It’s a simple concept: Rent a house, then sub-let the rooms to sub- tenants and make as much profit as possible.
This is a mushrooming phenomenon which has seen hoards of “experts” writing blogs, books and seminars on how to get started and even running courses costing up to £500 on how to bring in tens of thousands of pounds with virtually no out-lay. One such “guru” includes Daniel Burton who claimed he earned £35,000 a month from the get-rich-quick scheme. Last week, The Guardian revealed he has gone missing, leaving tenants and landlords across London hundreds of pounds out of pocket.
The idea behind how it works involves a tenant (or “renter”) offering a landlord a guaranteed amount of rent for a set period, say three years. “This amount is likely to be less than its actual market value but the landlord, in theory, is happy because the property is let and he does not need to worry about lost rent, void periods or tenant issues for the foreseeable future” says Paul Shamplina.
The tenant agrees to look after the property, take care of maintenance issues and in some cases even carry out a refurbishment on the property. Then, the tenant sub-lets as many rooms as possible to willing sub-tenants who are happy to rent a converted lounge or dining room and live in a house shared with six other strangers. The “renter” then creams a profit on the difference between the rent he is paying the owner/landlord and the rent coming in from the sub-tenants as a result of the multi-let.
Mr Shamplina has been asked to discuss the latest craze and how landlords might get unwittingly caught up in this scam and, what they should do if they are.
He comments:
“I have several concerns over the legal practices of this process and how it affects the very landlords it claims to ‘support’. In my view, if it is not carried out diligently the landlord loses control of the property which is where the problems begin. I suppose I speak from being at the sharp end of dealing with evictions but I would advise any landlords entering into such an agreement to tread very carefully.”
To hear Paul’s views on rent to rent, tune in to You and Yours on Radio 4 from 12pm on Wednesday 16th October 2013.
