After a two-year pilot project devised by a letting agency, a new up-front rental payment system which has been hailed as ´game changing´ is about to be rolled out across the UK.

Choices is a letting agency in the South East of England and has other associate brands including Sinclair Hammelton and Daniels in Kent.  They have devised the new up-front rental payment system called the ¨Advanced Rent Option¨ (ARO), which operates through a Primary Tenancy and involves the agent acting as the landlord´s tenant and essentially sub-letting to the incumbent renter.

It differs to the Rent to Rent scheme in that there remain only three parties to the transaction, which makes it more flexible and adaptable to a business structure said Choices chairman Simon Shinerock.

“It completely changes the relationship and takes all responsibility away from the landlord” he says.

Instead of the landlord receiving a monthly sum in rental payments as with traditional payment systems, the new rental payment system provides the landlord with an up-front sum whilst the letting agency assumes responsibility for collection of monthly rental payments.  Landlords will be able to spend much less time managing their property portfolios and can then use the lump sum towards their mortgage payments or expansion of their property portfolio if so desired

Up front sums are either collected at the start of a tenancy period on the condition that the property is compliant and that all tenants have passed a referencing process, or at any other time of the tenancy period, subject to a new one-year agreement.

“Landlords with small to medium property portfolios are paying between 12 to 17 per cent plus VAT for a fully managed service. It is possible to pay less, but over 30 years of experience in the industry, I have come to believe that paying a discounted agency fee or letting privately is often a false economy” adds Shinerock.

Despite the advantages, the licences for the ARO are not available wide-spread and will be limited to 1% of the industry, upon application.  Choices say that preference will be given to SME independent agencies with a local exclusivity option available under certain circumstances.