Rent to rent can work with far less money than buying, but the margin is thin. The deal lives or dies on the gap between what comes in and everything you pay out.
How rent to rent works
You agree to pay a landlord a fixed monthly rent, often for 3 to 5 years, then let the property out again, usually room by room as an HMO or by the night as serviced accommodation. The landlord gets a guaranteed rent and no management work. You keep what is left after your costs.
The costs people forget
Room income is the easy part. The costs that decide the deal are the rent to the landlord, bills (energy, water, broadband, council tax for an HMO), cleaning, maintenance, insurance, platform or agent fees, and empty rooms or nights. Then there are the setup costs: furniture, decorating, safety items, any licence and fees.
Worked example: a 5-room HMO
| Item | Per month |
|---|---|
| Room income, 5 rooms at £600 | £3,000 |
| Rent paid to the landlord | −£1,400 |
| Bills | −£450 |
| Allowance for an empty room (1 in 10) | −£300 |
| Cleaning and maintenance | −£150 |
| Profit | £700 |
Setup costs of £6,000 would take about 9 months to pay back at £700 a month. Before the empty room and cleaning allowance, the same deal looked like £1,150 a month and a 5-month payback, which is why a realistic allowance matters.
Is rent to rent legal?
Yes, when it is done properly. The landlord has to agree in writing, the lease or management agreement must allow subletting, the mortgage and insurance must allow it, and the property must meet the rules for how it is let, such as HMO licensing and safety standards. Councils can take action against the person in control of an unlicensed HMO, which can include you.
Run your own numbers
The Rent to Rent Calculator works out monthly profit after the landlord’s rent, bills, cleaning, fees and empty rooms or nights, then the return on your setup costs and the payback time, for HMO and serviced accommodation set-ups.