LetMe offers landlords rent up front
UK property start-up LetMe is offering landlords 12 months' rent up front and free advertising on Zoopla and Rightmove in exchange for a 10% fee, in a reverse of the usual letting-agent model that demands fees up front followed by monthly rental payments to the landlord.

For the first time ever landlords can list their properties to rent on both Zoopla and Rightmove without paying up front fees.

LetMe, an online lettings agent, has just launched a service giving landlords the option of paying no fees at the outset, receiving 12 months rent in advance and having a guarantee that the condition of their property on the tenant’s departure will be equal to the condition at the start of the tenancy.

It includes listing as many properties as they like for no charge on both major property portals with LetMe claiming the overall deal is 'free'.

Like anything that sounds too good to be true, it is - landlords forfeit 10 per cent of rent

But like anything that sounds too good to be true, it is. Usually landlords pay fees to list their property, management and contract fees on day one and then receive 100 per cent of the rental income on a monthly basis minus the management fee.

With LetMe, landlords can opt to pay no fees and receive 90 per cent of their rental income on day one. They still pay but the cost of listing and management fees is spread over 12 months; LetMe maintains however they don't add a fee to maintenance costs.

Jeremy Leaf, north London estate agent and a former RICS residential chairman, warned: ‘If something sounds too good to be true, there is probably a catch.'

Alan Ward, of the Residential Landlords Association, agreed: 'There's nothing new under the sun. How can they promise to return the property in original condition in return for 90 per cent of rent? That's just a typical 10 per cent agent fee deduction. Landlords need to keep their wits about them and read the contracts carefully.'

Ward also contests that the LetMe proposition is the first of its kind.

'For some years there have been organisations such as councils who will take rental properties on for private landlords and pay 12 months' or more rent in advance,' he said.

'They also take on the full maintenance and management responsibility. These typically took at least 30 per cent discount on the rent. And that's my point, the landlord has to pay somehow.'

Don't forget your own cashflow

BREXIT POSES OPPORTUNITIES FOR LANDLORDS Research carried out after the EU referendum showed that landlords who saw the capital values of their properties rise most dramatically voted to remain in the European Union. By contrast, those whose rental yields are highest – typically because property values are lower – voted to leave. Christian Faes, of peer-to-peer lender LendInvest, said: ‘Brexit may create opportunities for property investors, particularly professional and experienced ones. House prices are expected to soften, so some would-be buyers may put off buying. But they still need somewhere to live, which is good news for landlords. What’s more, if house prices do cool as predicted, then investing in property will become even more enticing.’ <!- - ad: https://mads.dailymail.co.uk/v8/ru/money/buytolet/article/other/mpu_factbox.html?id=mpu_factbox_1 - ->

Experts have also warned that receiving the annual rent in a block payment at the start of the tenancy could leave landlords with cashflow problems later in the year.

Lucy Hodge, of buy-to-let mortgage adviser Vantage Finance, said: 'This arrangement has it’s place for professional landlords who are good at managing their cashflow and finances.

'The risk you run with those who are not is that they spend the upfront rent and still have a mortgage commitment each month. I think they will have a lot of success but that doesn’t mean it’s for everybody.'

Landlords who choose to list their property for free are under no obligation to rent out their properties through LetMe - meaning the real advantage of the service is the free listings with Zoopla and Rightmove.

Sam Wells, chief executive of LetMe, claimed: 'We've turned an old, stale and cumbersome process into a fast, efficient and radical solution that puts money straight into the pockets of landlords.'

This 'solution' sees LetMe take responsibility for rent arrears, void periods and tenant evictions, provide complete management of property and instant online rental valuations.

Penny pinching: The worse the problem gets, the less the agent helps and the more they charge to landlords

Wells added: "Landlords pay thousands of pounds for fully managed services but as soon as problems come up the cost gets passed straight to the landlord. The worse the problem gets, the less the agent helps and the more they charge.

'This won't happen with us. Landlords can forget about their property safe in the knowledge they have their rent for the year and their property will be looked after.'

LetMe is backed by an investment fund called the Richmond Group which invests in education, housing and financial services companies with a bent towards backing entrepreneurial new firms.

It is this backing that allows the LetMe to fund the up front payment of rent to landlords on day one without suffering cashflow issues itself. The fund is sitting on net assets of over £200million.

No deposit, no agency fees, no rent up front

UP FRONT FEES If tenants choose not to take the move in for free option the fees are £300 per property. This is standard with LetMe across the whole country and is 'normal' for the industry. The usual deposit is six weeks rent and tenants would also need to pay one month rent upfront. Again this is standard for the industry and is subject to change depending on the deposit required by each individual landlord. <!- - ad: https://mads.dailymail.co.uk/v8/ru/money/buytolet/article/other/mpu_factbox.html?id=mpu_factbox_2 - ->

The 'fee-free' option is also available to tenants on pretty similar terms. Rather than paying a deposit, agency fees, credit referencing fees, admin fees, guarantor fees, pet fees, legal fees, check out fees - the list is endless - tenants can forgo up front costs altogether when they move in and just pay their monthly rent plus 10 per cent on top every month.

That said, there may still be costs to settle when the tenancy ends - as with any regular tenancy agreement the leaving tenant is responsible for any damage that has occurred.

Hodge said: 'I think this will open the door to tenants who may otherwise have struggled. I also don’t think that the low entry costs to tenants will result in issues for landlords given that LetMe take measures to qualify the tenant in other ways.'

To sign up for the move in for free package a tenant must either have near perfect credit history or be able to provide a guarantor.

But Leaf warned that this raised its own questions. He said: 'Who subjectively decides whether a tenant has a ‘great’ reference and how readily will LetMe be prepared to pay out if mistakes are made?'