The Property Unleashed Podcast

Is The Renters Right Bill Going To Kill Rent 2 Rent?

• Mark Fitzgerald • Episode 305

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The new Renter's Right Bill is causing unnecessary panic in the property investment community about the future of rent-to-rent strategies. Mark Fitzgerald explains why this concern is misplaced and how properly structured rent-to-rent businesses will continue to thrive despite legislative changes.

• Renter's Right Bill is changing ASTs from fixed-term to month-by-month rolling contracts
• Many incorrectly claim this will kill rent-to-rent strategies
• Professional rent-to-rent operators never use ASTs with landlords
• Management agreements or commercial lease agreements are the correct contracts to use
• ASTs are only used between the operator and tenants, not with property owners
• Focus on finding landlords who value property maintenance and preservation
• Quality properties require less frequent repairs and redecoration
• A handful of well-managed properties can provide substantial cash flow
• Delivering a VIP service to landlords is key to sustainable success
• Proper training and systems are essential before attempting this strategy

For free tools, resources, and training on proper rent-to-rent implementation, visit thepropertyunleashed.com where you'll find e-books on HMO rent-to-rent, serviced accommodation, deal sourcing, deal analyzers, and free masterclass training.


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Speaker 1:

Is the new renter's right bill going to kill rent-to-rent? Some people think so, but let's find out. Hello, my name's Mark Fitzgerald. It's great to have you joining me here today. So if you've lived under a rock, you haven't heard about the renter's right bill.

Speaker 1:

This is where the government are changing the ASTs the contracts that we use with tenants and also changing some of the rules and regulations around tenancies in the UK market, in the British market, in England basically. So an AST normally was either a six-month or 12-month contract that you would have with a tenant. It's normally six months when you're in HMOs and normally 12 months if you're doing buy to let. Now what the government want to do is change that to a month on month rolling contract, rather than actually tenants having the safety of locking themselves in for a nice agreement. Now there are some different rules for us as, so to speak, landlords than there has been in the past and of course you know a tenancy can be ended within one month's notice for the actual tenant, but for us landlords, we have to give, you know, two to three months notice to actually ask the tenants to leave. So it's a bit of a nonsense. If I'm quite honest with you. It's not really something I'm worried about, but what is annoying me at the moment is when people are out there basically saying rent to rent now is dead. You cannot do rent to rent anymore as soon as this legislation comes in. That is actually incorrect. That is normally talked about and spoken about by people who've never done rent to rent and don't actually know how to set up and run a compliant rent to rent business. Now what do I mean by that? These are people that think that we use an AST contract to do a deal with the landlord or letting agent on a rent toto-rent property. That is absolutely crazy. If you are doing AST or using AST contracts to do your rent-to-rent deals, then you're doing it wrong anyway. But these people are wrong. Yes, rent-to-rent will be dead because you cannot lock in a big agreement. You cannot do three to five years anymore, and this is what they're naively talking about. So if you've heard this, any networking events or anything, then it is a load of rubbish.

Speaker 1:

What we want to be using contractually when we do rent to rent is management agreements, which is very much the same as a letting agent uses with their landlords, or a commercial lease agreement if the property is not mortgaged. These are two contracts that you can use when doing rent-to-rent deals and should be using as well. In my training the Rent-to-Rent Business Builder, I give you these contracts, I give you copies of these contracts so you know exactly the types of contracts that you should be using. But you should not be using licensed agreements. You should not be using ASTs when it comes to these things. So when people are saying this to you or they're talking about it, these people do not know what they're on about. Okay, unfortunately, they think they do, but they don't. They haven't got the facts straight. As I say, if you are out there using ASTs on your rent-to-rent contracts with your landlords, then you're using the wrong contracts. You think of a letting agent Now, a letting agency.

Speaker 1:

Whether you give them one of your HMOs or your buy-to-lets, they will use a management agreement and most of the time, in any mortgage terms and contracts, it will say we allow a management agreement to be used to run the property and that is why that is what we use for rent to rent, we use a management agreement. Now, with our tenants that are staying in the properties, we would have used, or we can still use ASTs. Okay, then it could be going to licensed agreements, it could be going to shorter term tenancies, but ASTs fundamentally right here, right now it's AST, so I'll keep talking about that and when it changes I'll do an update and an updated video on all of that. So you know about that as well. But that's what you use with your tenants. Okay, you use ASTs with your tenants. You use management agreements or commercial agreements with either the letting agency if you're going through a letting agency or the landlords. Okay, don't get caught up in all of the hype that this is it. This is the end of rent to rent.

Speaker 1:

Rent to rent is a great strategy to be using to build up cash flow. You have to be doing the right deals. You want to be finding landlords that appreciate the fact that you're going to maintain and look after their property and keep it to a high standard. A lot of landlords aren't bothered about that. A lot of landlords just want the money and they're normally the properties that you walk around that aren't very nice properties. You'd have to put money into those properties and they just want as much money as possible because they found out now that they cannot fill the properties themselves. Why? Because they've let the properties go to disrepair and nobody wants to live there anymore. Those aren't always the properties that you want to be looking for. You want to be looking for the good, savvy investors.

Speaker 1:

I look for investors that are like myself, people that have put money into a property and want it maintained to a high standard. Now that high standard of maintenance will come at a slight cost, not a massive cost if you think of the grand scheme of things, but at a cost where I can afford to look after their properties, make some money and make sure that their asset is kept to a high standard. And they're making money as well. Because all too often people will go for a very, very cheap letting agency but then within 12 months, 16 months, all of the money that they've spent on their property to make it really nice, they're having to do it again. They're having to redecorate, they're having to change carpets. Why? Because the properties are not being managed to a high standard. They haven't got the agencies being proactively sorting out little maintenance issues, sorting out things that are going wrong, like we can do as rent-to-rent operators, and this is what we teach everybody.

Speaker 1:

Like we can do as rent-to-rent operators, and this is what we teach everybody this is how I teach everybody anyway is to make sure that we deliver a VIP service to any landlords that we work with, and that means that we don't need hundreds of properties to manage, we just need a handful. A handful of properties can give you the cashflow that you want to go and live the life that you want and be able to put systems in place. Of course, you can use Rent2Rent to do serviced accommodation as well short-term rentals that is another great strategy and of course, you can use the management sort of strategy with that as well. But if you need any help with these, then go to thepropertyunleashedcom.

Speaker 1:

Free tools and resources. I have some e-books on HMO rent to rent, e-books on serviced accommodation, deal sourcing. There's some deal analyzers there as well and some free masterclass training that can help you to get out there and understand how you're supposed to do this. I give away free training that actually helps people when it comes to contracts that they should be using and, of course, how they should be setting themselves up, because far too many people that are just getting it wrong.

Speaker 1:

Okay and realistically, if you can't afford to invest in yourself and a bit of training, like the rent to rent business builder or the ultimate service accommodation business builder. Don't start doing this strategy. Okay, because it's not a quick fix and you'll probably end up losing more money than you make. Why, because you just won't do it right, because you won't know everything. We cannot share every last thing with you and, of course, if you're in our community, we are able to help you, we are able to coach you, we are able to support you as you're moving forward. So is the renter's right bill going to stop rent to rent? No, not at all. As it happens, it's a bit of a hindrance. It's not really great. I think the government have made a mistake, but then who am I to actually tell the government what to do? We will survive, we will thrive and I hope you do the same. I hope you've enjoyed this episode and I look forward to you enjoying another episode very soon with me. Take care and bye for now.