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Advanced Rent Propositions

September 17th, 2019 | By Issac Qureshi

Introduction

Renting conditions within the United Kingdom have been described as “tricky,” making it difficult for landlords to determine their finances month to month. Landlord with property find that the cost of letting their properties to new tenants is going up. The monthly rent they collect from their tenants may not be sufficient to allow them to fund future business or private plans.

What the Advanced Rent Proposition Does

The Advanced Rent Option (ARO) allows landlords to gain additional financial freedom so they are better able to add more properties to their portfolio. Or, they can pay for an upcoming holiday.

The ARO gives landlords the ability to request and receive an entire year’s rent in one payment. This ARO is offered by the Choices Estate Agents and other brands, which use the Primary Tenancy service.

Minus usual letting fees, landlords receive up to 12 months rent—in advance. This option doesn’t apply automatically. Tenants are required to provide references first.

A Few Figures

Looking at a few figures, if a property rents for £1,200 monthly, if the tenant’s references are acceptable, the landlord can expect to receive a lump sum of £10,292 for the year after signing up for an ARO.

This £10,292 is reached by subtracting normal annual agent fee costs of £2,592, a new tenancy setup fee of £305, a rental guarantee of £432 and an emergency fee (maintenance-related) of £750 from the total rental of £14,400 that the tenant has just paid. Of course, the tenant must be financially able to bear the substantial cost of annual rent.

Options for Landlords

If a landlord has a tenant living in one of their properties, and they want to place the property under ARO, they have two options available to them.

First, they can direct the Choices Estate Agents or their related brands to conduct background checks on their tenant, and obtain new references before signing an ARO agreement with the agency.

Second, the landlord can hire Choices or its partners to manage properties with current tenants, until their tenancy ends. Once the tenancy ends, the landlord can sign an ARO.

The ARO is simply the tenant’s annual rent, paid up-front. It is not a loan made to the landlord.

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