Rent to rent is a property investment strategy which allows property investors who do not have the capital to outright buy a property, rent from a landlord with the purpose of multi letting to tenants. Rent to rent is an effective way of generating income whilst investing less.
follow link Making Sure You Are Covered
Rent to rent does however come with potential issues which must be considered before investing in order to avoid making any potentially costly mistakes. If you are planning on sub letting, it is imperative that the Landlord understands your intentions with the property. The reason for this being, they may not be covered for that particular type of venture.
chf forex broker HMO Licensing
In some areas of the UK, if a property is intended to be rented out to multiple occupants, it has to pass the HMO (house of multiple occupancy) rules in order to obtain an HMO licence from the relevant local authority. We won’t list the specifics of what is required from a property in order to pass, but it is important you make sure the property is licensed if required. This is both the Landlord and your responsibility.
follow link Landlord Property Insurance
Landlord Property Insurance must be considered before sub letting. It is not a legal requirement, however in the event of the building being damaged by a fire, flooding etc, you may be stung with a costly bill of repairs as the tenants are now your responsibility. It is important to shop around and find the policy that best suits your intentions with the property.
http://happilyforever.com/die/6031 What Contracts Need To Be In Place
Contractual obligations such as the property owner being bound by a clause in their mortgage contract, can mean traditional subletting and tenancy agreements are not appropriate. If a property owner still has money to pay on their mortgage and their mortgage agreement specifies they may not sublet, you and the owner will need to draft a management contract.
Management contracts involve you paying the owner a monthly fixed sum for managing their property, in this case you will draft your own rental agreements. This ensures that no subletting is happening on the owner’s behalf which may infringe their own mortgage agreement.
The world of property can be difficult to navigate for newcomers and those experienced in the sector. Many potential mistakes along the way have the potential to hinder your return on investment, so it is important to first entirely understand every aspect of subletting before investing your time or money.