Advertising Rent to Rent Correctly

The ASA took issue with an advert which purported to guarantee rent to landlords. Among other phrases the advert stated:

“We make sure you get the full rent amount you are due each and every month … This effectively means that we are taking away the risk, giving you confidence in your rental income so you can rely on it, whatever happens”.

While there was evidence that this promise had been upheld it was actually subject to limitations, albeit ones that appear not to have been used in full.
However, the key complaint from the ASA was less to do with the scope of the promise and more to do with the manner in which it was being fulfilled. There are two recognised guaranteed rent models. One in which an agent finds tenants in the usual way for landlords and then provides a guarantee, often backed by insurance, which covers any rent default. The second model involves the rent guarantee offeror taking a tenancy themselves and paying the rent for the property, although usually at less than the market rate, and then letting the property out on their own account- a rent to rent deal. This was one of the latter arrangements. 

The ASA took the view that an arrangement advertised as “Guaranteed Rent” would be seen by landlords as one in which they would contract with tenants with the agent making good any shortfall, by whatever method, as a third party. They would not normally understand this to mean that they would be entering into a rent to rent arrangement. The scope of any limitations should also be made clear.

I have come across a number of cases where landlords have entered into an arrangement with what they thought was a letting agent only to discover later on that it was actually a rent to rent deal. This ruling emphasises the importance of agents making clear in advertising whether they are merely acting as an agent and finding a tenant to contract with the landlord or whether they are proposing to contract themselves in a rent to rent arrangement.

About the author:

David Smith is a partner at Anthony Gold Solicitors and a recognised expert in landlord and tenant law.

He can be reached by telephone on 020 7940 4060 or by email on [email protected]

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