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TODAY'S OTHER NEWS

Industry first as landlords offered a year’s rent in an up-front lump sum

A lettings agency is believed to be the first to offer landlords a year's rent in advance in one lump sum through a pioneering scheme called Primary Tenancy. 

Choices Estate Agents - a nine-branch lettings, sales and investment agency operating in the south east of England and with associate brands including Sinclair Hammelton and Daniels in Kent - is offering the so-called Advanced Rent Option though a service named Primary Tenancy.

This involves the agency collecting rent on a monthly basis but providing investors with a lump sum to manage their buy to let mortgage payments or to use as capital towards expanding their portfolio.

Subject to referencing, ARO can provide landlords with up to 12 months' rent in advance minus agency fees.

"We want to provide landlords with more financial freedom while at the same time ensuring they have the protection and peace of mind they require by letting through a trusted high street agency” explains Choice Estate Agents owner Simon Shinerock.

In a statement announcing the scheme, Choices gives the example of a property with a monthly rental of £1,200 per month; its landlord could receive an upfront lump sum of £10,231 by signing up to ARO.

This final figure is calculated by discounting standard annual agent fees of £2,592, new tenancy set-up fees of £395, a rent guarantee of £432 and an emergency maintenance float of £750 from the total annual rent of £14,400.

The ARO scheme is also open to landlords with tenants in site; they can instruct Choices to carry out background checks and re-reference the tenant, before signing an agreement with the agency. Or Choices can manage properties with sitting tenants until the tenancy is over, before implementing the ARO for a new tenancy.

The Advanced Rent Option is not a loan, which means it does not depend on a landlord’s credit rating.

Shinerock says challenging market conditions and ongoing Brexit uncertainty mean that average property prices have been falling and transaction levels low in some areas. 

"All shrewd investors know that during a market lull is the time to pick up a bargain before the next period of growth," explains Shinerock. "However, finding the capital to do so is not always easy. That's why we want to help landlords to take advantage of favourable investment conditions by using the annual rent from their existing properties to purchase their next one."

He adds: “It’s clear that in the face of rising costs and increased legislation, the rental market makeup is moving away from accidental and part-time landlords and shifting towards professional investors with large portfolios.”

Following a soft launch ARO will be officially launching on August 28 at the Royal Institution of Great Britain, at an event hosted by Choices and Angels Media, publisher of Letting Agent Today and other Today titles.

Details on how to attend the launch are here.

  • jeremy clarke

    And what happens if the landlord doesn't pay the mortgage and property is repossessed?

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    The letting agency should have insurance to cover for this. I would ask that question if I were the tenant

     
    Simon Shinerock

    The tenants rights pre empt the lenders rights, they would in other words inherit the tenant who could stay until the end of the Tenancy as normal. We recently confirmed this in a court case

     
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    Stupid idea. Not a good idea having rent paid more than one or two months in advance unless foreign students without uk employed guarantors.

    Simon Shinerock

    I’m not sure you have got this Steve, we are paying the landlord a year up front and collecting the rent monthly, we are insured if the tenant defaults

     
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    Its just a different carrot - scam to fleece even more money from Landlords

     
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    This “amazing” offer has been plastered all over LinkedIn for months and the issue is still the same.

    Excluding the float you are charging 23.7% of the annual rent for this service - assuming one tenancy in the year - I note there are no additional move in fees mentioned (gas/smoke/inventory) etc - are these free?

    So after my mortgage, tax bill and your fees I would be left with .......nothing.

    Also your Primary Tenancy is nothing more than Northwood “lite” where you say you’re the tenant but (unlike Northwood) you state you don’t actually have to contractually pay the rent if the sub tenant doesn’t pay you. It’s well known it “primary” point is to keep the VAT on the equivalent fee you traditionally charge.

    I won’t embarrass the staff member who I grilled on this so I know the above but their answers were so vague on important legal issues it was quite alarming.

    Simon Shinerock

    Hi Chris, it’s my idea and my money. The charges are identical to normal agency charges. Our Primary Tenancy makes the ARO possible. You are very critical but there are no catches, you are welcome to email me atsimon.shinerock@gmail.com and I’ll happily arrange a call to answer all your questions and explain why the Primary Tenancy is a superior business model for landlords, tenants and agents

     
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    Its rubbish and maybe the one off LL living in the hills might like it. But to me its a rip off mad scheme

    Simon Shinerock

    Steve, you should not say things like this, you are totally wrong and it feels like trolling

     
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    I agree with you Steve, 23 % - how many Landlords are going to ' Fall ' for that one ?
    ( not many will be able to afford to ) you can see the creative ways that Agents are trying to get more money out of Landlords because of the Tenant Fee ban.

     
  • Simon Shinerock

    I have to say I am pretty appalled by some of the comments here. If it wasn’t for the large amount of positive feedback and appreciation we have had I might be worried. We have operated the Primary Tenancy for 11 years and as it develops it continuously shows itself to be more flexible, more secure and more compliant than the standard agency model. I guess I shouldn’t be too surprised as when something new and better comes along you always get ignorant stick in the muds trying to justify their own negativity and prejudices. We are having a panel debate at our launch, to those ignorant rude individuals posting here I say this, how about coming along and contributing, assuming that is you don’t mind being humiliated in public. Alternatively ask me any question you like and assuming it’s relevant I’ll answer you right here so you can be humiliated in the comfort of your own office or home :)

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    I've sent you an invite on LinkedIN - would be a good opportunity to connect if possible.

     
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    Bog standard reaction Simon, people hate change and will come up with a million reasons why something can't be done differently, including screaming 'scam' at every turn. Ignore them.

     
  • Simon Shinerock

    Thanks Msec S and Mark, I’ve actually had quite a few private messages of support. It takes a ‘killer ap’ to initiate major change, I think we have one with the PT and now the ARO, we shall see🙏

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    Ok SS. Simple question how much will you charge per month on property achieving £1000 per month in rent.

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    Your on several sites with this one and replies dont look good.
    What is the cost to a LL renting out at £1000 per month, keep it simple for us simple ones please.

    Simon Shinerock

    Steve, our charges are spelt out in the article. However, to keep it simple we charge 15% + Vat for full management, equivalent to 18% on a Primary Tenancy. This fee as well as our move in fees, inventory charges etc are all identical to our normal service. The ARO is therefore currently offered without a premium fee. I accept there are cheaper management offerings but there are costlier ones as well. So far the take up has been really encouraging. Not everyone needs or wants the money but for some it’s a game changer and others like the idea it could be available if needed. It’s not a loan, there is no onerous paperwork and we can only offer it because of our Primary Tenancy business model. Happy to send you the brochure which contains a fully worked example if you give me your email

     
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    Sorry but as i said a rip off professional LL dont need an agent to manage and if they do they must be desperate to pay these types of fees. Good luck and make hay while you can but trust not tricks i say.

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    Read Landlord today.

    Simon Shinerock

    You realise this is Lettings agent today don’t you Steve, you don’t do you...

     
  • WEE BRYAN

    I can't see how this can work short or long term to benifit anybody on either side of the argument,
    in other words I expect it to be a waste of space.

    Simon Shinerock

    You’re reasoning please, oh sorry, I just worked it out, you mean you can’t work out how it can benefit you :)

     
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    SS still a twit. It will be of no benefit what so ever to a professional LL but yes your right you agents will continue to try to rip us off,,, while you can.

    Simon Shinerock

    Please Note:
    When using this website you shall not post or send to or from this Website any material (which is) defamatory, (and) which may cause annoyance or inconvenience to others

     
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    I'm so chilled its cool.
    But you guys have got to understand us professional LLs know a lot more far far more than you LAs. When you accept that life will be so much better,,,, for you.

  • Paul Smithson

    Mr Sykes (aka mr £250 incl VAT and Inventory man) whilst I understand your very special , when I asked you to breakdown your fees last time you just hid away and as I advised under the tenant fee ban it's not viable to advertise/show properties/run a high st office/ have all the insurances/ draw up tenancies/compile inventories etc for £208.33 + VAT , I understand you think your so cool clearly butter wouldn't melt in your mouth but have you ever thought about a narcissistic personality disorder test ? as clearly other people have other points of view and don't tend to get angry or arrogant as yourself..PLEASE READ ALL YOUR POSTS just as a bit of personal advice.

  • Paul Smithson

    Mr Sykes, I just looked up the traits, does this sound like you ?

    Narcissistic personality disorder (NPD) involves a pattern of self-centered, arrogant thinking and behavior, a lack of empathy and consideration for other people, and an excessive need for admiration. Others often describe people with NPD as cocky, manipulative, selfish, patronizing, and demanding.

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    PS stop being a twit. I pay £250. End of. Clearly you charge far in excess. Now stop acting a twit and keep these topics on a sensible footing if you can't
    then stop bothering us. Twit.

  • Paul Smithson

    I’ve diagnosed you 100% :-)

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