David Smith explains what rent to rent is and what you should consider when making a rent to rent deal.

Property professionals are being lured into paying for training courses which advise investing in legally-dubious rental schemes.

Housing solicitor David Smith has warned investors to be wary of anyone advocating so-called ‘rent for rent’ schemes.

These schemes – by which an investor rents a property, then sublets it at a profit – are fraught with legal problems, Smith said.

They can result in investors losing money and finding themselves in court.

“The people running these courses often give the impression that they are themselves making a fortune from their ‘rent to rent’ investments”, Smith said.

“But often their money – if they’re making any – actually only comes from running the courses.

“They may not be experts at all – and as a result the investment advice offered can be very bad indeed.

“It can result in people facing huge fines, and potentially putting themselves at risk of prosecution.”

Low savings rates coupled with recent changes to tax policy have resulted in many would-be landlords seeking news ways to earn money from property.

Self-styled ‘property gurus’ have sought to tap into this market by offering courses on building up a ‘rent to rent’ property portfolio.

Smith, a specialist in residential landlord and tenant law at Anthony Gold solicitors, advised caution of these schemes.

“The people running these courses often seem to gloss over the relevant property law”, Smith said.

“I’ve seen courses where the people running them make no mention of the 90 day limit on short term lets in London.

“Ignoring this can land any landlord in court.

“They often also suggest using so-called ‘licences’ instead of tenancy agreements, and claim that by using a licence a landlord can force eviction without first going to court.

“But that’s just not true. The courts have repeatedly held that ‘licences’ are not substantially different from tenancy agreements, and you still need to go to court to get an eviction order.”

Smith pointed out that recent legislative changes mean landlords risk now even more if they ignore the rules.

The Housing and Planning Act 2016, which came into force in April 2017, allows tenants to sue, and get financial compensation for, any unlawful eviction, Smith said.

“I would be very wary about ‘rent for rent. I liken these schemes to those old ‘buy my book and you can be as wealthy as me’ advertisements in the newspapers.

“Too often these people seem to be trying to make money by telling others to do something about which they know very little indeed.”

This video has been recorded for Property Fraud Awareness Week 2017 in partnership with Property Tribes. If you think you have been a victim of property fraud please contact us 0207 940 4000.

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