Unique Rental Guarantee Scheme
We pride ourselves at Brookdale for being different in many aspects including tenant selection criteria, property management, marketing and a host of other things. This is a non-insurance based rental guarantee. Our tenant selection criteria (we believe) is second to none, however, even the best tenants are prone to changes in financial circumstances especially in a recession.
Most letting agents state that they offer a rental guarantee scheme but this is, in fact, only an insurance based scheme for which you pay a premium and the agent earns commission from selling it to you. In the event of non-payment of rent, you will have to claim for the lost rent. Invariably, these policies do not pay out when a tenant is late paying their rent and involve an “excess” (like car insurance policies) and the excess is usually a month’s rent. Hardly a guarantee!
We pay full market rent for your property under our guarantee scheme
Some agents offer a “rent guarantee” scheme which states that you will be paid whether your property is occupied or not.
Often, you are paid a percentage of the true market rent for the property. Sometimes this is 70% or lower. Effectively, your letting agent becomes your Tenant and sub-lets to other Tenants. You should look into your mortgage terms and conditions for clauses about sub-letting.
We are sure that all agents offering this service try to operate ethically but, all things considered, if you were an agent guaranteeing to pay rent on an empty property, perhaps the quality of Tenant selection criteria could be compromised during the re-let period? This is not how our scheme works.
When we say “GUARANTEE” we mean it! We guarantee to pay 100% of the market rent to you as long as your Tenant is occupying the property and whether they pay us the rent or not. In terms of gaps between tenancies, we are confident that our reputation as the largest letting agent in Peterborough and our far reaching property marketing will ensure your property re-lets quickly minimising void periods.
When an agent says “Rent Guarantee” - look into the small print! We pay full market rent for your property under our guarantee scheme.
Non-insurance based rental guarantee for Landlords
Many letting agents advertise some form of “rental guarantee”. To the best of our knowledge all of them, apart from ours, are insurance based.
This means that the letting agent will sell you an insurance policy (and earn commission from this) to guarantee your rent. Often the policy sets out certain terms and conditions in relation to how Tenants are referenced and almost all of them include an “excess” which is usually a month’s rent. Hardly a guarantee.
Our rental guarantee is a simple contract between you (our Landlord) and us. It states that whilst the Tenants occupy the property we will pay your rent on time, every time regardless of whether the Tenant(s) pays us. It really is that simple.
One of the down-sides of an insurance based guarantee scheme is the need to claim for any lost rent. This, of course, causes a delay in payment to you. With our guarantee scheme, even if the Tenant is late paying rent you will be paid. Without rent guarantee you would effectively miss a payment until the Tenants account was up to date. This is not helpful if you have a mortgage to pay.
The cost of the scheme is just 2% + VAT (2.4% inc VAT) of the monthly rental. To get onboard it’s simple. For new Landlords, select the option when signing your management contract.
For existing Landlords, just request a rent guarantee contract and we will set it up.
What happens if the Tenant does not pay their rent?
When we meet new Landlords a question often asked is what happens if the Tenant does not pay their rent? There is only one answer If we don’t receive the rent - neither do you!
Our Tenant selection criteria is extremely strict and as a result we seldom come across Tenants who won’t pay their rent - but sometimes it is because they can’t pay. There are various reasons for this such as marital breakdown, illness, redundancy etc.
For a Landlord, the effects can be financially problematic. For example, most Landlords who need to cover the mortgage for their property rely of the rental income each month and rely on it being paid to them on a certain day of the month. Your rental payments made on time every time.
With our rent guarantee scheme there are two main benefits:
- If the Tenant cannot pay at all, you will still be paid.
- If the Tenant is late paying their rent, without rental guarantee you would have to wait for the payment and find another means to pay your mortgage. With rental guarantee, your payment will be made as normal.
We are all familiar with the term “excess” in the context of insurance - particularly car insurance which affects the majority of us.
Well, many rental guarantee insurance policies also include an excess and this is often an amount equivalent to a month’s rent. When we devised our rent guarantee scheme we researched other products on the market and the majority had an excess. Our view on this was to question how a “guarantee” could actually exclude some of the missing rent due!
It is for that reason that our rental guarantee really does mean “guarantee” as there is absolutely no excess and even if the Tenant is late paying the rent - you are still paid.
Because our rental guarantee scheme is non-insurance based there is no claim form to fill in in the event of late rental payment or non-payment.
Your regular payment will appear in your bank account on the usual date whatever the problem with the Tenants account.
Some of the rental guarantee insurance policies will ask you to complete a claim form detailing the circumstances of non-payment and also ask for details about what your letting agent has done to recover the debt. They may also require details of the Tenants including references and credit checks taken.
It is the aim of insurance companies to limit payments made to their clients in the interest of their business. Quite rightly, they will scrutinise the claim closely before making payment.
All this takes time which you may not have readily available if you have a mortgage payment to make.
Our rental guarantee scheme represents absolute financial security and excellent value for money at a cost of just 2% of the monthly rental.
Feedback from our Landlords indicates that the guarantee of payment in the event of missing Tenant payments is appealing but also the fact that late payments from Tenants do not affect their cash flow is perhaps equally as important.
Some larger investors build in an element of rental arrears into their portfolios but, for smaller investors and those with just one rental property, our scheme is a real asset.
The prospect of not missing a mortgage payment or having to move money around bank accounts to cover a mortgage payment is a real bonus.
The cost of our rental guarantee scheme is just 2% + VAT (2.4% inc VAT) of the total monthly rental
It’s simple to join and simple to understand. On your financial statement for your property next to the commission rate for managing your property will be an additional item “..plus rental guarantee sum”.
There is no fee to pay in advance, no membership fee - just 2% + VAT (2.4% inc VAT) of the gross monthly rent.
All you need to do to join the scheme is (for new Landlords) select the option in your management agreement and for existing Landlords, contact us to request a contract.
Our rental guarantee means that there is absolutely NO compromise on tenant quality because it is Brookdale who are guaranteeing your rent.
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