What UK landlords need to know about Rent to Rent

Rent to rent has become an increasingly talked-about strategy in the UK property market, offering landlords guaranteed income whilst handing over day-to-day management responsibilities to an intermediary tenant. But is this arrangement as straightforward as it sounds? With the Renters' Rights Act coming into force from 1 May 2026, the regulatory landscape is shifting, making it more important than ever for landlords to understand the legal complexities and practical implications of rent to rent agreements.

In this comprehensive guide, we'll explore what rent to rent actually involves, how it differs from standard letting arrangements, the legal requirements you must meet, and the risks and benefits you need to weigh up before entering into such an agreement. Whether you're considering this model for the first time or reviewing existing arrangements, this article will help you make informed decisions about rent to rent in 2026 and beyond.

What is rent to rent?

Rent to rent is an arrangement where you as the property owner let your property to an individual or company (the intermediate tenant or 'mesne tenant'), who then sublets it to one or more end tenants. The intermediate tenant essentially becomes a landlord themselves, taking on responsibility for finding tenants, collecting rent, managing the property, and dealing with maintenance issues.

The appeal for landlords is straightforward. You receive a guaranteed monthly rent from the intermediate tenant, typically slightly below market rate, whilst avoiding the administrative burden of property management. The intermediate tenant profits from the difference between what they pay you and what they charge the end tenants, often by optimising the property's configuration or targeting a specific rental market like professionals, students, or short-term lets.

This isn't the same as using a traditional letting agent. With a letting agent, you remain the direct landlord to your tenants. In rent to rent, you have no direct relationship with the people actually living in your property. This creates a complex web of responsibilities and legal obligations that many landlords don't fully appreciate when they first consider the model.

How rent to rent differs from standard letting

Understanding the structural differences between rent to rent and standard lettings is crucial for assessing whether this model suits your circumstances.

In a standard letting arrangement, you grant an Assured Shorthold Tenancy directly to your tenants. You're responsible for compliance with all landlord regulations, including Gas Safety Certificates, EICRs, EPCs, and deposit protection requirements. You have direct control over tenant selection, rent levels, and property management decisions.

With rent to rent, you're letting to a business rather than a residential tenant. The intermediate tenant doesn't occupy the property as their main residence, which has significant legal implications. They need a commercial agreement with you, not a standard AST, as the property isn't their primary home. This means they don't benefit from the same protections afforded to residential tenants under the Protection from Eviction Act 1977.

The intermediate tenant then creates tenancy agreements with the end tenants. These end tenants do have ASTs and all the associated rights, even though they're technically subtenants. This creates a three-tier structure where responsibilities and liabilities can become blurred, particularly when things go wrong.

The legal framework for rent to rent

Subletting isn't inherently illegal in the UK, but it must be done properly with full transparency and the landlord's explicit written consent. Most standard AST agreements include clauses prohibiting subletting without permission, which means any rent to rent arrangement requires you to either grant permission for the specific arrangement or issue a new tenancy agreement that allows subletting.

From a regulatory perspective, you remain the property owner and retain ultimate responsibility for compliance with landlord legislation. The intermediate tenant takes on day-to-day management, but you can't simply abdicate your legal obligations. This shared responsibility model requires careful documentation to avoid disputes and potential regulatory breaches.

Your mortgage lender's consent is also essential. Most buy-to-let mortgages have specific terms about subletting, and failing to obtain permission could breach your mortgage conditions and potentially result in the lender demanding immediate repayment. Similarly, your landlord insurance policy must cover rent to rent arrangements, as many standard policies explicitly exclude coverage for properties that are sublet.

If your property will house three or more unrelated tenants forming two or more households, it becomes an HMO and requires an HMO licence in many local authority areas. As the property owner, you're responsible for ensuring any necessary licences are obtained, even if the intermediate tenant is managing the property day-to-day. Operating an unlicensed HMO can result in significant fines and Rent Repayment Orders.

Key benefits of rent to rent for landlords

When structured properly, rent to rent can offer genuine advantages for property owners in specific circumstances.

Guaranteed rental income - The primary attraction is receiving consistent rent regardless of whether the property is occupied, whether tenants pay on time, or whether there are void periods between lets. The intermediate tenant typically agrees to pay you a fixed monthly amount throughout the contract term, providing cashflow certainty that can be particularly valuable during uncertain economic times.

Reduced management burden - You offload the time-consuming aspects of being a landlord to the intermediate tenant. They handle tenant viewings, rent arrears chasing, maintenance requests, inventory management, and day-to-day communications. For landlords with demanding careers or multiple properties, this can free up substantial time whilst still generating rental income.

Professional optimisation - Experienced rent to rent operators understand how to maximise a property's rental potential. They may reconfigure layouts, target specific tenant demographics, or furnish properties to professional standards that command premium rents. You benefit from their market knowledge without having to develop that expertise yourself.

Long-term tenancy arrangements - Rent to rent agreements typically run for three to five years, significantly longer than standard ASTs. This provides stability and reduces the frequency of void periods, tenant turnovers, and the associated costs of remarketing your property.

No direct tenant relationship - For landlords who find tenant management stressful or who've had negative experiences with difficult tenants, rent to rent offers a buffer. You deal with one professional entity rather than individual tenants, which can simplify communications and reduce emotional stress.

Significant risks and downsides

The convenience of rent to rent comes with substantial risks that every landlord must carefully evaluate before proceeding.

Below-market guaranteed rent - The intermediate tenant's business model depends on the margin between what they pay you and what they charge end tenants. This means accepting guaranteed rent that's typically 10-25% below the market rate you could achieve letting directly. Over a five-year agreement, this discount can represent tens of thousands of pounds in foregone income.

Property wear and tear - Multiple tenants moving through your property over several years, often with higher turnover than a single family let, can accelerate wear and tear. You may find your property in worse condition at the end of the agreement than you anticipated, with refurbishment costs exceeding your expectations. Some rent to rent operators prioritise occupancy and cashflow over property care, particularly if they're struggling financially.

Regulatory responsibility remains yours - Despite delegating management, you retain legal obligations as the property owner. If the intermediate tenant fails to maintain Gas Safety Certificates, doesn't protect deposits correctly, or operates an unlicensed HMO, you can face prosecution, fines, and Rent Repayment Orders from end tenants. The Renters' Rights Act actually increases this risk by giving tribunals power to make superior landlords liable for offences committed by intermediate tenants.

Vetting challenges - Assessing whether a rent to rent operator is financially stable, experienced, and trustworthy is difficult. Unlike traditional tenants where you can run credit checks and obtain employment references, many rent to rent operators are new businesses with limited track records. If they become insolvent or simply walk away, you're left with multiple tenants in your property, potential deposit disputes, and uncertain legal standing.

Difficult exit scenarios - If you need to sell your property or want to move back in, extracting yourself from a rent to rent agreement can be complex. The intermediate tenant has contractual rights, and the end tenants have statutory tenancy rights that must be respected. The abolition of Section 21 notices from 1 May 2026 makes regaining possession even more challenging, as you'll need to rely on specific grounds for possession under Section 8.

Insurance complications - Many landlords discover too late that their insurance doesn't cover rent to rent arrangements. If you make a claim and your insurer learns the property was sublet without appropriate coverage, your claim may be rejected entirely. Specialist rent to rent insurance exists but typically costs more than standard landlord policies.

Essential due diligence before agreeing to rent to rent

If you're seriously considering rent to rent, thorough due diligence is non-negotiable. Cutting corners during the assessment phase can lead to years of problems and financial losses.

Start by comprehensively researching the rent to rent operator. How long have they been operating? Do they have references from other landlords whose properties they manage? Can you visit other properties in their portfolio? Request financial statements and proof of professional indemnity insurance. Check Companies House for their company structure, filing history, and director details. Search online for any complaints, county court judgements, or negative reviews.

Scrutinise their business model carefully. How much rent will they pay you compared to market rates? How do they plan to achieve the margin they need to be profitable? If their model depends on converting your three-bed house into a five-bed HMO, do you understand the regulatory requirements and potential property modifications involved? Are you comfortable with the level of occupation intensity they're proposing?

Obtain legal advice before signing anything. A specialist property solicitor can review the proposed agreement, explain the implications for your legal position, ensure the contract protects your interests, and flag any concerning clauses. This upfront investment in legal fees can save you from costly disputes later. Your agreement should clearly define responsibilities for property maintenance, compliance requirements, insurance obligations, how and when rent will be paid, termination procedures, and what happens if either party breaches the contract.

Verify that all necessary consents are in place. Confirm your mortgage lender permits rent to rent arrangements and get this in writing. Update your insurance to appropriate rent to rent coverage and ensure the policy is valid for the intended use. If HMO licensing applies, understand who will obtain the licence and how costs will be shared.

Consider visiting the property regularly or conducting periodic inspections to ensure the intermediate tenant is maintaining standards and complying with regulations. Build inspection rights into your agreement, recognising that you'll need to provide proper notice to end tenants as you can't enter their homes freely.

The Renters' Rights Act implications for rent to rent

The Renters' Rights Act 2025 introduces significant changes from 2026 that affect rent to rent arrangements, some of which increase risks for property owners.

From 1 May 2026, the abolition of Section 21 no-fault evictions means you can only regain possession of your property using specific grounds under Section 8. If you need to sell or move back in, you'll need to provide four months' notice to the intermediate tenant using the appropriate grounds, and even then you face a 12-month restriction period before you can re-let the property. This makes rent to rent arrangements considerably less flexible than they were under the old regime.

The Act converts all fixed-term ASTs to periodic tenancies from 1 May 2026. If you enter a five-year rent to rent agreement, the arrangement with your intermediate tenant will likely be on a longer fixed term, but the intermediate tenant's agreements with end tenants will become periodic. This gives end tenants more flexibility to leave with just two months' notice, potentially increasing turnover and reducing the intermediate tenant's stability.

Most significantly, the Act empowers the First-tier Tribunal to make superior landlords liable for Rent Repayment Orders in respect of offences committed by intermediate tenants. If your rent to rent operator fails to license an HMO, accepts prohibited payments, or commits certain other offences, end tenants could pursue you for up to two years' rent (increased from 12 months previously). This dramatically increases your exposure to the intermediate tenant's compliance failures.

The new Private Rented Sector Database, expected to roll out from late 2026, will require all landlords to register their properties. As the property owner, you'll need to ensure your property is properly registered, but the intermediate tenant may also have registration obligations as the mesne landlord. How this dual registration requirement will work in practice remains unclear, pending detailed regulations.

From 2028, mandatory membership of the Property Ombudsman scheme will apply. Again, the interaction between your obligations and the intermediate tenant's obligations needs careful consideration, as end tenants may have grounds to complain to the ombudsman about issues that arise from the intermediate tenant's actions but for which you retain ultimate responsibility.

Alternatives to consider

Before committing to rent to rent, explore whether other arrangements might better serve your objectives.

Traditional letting agents - A good letting agent provides many of the benefits of rent to rent without the same level of risk. You pay management fees (typically 10-15% of rent plus lettings fees) but maintain direct control, receive market rent, and retain flexibility. Modern property management apps like August help you track everything digitally, from rent tracking to maintenance management, reducing the administrative burden whilst keeping you in control.

Guaranteed rent schemes - Some letting agents offer guaranteed rent products where they commit to paying you a set amount regardless of occupancy, similar to rent to rent but typically for shorter periods (12-24 months) and with less dramatic discounts to market rent. The agent handles all management whilst you retain ownership of the tenancy relationship.

Corporate lets - If your property is suitable, letting directly to a company for employee accommodation can provide stable, professional tenants and reliable rent without the subletting complications. Corporate tenants often sign longer agreements and maintain properties well, though they may demand higher specifications and more responsive maintenance.

Self-management with technology - For landlords who want to maximise income but minimise time spent, self-managing with the support of good property management software can be surprisingly efficient. August's compliance features help you stay on top of certificates and deadlines, document storage keeps everything organised, and expense tracking simplifies tax preparation. You keep full market rent whilst technology handles much of the administrative work.

Red flags to watch for

Certain warning signs should make you extremely cautious about proceeding with a rent to rent arrangement.

Be wary of operators who pressure you for quick decisions without time for proper due diligence. Legitimate businesses understand that landlords need to conduct thorough checks and obtain professional advice. Similarly, be suspicious of anyone unwilling to provide references, financial information, or details of their other properties.

Avoid agreements that don't clearly allocate responsibilities for compliance, maintenance, and insurance. Vague or poorly drafted contracts invariably lead to disputes. If the operator suggests that regulatory requirements "don't really apply" or can be worked around, walk away immediately. This indicates either dangerous ignorance or deliberate non-compliance.

Question any business model that seems too good to be true. If an operator offers guaranteed rent at or above market rates, ask yourself how they plan to profit. The economics must work for them, and if they can't clearly explain their margin strategy, they may be overextended and at high risk of financial failure.

Be cautious of operators who want to make substantial property modifications without clearly documenting who pays for works, who owns any additions, and how the property will be returned to you at the end of the agreement. Disputes over property condition and restoration costs are among the most common issues in rent to rent relationships.

Making your decision

Rent to rent can work well in specific circumstances, particularly for landlords with properties in high-demand areas, those who want minimal involvement but accept reduced returns, and those who've found genuinely professional, well-established operators with excellent references and solid financials.

However, for most landlords considering rent to rent purely for convenience, the combination of reduced rent, increased regulatory risks under the Renters' Rights Act, and loss of control often makes traditional letting arrangements more attractive. The 15-25% discount to market rent you'll accept for guaranteed income can be substantial over a multi-year agreement, easily exceeding the cost of professional management fees whilst maintaining more flexibility and control.

If you do proceed, invest properly in legal advice, obtain all necessary consents, conduct rigorous due diligence on the operator, ensure your insurance is appropriate, build in inspection rights and compliance verification mechanisms, and maintain awareness of your ongoing regulatory responsibilities even though day-to-day management is delegated.

The regulatory landscape is becoming increasingly complex, with Making Tax Digital requirements, the Renters' Rights Act changes, and emerging standards around property conditions all adding layers of compliance. As discussed in our article on how landlords operate differently, there's no single right approach to property letting, and what works for one landlord may not suit another.

Protecting yourself in a rent to rent arrangement

If you decide rent to rent is right for you, several practical steps can help protect your interests throughout the agreement.

Maintain regular property inspections at intervals agreed in your contract, ensuring you can verify the property's condition and the intermediate tenant's compliance with regulatory requirements. Document everything thoroughly, keeping records of all communications, inspection reports, maintenance works, and any issues that arise.

Consider requiring the intermediate tenant to provide you with copies of end tenant agreements, deposit protection certificates, compliance certificates, and other key documents on a regular basis. This allows you to verify that obligations are being met rather than discovering problems only when something goes wrong.

Build break clauses into your agreement that allow either party to terminate with appropriate notice periods. Whilst you want stability, you also need flexibility to adapt if circumstances change or if the relationship isn't working as expected. Ensure any break clauses clearly specify the notice period, how the property should be returned, and what happens with end tenants in occupation.

Keep your own records of property condition through thorough check-in reports and regular photographic documentation. This protects you if there are disputes about dilapidations at the end of the agreement. Professional inventory services can provide detailed baseline documentation that stands up in disputes.

Maintain appropriate financial reserves to cover unexpected costs. If the intermediate tenant defaults and you need to step back into direct management, you'll face immediate costs for tenant communications, any urgent repairs or compliance issues, and potentially legal fees to resolve the situation. Having a financial buffer prevents you being forced into poor decisions under pressure.

The future of rent to rent

The rent to rent model faces headwinds from regulatory changes over the coming years. The Renters' Rights Act increases landlord liability for intermediate tenant actions, the Private Rented Sector Database will make opaque arrangements more visible to authorities, and the trend towards stronger tenant protections and higher property standards raises compliance complexity and costs.

These changes don't make rent to rent impossible, but they do increase the importance of working only with professional, well-established operators who understand their regulatory obligations and have the systems and resources to comply properly. The casual or semi-professional rent to rent operators who've proliferated in recent years may struggle to adapt to the new regulatory environment.

For landlords, the calculus of whether rent to rent makes sense should factor in not just the immediate convenience and guaranteed income, but also the long-term regulatory trajectory and the increased risks you're exposed to under the new legislation. In many cases, the reduced flexibility, higher risk exposure, and significant discount to market rent make traditional letting arrangements more attractive, particularly when supported by modern property management technology.

As explored in our 2025 year in review, the rental market is evolving rapidly, with landlords needing to adapt to changing regulations whilst maintaining profitable, compliant portfolios. Whatever letting model you choose, staying informed about regulatory changes, maintaining high standards of property management, and keeping meticulous records will be essential for success in the years ahead.

For help managing your rental properties and staying compliant with the latest regulations, explore how August's landlord features can support your property business in 2026 and beyond.

Disclaimer: This article is a guide and not intended to be relied upon as legal or professional advice, or as a substitute for it. August does not accept any liability for any errors, omissions or misstatements contained in this article. Always speak to a suitably qualified professional if you require specific advice or information.