Rent Guarantee by Agent falling short

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    Rent Guarantee by Agent falling short

    Hi all,

    I could do with some advice please.

    I've let my property through an estate agent for the last 2 years without any issues whatsoever under rent Guarantee Scheme. I get less than what I normally would but I wanted that piece of mind after a really bad experience with an unpaying tenant which left me with a really big financial hole.

    There is a year remaining on the contract.

    Rent has always paid on time, never ever late and in general have a really good relationship with the agent and I'm really happy with them.

    However, at the start of lockdown, the agent have advised that majority of tenants have stopped paying rent due to Covid-19 and that rent payment will be reduced. 1st month 25% will be paid then remaining 2 months 50% will be paid. This is a rather big hit to take. You could say I'm just about breaking even.

    I know these are unprecedented times and under normal circumstances I'd have argued the point that both parties have signed a contract of rent guarantee and anything less than the specified amount will be in breach of contract.

    I’m sure there are many tenants and agents alike will be taking advantage of the whole pandemic crisis.

    What can I do in this situation if anything? Do I demand that agent pay what’s owed? On the other hand, I know even if I get my property back, it will be harder to find tenants which will make me worse off. Also, tenants would probably stay in property for free and as the AST will have been between agent and tenants, it will be an absolute nightmare trying to evict.

    #2
    You need to read the contract between you and the agent, to see what their rights are.

    If you can afford to, I would wait until normality has resumed and then, assuming the agent has no right to vary the rent unilaterally, consider starting the process of recovering the rent owed.

    The hidden problem with guaranteed rent schemes is the mismatch in rights and liabilities between the partied (the landlord, the scheme operator and the tenant(s)).

    If the guaranteed rent agreement ends, any tenants "left behind" become the landlord's tenants with all the normal rights of an assured tenant.
    Which puts the landlord in a terrible position.
    However badly the scheme behaves, the landlord is usually still worse off if they end the agreement.
    The chances of a rent guarantee scheme returning the property empty seem remote - their income will be coming to an end and they would incur a lot of new costs.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      Thank you for you reply, much appreciated.

      I can afford to hold on for now - just dont' like the thought of being taken for a ride.

      Comment


        #4
        I'd be having a little chat with the tenant, to enquire if he was really paying less rent.

        Comment


          #5
          Sounds like their chancing it to me. Agree you need to find out the tenant's situation. If they've been furloughed their still getting 80% of their salary. The full rent is still due even if you negotiate a longer time pay off the arrears.

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            #6
            Originally posted by JK0 View Post
            I'd be having a little chat with the tenant, to enquire if he was really paying less rent.
            The occupier of the property has no obligation to talk to a superior landlord.

            Comment


              #7
              Originally posted by MdeB View Post

              The occupier of the property has no obligation to talk to a superior landlord.
              If I was the under tenant, I would also be p*ssed if my landlord was not passing on my rent, and would have no problem talking about it.

              Comment


                #8
                Originally posted by JK0 View Post
                If I was the under tenant, I would also be p*ssed if my landlord was not passing on my rent, and would have no problem talking about it.
                Their landlord has no rent to pass on.
                They have a separate agreement to pay rent to the superior landlord.
                Money is fungible.

                Comment

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