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I was wondering if someone could clear this up for me. I was speaking to a friend the other day that is now looking to start rent to rent in Scotland. I was sure this was illegal, however, and told him that, but I cannot find anything online to back this up? I was told that it was illegal but I am now not sure?
Can anyone please clarify if it is or isn't?
Not illegal if done correctly.
However if a lender is involved many of them don't allow such R2R.
Doing so in breach of lender conditions is risky if the lender finds out.
Thank you for such a quick reply, Paul.
Remember I reply as an English LL
It would be presumptuous of me to say I understand how the Scottish letting market regulations work.
Cos I don't!
So what goes for England may not for Scotland.
You really need a reply from a LL etc involved in the Scottish market so you shouldn't take my response as the final word on the scenario you outline.
Any rent-to-rent arrangement would have to give consideration to the terms of the Private Housing (Tenancies) (Scotland) Act 2016 which gives tenants enhanced security of tenure.
Don't know if it's technically illegal as I'm not a lawyer but subletting is in breach of every mortgage agreement I've ever seen and every tenancy agreement.
If not illegal, morally dubious and I've never come across any respectable landlord or letting agency doing it.
LETS MAKE HOMES by treating landlords as partners, tenants as customers & every property as our own."
That being the case how do Northwood manage to do R2R?
Our Guaranteed Rent scheme is a little different from rent 2 rent as most people think of it. This is usually where a party rents a property under a PRT and sublets it under another PRT.
We offer a commercial contract with the landlord which allows us to rent the property under a PRT in the same way any landlord would rent out a property. As such, I am not going to comment on other 'rent 2 rent' products without reading the contractual terms, however I agree one should exercise extreme caution. Get it wrong, and gaining possession becomes one of the biggest challenges.
With the changes to legislation, we obviously revisited our contracts and made amendments as necessary to ensure compliance with the Law and to protect the landlord and tenant's interests. This was a very thorough process.
I would recommend extreme caution in respect of other 'rent 2 rent' products as I am acutely aware of the problems some could create, however we have ensured that these potential pitfalls are covered. You will appreciate that Guaranteed Rent is our core product and as such no expense was spared in ensuring that we got this absolutely spot on.
Glad you replied to Paul before anyone answered on your behalf.
So just to be clear.
You (i.e. Northwood) rents a property from a private landlord as a company let. With the landlords agreement, you then sublet this property out to another individual or company. This is how you can gaurantee a rent.
Is the rent you pay to the landlord the market rent? Do you still charge the landlord a management fee? I take it you have permission from the lender (if there is one?)
And you do this in Scotland?
Just another thought...
How do you get around the insurance requirements to declare that you have complete control over the property?
Also, wondered how this type of letting would stand up under scrutiny by the new housing tribunals and would it be in breach of the new Model PRT
as somebody looking at rent2rent in Scotland I found this thread really helpful and interesting. Shame that Eric never replied to Ed's question as I would love to know the answer too. If anybody has done rent2rent training with people who know how this scheme works in Scotland I'd be really interested in recommendations.