Ask most landlords what their property earns and they will quote the monthly rent. It is the wrong number. What lands in your account is the rent minus management fees, void weeks, the occasional arrears case, maintenance, and the rising cost of staying compliant. Once you count all of that, the gap between guaranteed rent and traditional letting looks very different from the headline.
The headline rent trap
Traditional letting, where an agent finds a tenant and you let on the open market, usually shows the bigger advertised figure. A flat marketed at £1,500 a month looks like £18,000 a year. That number assumes twelve months of rent, paid in full, on time, with nothing going wrong and nobody taking a cut. It rarely survives contact with a real tenancy.
What traditional letting actually costs
Start with the agent. Full management in the UK runs 8% to 15% of monthly rent, and in London high-street agents sit at the top of that, often 15% to 20%, with VAT on top. On an £18,000 rent, 12% plus VAT is around £2,600 a year before anything else happens. Tenant-find and renewal fees stack on top, because the Tenant Fees Act 2019 stopped agents billing tenants and moved those costs to landlords.
Then the gaps. The average void period in England is around 24 days, and in London a single void costs roughly £1,250 in lost rent even though our empty periods are shorter than most. One turnover a year quietly erases a month’s income.
Then the risk you cannot predict. If a tenant stops paying, the three-month arrears threshold under the Renters’ Rights Act means longer before you can act, and possession through the courts is averaging almost 34 weeks. By the time you have the property back you can be owed eight to ten months of rent, with eviction costs the NRLA puts at £2,000 to £7,000. It does not happen every year. When it does, it wipes out several years of profit.
Add routine maintenance, safety certificates, and the licence your borough increasingly requires, and the £18,000 is closer to £13,000 in a good year, less in a bad one, and it costs you time either way.
How guaranteed rent works
Guaranteed rent flips the model. A company like SmartSpace takes your property on a fixed agreement, usually five to ten years, and pays you a set rent every month whether or not there is a tenant in place. No commission, no tenant-find fee, no management charge. Voids, arrears, tenant sourcing, repairs and compliance become our problem, not yours. You get one predictable figure, on the same date, every month.
The trade-off is honest. The guaranteed figure is usually set a little below the very top rent you might achieve on the open market in a perfect year. You are swapping the chance of the maximum for the certainty of the whole. Our introduction to guaranteed rent covers how the lease itself works.
A worked example
Take that £1,500 flat.
On the open market, £18,000 gross becomes roughly £13,000 net after management, one void, maintenance and a licence, in a year where nothing goes badly wrong. Have one arrears case or a longer void and it drops below £11,000. The income also arrives unevenly, and you carry every risk yourself.
On a guaranteed agreement you might be offered somewhere around £1,300 to £1,400 a month, so £15,600 to £16,800, paid in full, every month, with no deductions and nothing for you to manage. The lower headline is often the higher net, and it is certain.
The exact figures depend on your property and area, which is the point of getting a valuation rather than trusting a rule of thumb.
Who each option suits
Traditional letting can win if you self-manage to avoid the fees, own a sought-after property that never sits empty, and have the time and appetite to handle tenants, repairs and compliance yourself. If everything runs perfectly, the open market can pay a little more.
Guaranteed rent wins when you value certainty over the theoretical maximum. If you own several properties, live far from them, have been burned by a void or a non-paying tenant, or simply do not want letting to be a second job, the fixed model does the work and carries the risk. It also suits landlords in boroughs bringing in selective licensing, where compliance is now part of the job whether you outsource it or not.
Neither is universally better. But most landlords overrate the headline rent and underrate what the costs and the risk take back.
Get a guaranteed rent figure for your property
We work with landlords across all 32 London boroughs. If you want to see the two options side by side for your own property, request a free valuation and we will come back with a guaranteed monthly figure to set against your current net. Or call 020 8686 3388.
