Landlords who opt to receive their annual rent upfront in one lump sum could free up the funds for a well-earned holiday.
Officially launching later this month, the Advanced Rent Option (ARO) aims to give landlords more financial freedom to make a luxury purchase or expand their property portfolio.
The ARO is being offered through Choices Estate Agents and its associated brands using the pioneering Primary Tenancy service.
Subject to referencing, it can provide landlords with up to 12 months’ rent in advance, minus standard letting agency fees.
How much could a landlord save?
Based on a property with a rental price of £1,200 per month, landlords 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 costs of £2,592, new tenancy setup fees of £395, a rent guarantee of £432 and an emergency maintenance float of £750 from the total annual rent of £14,400.
Landlords could use this lump sum, which is paid upfront, to pay for a holiday for their family or an alternative luxury purchase they have been working towards.
According to research by Expedia, the typical family spends £4,800 on holidays each year, with the average nine-day getaway costing £2,417.
The average family takes two holidays per year and spends their cash on everything from flights and accommodation to ice creams, sun loungers and day trips to create a ‘priceless’ experience.
“The ARO provides landlords with a great opportunity to improve their cashflow,” says Simon Shinerock, owner of Choices Estate Agents.
“As we can see, for landlords letting an average property the ARO could help to pay for a holiday, with plenty of money left over to put towards an additional property purchase or paying off buy-to-let mortgage payments.”
An easy way for landlords to receive rent upfront
The initiative provides landlords and investors with a quick and stress-free way to receive their annual rent upfront in one lump sum.
If a landlord wants to benefit from the ARO but already has a tenant in-situ, they can instruct Choices or any of their associated brands to carry out some background checks and re-reference the tenant, before signing an agreement with the agency.
Alternatively, Choices or its partners can manage properties with sitting tenants until the tenancy is over, before implementing the ARO for a new tenancy.
One of the key benefits of the ARO is that it is not a loan, which means it does not depend on a landlord’s credit rating and there is no complicated extra paperwork to complete.
“Rental market conditions have been tricky for some time now and we want to provide landlords with a straight-forward way to wrestle back control of their finances,” adds Shinerock.
“The cost of letting a property is likely to keep on rising, while the private rented sector will only become more regulated. With this in mind, landlords can benefit from receiving their rent upfront and start planning their future investment strategy accordingly.”