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Guaranteed rent or a letting agent: which actually pays more?

The headline rent is not the number that matters. Here is how the two models compare once voids, fees and arrears are taken out.

Every landlord who calls us asks the same question in the first two minutes: why would I take less than market rent? It is a fair question, and the honest answer is that you usually do not, once the year is counted properly.

The headline figure is not the income

Say a three-bedroom house lets at £2,100 a month through a high street agent. That is the number on the listing. Now take out a month of void between tenancies, roughly £2,100. Take out management at ten per cent plus VAT, around £3,000 over the year. Take out a tenant find fee on the re-let, often another £1,000 or more. Add a fortnight of rent lost while works are done between tenancies.

The £25,200 headline is closer to £18,500 in the account, and that assumes nobody falls into arrears.

What guaranteed rent changes

A guaranteed figure of £1,700 on the same house pays £20,400 a year, every year, with no fees deducted and no void risk. It is a lower headline and a higher income, which is counterintuitive until you have run the year out on paper.

When a managed letting is the better answer

There are cases where it is. If your property is in a premium central postcode, in excellent condition, and you are comfortable carrying void and arrears risk yourself, the market-rent route can out-earn a guaranteed figure. That is why we quote both and let the numbers argue it out.

The part nobody prices

The other half of the decision is not financial. Under a guaranteed agreement you are not the person who takes the call about a boiler on a Sunday, and you are not the person chasing rent that is eleven days late. For a lot of owners, that is worth more than the difference in the figures.

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