Risk check · England (UK notes)
Rent-to-rent and guaranteed-rent deals: check before you sign
In a rent-to-rent or guaranteed-rent deal, a company pays you a fixed rent for your property, then lets it out — often room by room, or as short stays — and keeps the difference. It isn't illegal, and some deals work well. But it can breach your mortgage, your lease or your insurance, and if the operator fails you can be left with occupiers you never chose.
What the deal is in law depends on the documents and on what actually happens — not on the words 'guaranteed rent'. Answer the questions below to see what's confirmed, what's missing and what to check before signing anything.
The eight questions — law and contracts are different
Something can be legal and still be forbidden by your mortgage, lease or insurance. Check each one separately.
1. Is it legally permitted?
Yes in principle. The operator either takes a tenancy or lease from you (they become your tenant and sublet), or acts as your agent under a management agreement (the occupiers are then your own tenants). Which one it is changes who is responsible for almost everything.
2. Does the mortgage lender permit it?
Most mortgages need the lender's written consent to let, and many buy-to-let mortgages forbid letting to a company, subletting or HMO use. A breach can let the lender demand repayment. Check your offer and mortgage conditions — the law alone can't tell you what your lender allows.
3. Does the superior lease permit it?
If you own a leasehold flat, the lease may restrict subletting, sharing, short lets or business use. Breaking a lease covenant can lead to forfeiture proceedings (with legal protections first) and claims from the freeholder.
4. Does the insurance cover it?
Your insurer must be told the property is let to an operator and sublet, and how (rooms, short stays). If you don't, a claim may be refused or reduced. Check the policy wording, not just the summary.
5. Is planning permission or licensing needed?
Rooms let to 5 or more people from 2 or more households need a mandatory HMO licence; your council may also run additional or selective licensing. A shared house of 3–6 people is planning use class C4 — allowed from a family home unless an Article 4 direction applies; 7+ needs permission. Short-stay use can need planning permission (in London, more than 90 nights a year does).
6. What rights will the occupiers get?
Occupiers usually become assured tenants (or licensees) of the operator. If the operator's tenancy ends — especially if you accept a 'surrender' — lawful subtenancies can bind you, making you their landlord. Exactly when that happens depends on how the arrangement ends and what the documents say; the law here isn't clear-cut, so get a solicitor to check before you end anything. Don't change the locks on occupiers: for most residential occupiers a court order and lawful enforcement are needed, and unlawful eviction is a criminal offence.
7. Money and tax
The rent is still your income for tax. Check who holds and protects deposits, who pays bills and council tax, and what security you have if the operator stops paying (a guarantee, a deposit, accounts). Since the Renters' Rights Act, rent repayment orders can be made against a superior landlord as well as the immediate landlord — but only where that landlord committed a relevant offence (such as running an unlicensed HMO). Your exposure depends on the offence, the documents and who controlled or managed the property.
8. What happens if it goes wrong?
If the operator stops paying, vanishes or is fined, you may face arrears, occupiers you didn't choose, damage, unlicensed-HMO penalties and court proceedings — while your mortgage still needs paying.
Questions you'll need to answer
- Is it a lease to the operator, or a management agreement?
- Does my mortgage lender allow a company let, subletting, HMO use or short stays — in writing?
- Does my lease (if leasehold) allow subletting, sharing or short lets?
- Has my insurer agreed to cover this exact use?
- Will it be an HMO, and who holds the licence?
- Does it need planning permission (C4, Article 4, short lets)?
- Who protects deposits and who is responsible for repairs, safety certificates and compliance?
- What security do I have if the operator stops paying?
- What happens to the occupiers when the agreement ends?
Watch out
- Never accept a "surrender" from an operator without legal advice — it can make the occupiers your tenants.
- Don't evict occupiers yourself or help the operator do it: for most residential occupiers a court order is needed, and unlawful eviction is a criminal offence.
- Rent repayment orders can now be made against a superior landlord as well as the operator — where that landlord committed a relevant offence (Renters' Rights Act 2025, s103).
- Section 8 notices must come from the occupier's direct landlord — notices served by the wrong person are invalid.
- Mortgage, lease and insurance permission are contract questions — the law being OK doesn't mean your lender or insurer is.
What to ask the professionals
Solicitor
- Is this a lease or a management agreement in law, and what does that make me responsible for?
- If the operator fails, will the occupiers' tenancies bind me?
- Do the termination and hand-back clauses actually work?
- What security (guarantee, deposit deed) should I insist on?
Mortgage broker / lender
- Does my mortgage permit a company let, subletting, HMO use or short stays?
- Will the lender give written consent, and on what terms?
Insurer
- Is a rent-to-rent operator letting rooms or short stays covered?
- What must I disclose, and what is excluded?
Accountant
- How is the guaranteed rent taxed, and what expenses can I still claim?
Talk it through, or get a specialist
Wala will ask the questions it needs and go through your answers with you. If you want a professional to look at it, Wala will tell you who to see.
Sources
| Source | Where | Status | In force from | Checked |
|---|---|---|---|---|
| Renters' Rights Act 2025, s103 — rent repayment orders: liability of landlords and superior landlords | England | Law in force | 1 May 2026 | 10 Nov 2026 |
| Renters' Rights Act 2025, Schedule 6 — leases, mortgages and insurance that permitted assured shorthold lettings | England | Law in force | 1 May 2026 | 10 Nov 2026 |
| GOV.UK — HMO licensing | England and Wales | Guidance | — | 10 Nov 2026 |
| Rakusen v Jepsen [2023] UKSC 9 (rent repayment orders before the 2025 Act) | England | Case law (now changed by statute) | — | 10 Nov 2026 |
| Property Redress Scheme — rent to rent / guaranteed rent agent guide | England | Industry guidance | — | 10 Nov 2026 |
| GOV.UK — Renting out your property: guidance for landlords | England | Guidance | — | 10 Nov 2026 |
Reviewer status: Not yet reviewed by a solicitor. Mortgage and insurance terms vary by lender and insurer — only your own documents can confirm them.