At the start of last month, the Conservative Party announced that all buy-to-let landlords will be forced to register with a redress scheme. This scheme type of scheme is already compulsory for all letting agents and estate agents. The Property Redress Scheme has said that is all buy-to-let landlords are being introduced to these redress schemes, then the Rent to Rent firms should also be forced into this type of scheme.
Rent to Rent companies operates by taking on a property from a landlord guaranteeing to offer them guaranteed fixed-rent for a set period of time. As a part of this agreement, the landlord then has to give consent to the R2R operator to let and manage the property. This rental usually takes place on a room by room basis to other tenants. The Rent to Rent firms act as a middleman between the landlord and the tenants living in the property. Tis arrangement is usually in place with Houses of Multiple Occupation, and the renter is able to make a profit from the shared accommodation model.
However, because this Rent to Rent model does not fit the traditional definition of either lettings or property management work, it means that there is an ambiguity about whether Rent to Rent companies have to be signed up to the redress scheme by law. It has been thought that is all other parties that are involved in the lettings process are signed up to such a scheme then Rent to Renters should be too. However, these arrangements see the Renter to Renter effectively becoming a tenant, and the person actually living in the property a sub tenant. This leads to a complex legal arrangement, with the landlord having to pay insurance to cover such a solution and are left unsure of whose responsibility it is to look after the property. As for the tenant, they are unaware they have no relationship with the landlord, so any problems and repairs that arise can leave them high and dry.
