A lettings agency’s ‘game changing’ up-front rental payment system is being rolled out across the UK after a two-year pilot project.
The Advanced Rent Option has been created by Choices, a nine-branch agency in the south east of England and with associate brands including Sinclair Hammelton and Daniels in Kent.
The ARO operates through a so-called Primary Tenancy which involves the agent acting as the landlord’s tenant, essentially sub-letting to the incumbent renter.
It’s different to a Rent to Rent scheme as there are still only three parties in the transaction; it is instead a more flexible and adaptable business structure according to Choices chairman Simon Shinerock.
“It completely changes the relationship and takes all responsibility away from the landlord” he says.
The agency collects rent on a monthly basis but provides landlords with an up-front sum to manage their buy to let mortgage payments or to use as capital towards expanding their portfolio.
Landlords take their up-front rent at the beginning of a tenancy provided their property is compliant and the tenants pass referencing, or at any time during an existing tenancy, subject to a new one-year agreement.
“Landlords with small to medium property portfolios are paying between 12 to 17 per cent plus VAT for a fully managed service. It is possible to pay less, but over 30 years of experience in the industry, I have come to believe that paying a discounted agency fee, or letting privately is often a false economy” adds Shinerock.
This post has originally been featured in Letting Agent Today.