Q&As

How does a rental guarantee agreement work in a residential development context and is it appropriate for a developer to use the promise of a guaranteed yield as an incentive in their market campaign?

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Published on LexisPSL on 15/02/2017

The following Property Q&A provides comprehensive and up to date legal information covering:

  • How does a rental guarantee agreement work in a residential development context and is it appropriate for a developer to use the promise of a guaranteed yield as an incentive in their market campaign?
  • Guaranteed rent
  • Consumer protection

How does a rental guarantee agreement work in a residential development context and is it appropriate for a developer to use the promise of a guaranteed yield as an incentive in their market campaign?

Guaranteed rent

The usual meaning of a rental guarantee in a residential property context is that a seller/developer of a property will guarantee to the buyer a certain rental income on the property for a specific period of time. The buyer/property owner then leases back the property to the developer who then sublets the property to a third party. The developer then pays the property owner the guaranteed sum each month and keeps the commission or the profit made on subletting (if any). Practice Note: Rent guarantees and Precedent: Rental guarantee schedule, whilst

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