legal fees to worry about
• Seems to generate profit pretty quickly

While you don’t need a hefty sum upfront to start rent2rents, do keep in mind that you’d be required to pay your landlord a certain amount every month, so make sure to have that amount available.