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Guaranteed rent schemes in London: what they really cost a landlord

24th August 2026
Guaranteed rent schemes in London: what they really cost a landlord

Short answer: Three different products are sold as "guaranteed rent" in London. One is a company let where an operator becomes your tenant and sublets at a markup. One is an insurance policy with a premium and exclusions. One is an agent's promise bundled into a management fee. Only the first costs you rent every month.

The word "guaranteed" is doing a lot of work in this market. A landlord in Canary Wharf, Nine Elms or Royal Wharf who searches for a rent guarantee will be shown three products that share a name and share almost nothing else. They have different tenants, different legal structures, different failure modes and completely different price tags. Two of them cost a fee. One of them costs a slice of your rent, every month, for years.

Here is what each one actually is.

What are the three products sold as "guaranteed rent"?

Rent-to-rent / company let Rent guarantee insurance An agent's "rent guarantee" in the fee
Who is your tenant? The operator company The person living in your flat The person living in your flat
Who is the occupier's landlord in law? The operator You You
What you give up A discount to market rent, control of who occupies, and usually the tenant relationship itself Nothing on rent; you accept referencing standards and claim conditions Flexibility — the cover is whatever the agent bought
When it pays Monthly, occupied or not, for as long as the operator stays solvent and in contract On tenant default, subject to the policy conditions and exclusions Per the policy sitting behind the promise
Cost shape An ongoing discount off every month's rent A premium — an annual fee per tenancy Bundled into the management fee, so you cannot see it

How does a rent-to-rent or company let scheme work?

An operator signs a commercial agreement with you, usually for three to five years, pays you a fixed monthly sum whether the flat is occupied or not, and lets the property on to occupiers at a higher rent. The Property Redress Scheme's landlord guide puts it plainly: the operator becomes "the immediate landlord of the occupiers", and "the operator makes its income from the difference between the rent paid to you and the rent received from the occupiers".

The legal shape matters more than most landlords expect. Under section 1(1) of the Housing Act 1988, a tenancy is assured only if the tenant is an individual who occupies the dwelling as their only or principal home. A limited company fails that first condition, so your agreement with the operator is not an assured tenancy. The people actually living in your flat are individuals occupying it as their home — so their agreement with the operator is capable of being one. You have created a tenancy you are not a party to, in a property you own.

That is why the Property Redress Scheme guide warns that "the occupier's rights do not simply end because your agreement with the operator ends", and tells landlords not to assume the operator has protected the deposit properly. It also flags the four consents landlords skip: whether your mortgage lender permits the arrangement, whether your insurer covers commercial letting and subletting, whether your lease permits subletting, and who applies for and maintains any HMO licence. The guide puts civil penalties for serious, repeated or ongoing non-compliance at up to £40,000.

The NRLA's research into rent-to-rent found that nearly two-thirds of landlords in these arrangements had no idea what rent the operator was charging the occupier. Only about a quarter reported no difficulties.

What does a guaranteed rent scheme actually cost?

Here is the arithmetic, with round numbers. This is an illustration, not a market quote — your own figures will differ.

Take a flat that would let at £2,500 pcm on the open market. An operator offers a "guaranteed" £2,150 pcm.

  • The gap is £350 a month — 14% of the rent.
  • That is £4,200 a year, and £12,600 across a three-year agreement.
  • At £2,500 pcm, a day of rent is about £82. So £4,200 a year buys you roughly 51 void days a year, every year.

Now ask the honest question: does your flat sit empty for fifty-one days a year? For a well-marketed London property, that is a very expensive insurance policy — and void days are the landlord's money whichever direction they run. The discount is not a fee you pay once. It compounds, quietly, for the length of the contract, and it is invisible on a bank statement that shows £2,150 arriving on time every month.

Guaranteed-rent pitches land hardest on two groups: owners of new-build stock, where a block completes and forty flats hit the market at once, and overseas owners who cannot easily supervise a letting from another time zone. Both are the groups where the discount is largest and the oversight is thinnest. If that is you, read our new-build lettings and overseas landlord pages before you sign anything.

We won't sell you a guarantee whose price is hidden in the rent.

What does rent guarantee insurance cost instead?

The second product is an insurance policy, and it is priced like one. On our managed tenancies we arrange Goodlord Rent Protection and Legal Expenses insurance, underwritten by Hadron UK Insurance Company Limited and administered by Elevate Specialty Limited, with up to £100,000 of indemnity per property. While you pursue possession, it pays 100% of the monthly rent with no cap on the number of months, then 90% for up to six weeks after vacant possession while the property is re-let.

It is a premium, not a discount: a fixed annual fee per tenancy for rents up to £10,000 pcm. We take no commission from the insurer — the insurance is arranged at cost. The full architecture, including first-month's-rent cover and Section 13 rent-increase cover, is set out on our rent protection page.

Insurance has real conditions, and we say so. Cover depends on the tenant being referenced to the required tier, the tenancy being statutorily compliant, and the claim being reported inside the window — nil excess within 45 days of the first missed payment, one month's rent between 46 and 90 days, nothing after 90. A guarantee with no exclusions does not exist. A guarantee whose exclusions are written down is the honest kind.

Has the Renters' Rights Act changed the maths?

It has changed why the pitch works. Since 1 May 2026, all assured tenancies are periodic, section 21 is gone, and possession runs through section 8 and the courts. Section 56 of the Renters' Rights Act 2025 makes the advertised rent a ceiling: a landlord "must not invite or encourage any person to offer to pay an amount of rent under the proposed letting that exceeds the stated rent". Landlords have lost the levers they used to price risk with, and guaranteed-rent operators are selling into that gap.

The gap is real. The answer is to price the risk explicitly — a premium you can see — rather than surrender 14% of your rent for three years to remove it.

Sources

Book a free rental appraisal. We will tell you what your flat lets at, how fast, and what the risk actually costs to cover. Book a valuation or call 020 3865 1500.

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