Rent to rent is where someone leases a property from its owner, then sublets it to tenants or short-stay guests at a higher rent or charge, and keeps the difference. The owner is promised “guaranteed rent” without the work. The rent-to-renter takes the risk, the running costs and the profit.
However, an approach from a rent-to-renter is rarely labelled as rent to rent. Advertise a property on one of the portals and you’ll often get an approach offering a “corporate let” or “guaranteed rent”. The landlord might have visions of a multinational housing employees relocating to the UK, but it’s usually a newly formed company without any assets that wants to lease the property and sublet the rooms as an HMO or as serviced accommodation.
Is it a good idea for landlords? In my view, it is not. The guarantee is only as good as the company giving it, and since the Renters’ Rights Act came into force on 1 May 2026, the superior landlord carries more of the downside: rent repayment orders can now be made against them, and with Section 21 gone there’s no longer a way for the rent-to-renter to hand the property back with vacant possession at the end of the lease.
In this post, I explain how rent to rent works and why the Renters’ Rights Act has made it riskier for the property owner.
Last updated: 31 August 2026
Rent to rent at a glance
What does rent to rent mean?
Rent to rent is the strategy beloved of many property trainers whereby someone rents / leases a property from a landlord and then uses the property to provide serviced accommodation, or an HMO. The rent-to-renter then sublets the property at a higher amount than they pay to the landlord owner. They make a profit in return for the risk taken and the service they provide.
As the property will be used as a business, it’s not possible to use an assured periodic tenancy agreement. Instead, a specialist commercial lease is necessary.
A useful summary of rent to rent is in the witness statement of Ben Beadle of the NRLA in the case Rakusen v Jepsen about rent repayment orders in the Supreme Court. Click here to download Ben Beadle’s witness statement.
Is rent to rent legal?
Yes, it is legal for an owner of a property to enter into a commercial lease with a third party who then either lets the property as an HMO or uses it for serviced accommodation.
That said, “legal” does a lot of work in that sentence. The arrangement itself is lawful, but whether a particular rent to rent deal is legal will depend on whether everyone involved has the permissions they need.
On the owner’s side, that means the mortgage lender’s consent to a commercial lease and to subletting, buildings insurance that covers HMO or short-stay use, and (for a flat) the freeholder’s consent under the lease.
For both the owner and the rent-to-renter, it means an HMO licence where one is required, planning permission where short-term lets or a larger HMO need it.
The rent-to-renter will need to ensure they comply with all the other obligations that fall on the immediate landlord of the tenants where the property is let as an HMO.
Is rent to rent a scam?
Rent to rent isn’t a scam in itself, but it attracts people with no assets, no experience and a lot of confidence, in order to make money.
If the rent-to-renter doesn’t get the HMO licence, doesn’t comply with the regulations, or simply stops paying, the owner is the one left with the property, the tenants and (since 1 May 2026) a possible rent repayment order.
>> Related Post: How subletting works in England
How does rent to rent work for the rent-to-renter?
For the rent to rent strategy to be profitable from a financial point of view for the rent-to-renter, there must be enough of a margin between the outgoings and the income. It’s a way to earn additional income without the same capital investment required for a buy to let investment.
For serviced accommodation, it works best in areas where guests pay a high nightly rate, and the landlord receives a low monthly rent. With HMOs, there needs to be a significant difference between the money the tenants pay on a room by room basis, and the amount the landlord receives. However, there are considerable set up costs for both serviced accommodation and HMOs. There are also licensing considerations and compliance with the HMO Management Regulations for HMOs.
Finally, the location of the property is key for both strategies. For serviced accommodation, the location needs to be suitable if it’s going to be popular for short-term lets. Serviced accommodation is also risky, due to void periods, because the outgoings for the rent-to-renter nevertheless continue when there is no-one staying in the property. Likewise, for HMOs, it must be an area popular with sharers for there to be sufficient demand from tenants.
>> Related Post: What landlords need to know about HMOs
>> Related Post: Landlord guide to serviced accommodation
Pros and cons of rent to rent for landlords
The strategy can potentially benefit the landlord, if they indeed receive the promised “guaranteed rent without the responsibility”, regardless of whether the property is occupied. The landlord would also still benefit from the property’s capital growth.
However, and this is a big caveat, the guarantee is only as good as the company offering the guarantee. The landlord needs to be sure the rent-to-renter will look after the property properly, and comply with all the regulations.
Consequently, the landlord will need to do extensive due diligence to make sure that the rent-to-renter has sufficient financial standing to be able to afford to keep the property in good repair, is an accredited landlord with relevant training and experience on the management of HMOs (if it’s going to be an HMO) and can demonstrate that the property and tenants will be a safe pair of hands.
Landlords should also check up on the performance of the rent-to-renters once the contract is signed, especially whether they get an HMO licence. I would also advise that landlords inspect the property at least once a quarter to make sure it’s in good condition and that the rent-to-renter is complying with their obligations in the lease.
There is also more wear and tear on the property with short-term lets and sharers, and rent-to-renters might not keep on top of repairs and maintenance.
There are some good rent-to-renters around, but landlords should view approaches from individuals promising “guaranteed rent” with scepticism. I would certainly never lease one of mine to a rent-to-renter.
>> Related Post: The truth about “passive income” for landlords
Why the Renters’ Rights Act has made rent to rent riskier
The tenancy reforms in the Renters’ Rights Act came into force on 1 May 2026, and the following two reforms have made leasing to a rent-to-renter considerably riskier for a landlord:
Changes to Rent Repayment Orders
Under Section 40 of the Housing and Planning Act 2016, as amended by the Renters’ Rights Act, rent repayment orders (RROs) of up to two years’ rent can be made against landlords who have committed certain housing-related offences. For instance, breach of the restriction on letting or marketing during the restricted period after using Grounds 1 or 1A of Section 8, or letting an HMO without the correct licence.
Before the Renters’ Rights Act, “superior landlords” were insulated from rent repayment orders. The case Rakusen v Jepsen went all the way to the Supreme Court on whether RROs can only be made against a tenant’s immediate landlord (the rent-to-renter). The tenant argued that RROs could be made against a superior landlord, but the superior landlord successfully argued that an order to repay rent to the tenant could not be made against them as they’d never received rent from the tenant.
The Supreme Court agreed, and said it would ‘strain the language to say that a superior landlord is “repaying” rent to a tenant from whom it had never received any rent’.
However, this decision was reversed by Section 103 of the Renters’ Rights Act, which enables the First-tier Tribunal to make an RRO against any “superior” landlord if they commit one of the offences.
The abolition of Section 21
The Renters’ Rights Act also abolished “no fault evictions” under the old Section 21 of the Housing Act 1988. This has made it considerably riskier for a landlord to lease a property to a rent-to-renter, because there is no longer a ground for possession that will guarantee that a rent-to-renter will be able to return the property to the landlord at the end of the lease with vacant possession. (That said, there are exceptions for social landlords and supportive living).
This means that the landlord will “inherit” any tenants that are renting the property at the end of the lease with the rent-to-renter.
>> Related Post: The Rent Repayment Order rules in the Renters’ Rights Act
>> Related Post: Guide to using Section 8 Grounds for Possession in Renters’ Rights Act
Final thoughts
The marketing of rent to rent makes it sound like the holy grail of “passive income” or “guaranteed rent without responsibility” for the superior landlord. However, it comes with considerable risk to the superior landlord, who needs to trust that the rent-to-renter will look after the property properly. Entering into a rent to rent contract does not give a superior landlord truly passive income. They still need to supervise the rent-to-renter.
Whilst leasing a property to an established supported living provider or a local authority is at the lower end of risk for the superior landlord, leasing a property to a rent-to-renter who has little experience or assets is foolhardy.
Properties are valuable assets and I want to look after my tenants and properties myself. That way, I know they’ll be in safe hands. Mine.
