For the last six years, I’ve successfully let a property through a refugee charity with them acting as agent and me as private landlord. I’ve now got tenants leaving another nearby property in January and have approached the charity to offer this property as an additional one for them. Their approach to working with landlords has changed somewhat and they are now working with more LLs who lease properties to them (five year term) rather than the agent/LL arrangement.
I’ve not leased before and wondered if anyone had any experience of that or advice on what I should be looking for. I’ve asked them for a sample contract and some figures and I expect them shortly.
For the record, I’ve known this charity a long time and know many of the staff personally. They are a quality outfit (recently featured in the Guardian for example) and have a good track record with those they house. I’m not looking for advice on the pros and cons of offering housing to refugees as I’ve got a number of years experience with that but rather on the lease arrangement versus the typical agent/LL situation I’m used to.
The landlord loses any consumer status that they may have had as this is a commercial enterprise
It may be in breach of their lease or covenant on the property
It may be a breach of planning regulations depending on the usage
Its likely any landlord insurance they have won’t cover them
If the mesne tenant, (intermediate tenant) breaches legislation, such as licensing, health and safety etc, the superior landlord will likely be liable for the fine/penalty and possibly rent repayment order
You would need specialist legal help with the contract to ensure there are no terms that could come back to bite you. This may include alterations to the forfeiture clause making it impossible to end the lease or unreasonable repairing obligations or making the landlord responsible for right to rent checks.
The mesne tenant can sometimes set up an office in the property and claim they have a 1954 Landlord and Tenant Act commercial tenancy with the right to automatic renewal ad-infinitum
If the mesne tenant uses ASTs with the occupants then they may not be able to evict at the end of the lease if you require your property back, particularly once s21 ends. If you manage to successfully evict your mesne tenant, you would be likely to inherit the occupants as your direct tenants.
Promises of guaranteed rent can evaporate when there is a crisis. During the covid lockdown, many rent to rent operators defaulted on payment.
Promises to return properties in the same condition they took them on are commonly ignored and in practice there is very little the superior landlord can do about it.
It has been known for mesne tenants to make alterations to the property to pack-in more occupants, erecting stud partitions between rooms
Many of the expensive “guru courses” around are churning out new “graduates” geared up to bombard local landlords with offers but without any of the legal knowledge, financial acumen or resources they need to do the job.
The whole list won’t apply in every case and some operators are better than others, but its likely that some will apply and for that reason I would never advise any landlord to get involved in a rent to rent scenario.