A Better Alternative to Guaranteed Rent
Government-backed payments can be more reliable than commercial guarantees. Higher yields too. But there is a trade-off: you do the work.
Why Guaranteed Rent Sounds Appealing
If you are searching for alternatives to guaranteed rent, you probably want:
- •Reliable income you can count on each month
- •Protection from void periods and tenant non-payment
- •Someone else to handle the hassle
- •A company that will actually pay you, consistently
These are reasonable goals. But if you have looked into guaranteed rent schemes, you have probably discovered problems.
Why Commercial Rent Guarantees Often Fail
The promise is appealing. The reality is often different.
Companies Fail
Many guaranteed rent operators work on thin margins. When market conditions shift or occupancy drops, they cannot sustain payments. Some reduce rent mid-contract. Others simply stop paying. Your "guarantee" is only as strong as the company behind it.
Below-Market Rates
To make their margin, guaranteed rent companies pay you 10-20% below what the property could earn. You sacrifice income for the illusion of security. If the company fails, you have neither the security nor the income.
Hidden Terms
Unclear exit terms, maintenance charges, and inconsistent property management are common complaints. By the time you realise the arrangement is not working, extracting yourself can be difficult and expensive.
Loss of Control
Most guaranteed rent schemes require you to lease your property to the company. They become your tenant. You lose control over who lives in your property and how it is managed.
The core problem: commercial guarantees depend entirely on a private company remaining solvent. When conditions change, the guarantee evaporates.
Government-Backed Payments: A More Reliable Source
There is an alternative source of rental income that does not depend on a commercial company staying in business: housing payments funded by the Department for Work and Pensions (DWP) through Universal Credit.
Under the Exempt Accommodation framework, qualifying properties can access enhanced housing element rates that are not capped by Local Housing Allowance (LHA). These payments come from the government, not a private company.
More Reliable Than Commercial Guarantees
The DWP does not go bust. Once a tenant is correctly placed in Exempt Accommodation, their housing element is stable and not arbitrarily withdrawn. This is not a rent guarantee, but it is more reliable than depending on a private company.
Higher Yields
Because Exempt Accommodation is exempt from LHA caps, the rates are significantly higher than standard private letting. Indicative figures are approximately £200-261 per room per week, depending on claimant type and area. Compare that to typical guaranteed rent rates that are deliberately set below market.
You Stay in Control
Unlike most guaranteed rent arrangements, you do not lease your property to a third party. You remain the owner and operator. You decide which tenants to accept. You manage the property on your terms.
Exempt from LHA Caps
Standard housing benefit is capped by Local Housing Allowance rates, which often fall below actual rents. Exempt Accommodation status removes this cap, allowing enhanced rates that reflect the cost of providing supported housing.
The Trade-Off: You Do the Work
This is not a passive income arrangement. If you want higher yields and government-backed payments, you need to understand what that requires.
This Is NOT:
- ✕A rent guarantee. Your income depends on occupancy.
- ✕Hands-off. You manage the property and handle tenant issues.
- ✕Risk-free. You carry void risk when rooms are empty.
- ✕Property management. No one else runs your property for you.
You Are Responsible For:
- •General maintenance and repairs
- •Day-to-day tenant issues and behavioural management
- •Property compliance and standards
- •Filling rooms and retaining tenants
- •Carrying void risk when rooms are unoccupied
If you already manage HMO properties, this is similar work to what you already do. The difference is the payment mechanism and the yields.
If you want someone else to manage everything, this is not the right solution.
How This Compares
Understanding the differences helps you decide which approach suits your situation.
| Aspect | Commercial Guarantee | Exempt Accommodation |
|---|---|---|
| Income source | Private company | Government (DWP) |
| Reliability | Depends on company solvency | Depends on occupancy |
| Typical rates | 10-20% below market | ~£200-261/room/week |
| Control | Property leased to third party | You remain owner and operator |
| Management | Usually handled by lessee | You manage the property |
| Void risk | Borne by guarantee company | Borne by you |
| Work required | Minimal | Hands-on management |
The key insight: commercial guarantees trade yield for perceived passivity. The Exempt Accommodation framework offers higher yields and more reliable payment sources, but you do the work.
Estimate Your Potential Income
Use this calculator to see indicative income figures for your property under the Exempt Accommodation framework. Remember: actual income depends on occupancy and your operational management.
Is This Right for You?
This framework suits a specific type of landlord. Being honest about fit saves everyone time.
This may suit you if:
- •You already manage HMOs or are willing to do so
- •You want higher yields than standard private letting
- •You prefer government-backed payments over commercial guarantees
- •You are comfortable with hands-on property management
- •You want to stay in control of your property
This is not for you if:
- •You want someone else to manage everything
- •You need income regardless of occupancy
- •You are not willing to handle tenant issues
- •You want a completely passive investment
If you want reliable income because you want to step back completely, guaranteed rent might still be your best option despite the risks. But if you want reliable income and are prepared to work for it, this approach likely offers better outcomes.
Common Questions
How is this different from guaranteed rent?
With guaranteed rent, a company promises to pay you regardless of occupancy. Here, your income depends on having tenants in place. The difference is the payment source: government benefits are more stable than corporate promises, but you still need to maintain occupancy.
What kind of yields are possible?
Approximately £200-261 per room per week, depending on claimant type and area. These figures assume 75% occupancy and are net of framework costs. Compare this to standard private letting yields in your area.
How much work is actually involved?
The same as running any HMO: maintenance, tenant queries, occasional issues. The framework provides the regulatory structure and payment processing. You handle everything else. If you already manage an HMO, you know what this involves.
What does Letora actually provide?
The framework that enables Exempt Accommodation status: compliant tenancy documentation, regulatory structure, payment collection and distribution, and optional tenant referral pathways. You remain the property operator.
Is this compliant and regulated?
Yes. The framework operates under Exempt Accommodation regulations. Properties must meet defined compliance standards and pass inspection. All arrangements are documented through formal agreements.
Find Out If Your Property Qualifies
Submit your property details for a suitability assessment. We will review your property and provide indicative income figures within 2 working days. No obligation.
Initial assessment provided free of charge.
Learn More
Explore these pages to understand the framework in more detail.
Important Information
This is not a rent guarantee. Your income depends on occupancy and your operational management. Void risk remains with you.
Government-backed does not mean risk-free. DWP payments are stable once tenants are correctly placed, but you are responsible for filling rooms and retaining tenants.
Income figures are indicative and vary by area and claimant type. Actual results depend on your specific property and how well you manage it.
All arrangements are documented through formal agreements. You should seek independent legal and financial advice before joining.