An East London landlord has experienced the challenging reality of unravelling rent-to-rent or ‘guaranteed rent’ agreements, which is more arduous than commonly believed. The Resolution Department Lead at HFIS handled a case involving a landlord who had entered into a rent-to-rent contract for their detached house, seeking a guaranteed income. However, due to deteriorating relations with the managing agent, the landlord wished to terminate the agreement. Despite providing a three-month notice for ‘vacant possession,’ the agent refused the request, leading to the complaint being escalated to the HFIS team for resolution.
Discovering Vulnerability
Through discussions with both parties, it was revealed that the occupants of the house, arranged by the local authority, were considered “vulnerable.” Evicting them on short notice was deemed impractical and unfair. Additionally, the rent-to-rent agreement in question was a “mesne” agreement involving three parties: the tenant, the “head tenant” (or intermediary), and the property owner (the landlord). According to common law, unless the initial agreement between the tenant and managing agent was unlawful (which was not the case here), the only way to terminate the agreement was for the landlord to evict both the “head tenant” (the managing agent) and the sub-tenant (the occupants) through legal proceedings.
No Dispute with Tenants
The landlord did not have any issues with the family living in the property but rather with the managing agent, alleging poor property maintenance. HFIS discovered that the agent failed to adequately explain to the landlord why they couldn’t relinquish control of the property. However, considering the circumstances, the landlord’s desire for vacant possession of the house was deemed “unreasonable.”
As a result, the landlord is now left with limited options and is seeking separate legal advice on how to proceed. This case highlights several important lessons:
- Exercise caution when selecting rent-to-rent agencies, assessing factors such as their office environment, staff communication, accreditation, and visible membership of valid redress schemes on their premises or website.
- Landlords should approach rent-to-rent agreements with great care and ensure they are well-informed. They should be aware that terminating such agreements prematurely would require court intervention, assuming the initial agreement between the agent and tenant was lawful and fair.
