For most of the last twenty years, buy-to-let in London worked something like this: you bought a 2-or-3-bedroom house in a decent borough, found an AST, charged 5 to 6 per cent gross yield, and accepted occasional voids and tenant turnover as the cost of doing business. Capital appreciation did most of the heavy lifting.
That model rested on three structural advantages that have now eroded:
- A 12-month fixed term gave you certainty of income.
- Section 21 gave you certainty of exit.
- Unlimited rent reviews gave you certainty of upside.
All three of those have gone. Fixed terms are abolished. Section 21 is gone. Rent rises are capped at once per year with a tribunal challenge route. The structural certainties of the AST regime, the things that made buy-to-let a low-effort, semi-passive asset, have been removed.
What replaces them is a regime that is still workable, but markedly more operationally intensive, more legally exposed, and more sensitive to tenant selection. The risk has not gone, it has just been redistributed.
How a finance desk would re-rate the asset
If you came at this fresh and asked an investment analyst to re-rate a London buy-to-let in 2026, they would look at three things: cash flow stability, downside risk, and operational drag.
Cash flow stability has weakened
Before May, a 12-month AST gave you 12 months of contractual rent. Now your tenant can leave on two months' notice at any point. The expected income series has gone from a step function to a discount-with-decay, every month carries some probability of vacancy.
Downside risk has widened
The 'tail risk', what happens if a tenancy goes badly, is now longer and more expensive. Six to ten months of rent foregone plus £15,000 to £25,000 of legal costs on a contested possession is not a far-tail outcome any more. It is a realistic 5 to 10 per cent annual probability for any landlord with three or more properties.
Operational drag has increased
The compliance load, new notice forms, rent-rise procedures, pet-request workflow, anti-discrimination compliance, deposit handling, Information Sheet deadlines, has gone up. None of these are individually onerous. Together, they consume time and create paperwork-related civil-penalty exposure (up to £40,000).
The risk spectrum for a London landlord in 2026
Here is, broadly, where the main routes for letting a London property now sit on the risk curve:
Self-managed AST (now APT)
Highest upside, highest risk. You retain 100 per cent of the rent. You also retain 100 per cent of the void risk, eviction risk, compliance risk, and tenant-management workload. This is the right answer for landlords with one trusted tenancy and capacity to handle the paperwork.
High-street letting agent (commission model)
Reduces operational workload, but retains all asset-level risk with you. Void risk, eviction risk, and rent arrears risk all still sit with you, and the agent's incentive structure, paid on transactions, does not align with long-term asset performance.
Full management with a strategic partner
What we do for stabilised, performing properties. Corporate-grade management with skin in the long-term performance of the asset, quality tenants, disciplined compliance, and the strongest achievable rent.
Guaranteed rent / company let
You receive a fixed monthly rent for two to five years from the operator (us), regardless of whether the property is occupied. We are the tenant on paper. We take the void risk, the eviction risk, the legal exposure, and the operational management.
The trade-off: your headline rent is typically 10 to 20 per cent below the open-market rent. The benefit: that rent is contractually guaranteed for the term, with no voids, no tenant disputes, no court risk, and no compliance load.
When does the trade-off make sense?
Guaranteed rent is not always the right answer. For a landlord with a high-yielding property, a strong tenant of three years' standing, and the time to manage it, self-management still wins on a pure-yield basis.
It tends to be the right answer when one or more of these are true:
- You have multiple properties and operational time is scarce.
- You are not based in London, or not based in the UK.
- You have had a bad tenancy and you do not want to repeat the experience.
- Your property has been sitting void or has had high turnover.
- You value income predictability more than absolute yield.
- You are approaching retirement and want the asset to behave like an income product rather than a job.
- You are concerned about your exposure to the Renters' Rights Act compliance regime.
What Morgan Prescott does differently
Most guaranteed-rent operators in London come from a letting-agency background. They run the model the way a letting agent runs an agency, volume-driven, commission-minded, tenant-quality variable.
We come from finance. We model each property like a fixed-income asset: we look at the achievable cash yield, the void risk profile, the local council demand pipeline, and the maintenance trajectory. We will not lease a property where the numbers do not work, and we will tell you straight if your asking expectation is unrealistic.
We currently manage rentals for 140+ tenants across West London, with a focus on Ealing, Hounslow, Fulham, Putney, and the wider corridor out to Heathrow. Our partnerships with local councils on temporary accommodation give us a structural advantage on tenant pipeline that pure letting-agent operators do not have.
The risk ledger, itemised
It is worth being precise about which risks a fixed agreement actually moves, because the product is often described in a blur. Void risk moves: the monthly figure arrives whether the property is occupied or not. Arrears risk moves: the covenant paying you is a business, not a household budget. Re-letting risk moves: finding and vetting each occupier is the operator's work. Conduct risk substantially moves: day to day management of the people in the property belongs to the operator, within the standards the agreement sets. What does not move is ownership itself: buildings insurance, the structure, the freeholder relationship where there is one, and the property's compliance with safety law remain the owner's estate, handled by agreement but ultimately in the owner's name.
Set out like that, the product is easy to price rationally. The fixed figure sits where it sits, relative to the open market, because it carries four categories of risk the open market leaves with you. A landlord whose finances can shrug off a bad quarter may rationally keep those risks and chase the market figure. A landlord with leverage, distance, a demanding career or a low tolerance for surprises may rationally sell them. The mistake is only in comparing the two numbers as if they were the same product.
What we have learned since May
Three months of the new regime have sharpened one observation: the value of certainty has repriced. Under the old rules, a landlord who kept every risk could at least reach for Section 21 if a tenancy soured; the downside had a known exit. Now the downside runs longer and costs more, which means every risk on the ledger above is worth more to be rid of than it was in April. That is not a sales point so much as an observable shift in how the landlords we speak to are choosing: the question has moved from whether the headline figure is highest to whether the year's worst case is survivable.
The practical advice stands regardless of which route you take. Get both numbers on the table for your actual property, from evidence rather than assertion. Read the agreement, whichever kind it is, with particular attention to term, repairing obligations and handback. And choose with your circumstances in view rather than a neighbour's, because risk appetite is the one input nobody else can supply.
How a guaranteed figure is actually built
Landlords sometimes imagine the fixed offer is plucked from the air or set by crude formula. In practice it is underwriting. We start from the same evidence base as a managed valuation: what comparable properties across the area have genuinely let for, weighted for condition, size and exact location. Onto that we map our own demand, the corporate requirements and council partnership needs the property could serve, because a property that fits two live pipelines carries less risk for us than one that fits none. Then we price the term: what we can commit to paying every month for two, three or five years, through quiet Januaries, through changeovers, through whatever the market does in year three.
That is why two similar looking houses can receive different fixed offers, and why the strongest offers go to well kept, compliant, sensibly located stock: not because anyone is rewarding virtue, but because those properties are cheapest to keep occupied. It is also why a fixed figure cannot responsibly equal the best-case open market rent. A guarantee priced at the optimistic case is a promise built to be broken, and a broken guarantee helps nobody. Ours are priced to be kept.
Reading a guaranteed rent agreement: the clauses that matter
Whoever you are considering signing with, read six things before anything else. The parties: which legal entity is promising to pay you, and does the name on the agreement match the name on the bank transfer. The term and any breaks: how long the income is committed for and what, precisely, allows either side to end it early. The rent provisions: the figure, the payment date, and whether anything permits it to be revisited mid term. The repairing split: what the operator maintains, what remains yours, and the condition standard for handback at the end. The permitted use: what the operator may do in the property, who may occupy it and under what arrangements. And the compliance clause: who obtains and renews the certificates, and who holds the licence where one is needed.
A serious counterparty will walk you through all six without impatience, and the agreement will answer them in plain drafting rather than by silence. We are happy to be tested against that standard; we would want any member of our own families to apply it to us.
Who should not take guaranteed rent
Candour requires this section. If your mortgage is modest or cleared, your temperament calm, your diary open and your property in a street where tenancies re-let in days, you are the landlord best placed to carry the open market's risks yourself, and the market's higher headline figure may reasonably be your choice. Equally, if you actively enjoy the work of letting, or you are between strategies and value the flexibility of a rolling arrangement, a multi year commitment may not fit this season of your ownership.
The fixed route earns its place where the risks it removes are the ones that would actually hurt: leverage that makes a bad quarter dangerous, distance that makes hands-on management impractical, a career that leaves no bandwidth for a Tuesday evening leak, or simply a strong preference for certainty over ceiling. Most portfolios we look after contain both kinds of property and both kinds of answer, which is rather the point of starting from an appraisal instead of a pitch.
Getting to a real number
Every argument in this article resolves into one practical step: put your actual property through an actual appraisal and look at both figures side by side. The postcode form on this page takes a minute or two, and what comes back within 24 hours is specific rather than rhetorical: the rent a managed tenancy should achieve on current evidence, and, where the property qualifies, the fixed figure we will commit to on a term of two to five years. Bring your mortgage statement to the conversation that follows, because the right answer lives in the gap between the fixed figure and your outgoings, not in any general theory.
Some landlords run the comparison and choose the market; a good number split a portfolio between the two routes, fixing the leveraged properties and running the unencumbered ones managed; plenty simply value knowing that the worst month of the next three years already has a number on it. All three are sound outcomes. The only unsound outcome is holding risks you did not know you were holding, priced at a figure you never checked, which is the position an appraisal exists to end.
However you proceed, keep the decision under periodic review rather than treating it as permanent. Circumstances move: mortgages are refinanced, careers change, streets gentrify, and a property that suited the fixed route three years ago may suit the market route at renewal, or the reverse. The appraisal is free every time, and the habit of re-checking it at each natural break point is what keeps a portfolio deliberate instead of accidental.
If you would like a frank conversation about where your property sits on the risk curve, and whether guaranteed rent is the right answer for it, book a free 24-hour valuation. We will tell you honestly if it is not.