Guaranteed Rental Income

The words ‘guaranteed rental income’ at the top of an advertisement, or displayed at an exhibition, can go a long way to encouraging a would be purchaser to obtain their property from the advertised source.

However, great caution is necessary and the purpose of this fact sheet is, of course, to present the facts! Here are a few suggestions.

  • Make sure you get the guarantee in writing, and examine carefully any conditions. These can include a requirement for the property to be available to the guaranteeing source at all peak periods, for example, meaning that the times when you can visit your own property are limited, or if you do occupy the property yourself at peak periods, the guarantee is reduced anyway.
  • If the company making the guarantee requires also to manage the property for you, make sure you are not paying ‘over the odds’ in management charge.
  • Beware particularly if you are ‘guaranteed’ an annual rental cheque ’whether or not the property is let out’. You have a right to be suspicious. It has been known for some companies offering this sort of guarantee to so inflate the purchase price that the ‘guaranteed rental’ is in truth being paid by the purchaser.
  • Remember any guarantee is only as good as the company which makes it! Find out from owners of similar properties if the guarantee is genuine and works in practice.

And indeed, we ourselves, do have from time to time, some excellent offers, where, by working hand in hand with the developers we are able to offer a limited number of guaranteed rental income contracts for a specific period. Whilst we do not offer any false promises, we are quite happy to say that the income received would actually go a fair way to making the interest on the mortgage payments for the first 12 months or so. This is a big help during the early stages of buying a property abroad.

There are undoubtedly companies who so concentrate on the lettings side of holiday homes that they can offer an excellent service and provide a regular and satisfactory rental income. From much experience we have found that the ideal situation is to find the best letting agency you can and combine their activities with your own letting arrangements carried out in the UK. Our associated offices in the country where you are purchasing will introduce you to several letting companies and leave you to question them and choose which, if any, you wish to use.