Rent-to-Rent Exposed: Why the Short-Term Rental Industry Desperately Needs Regulation

A 48-year-old gentleman recently reached out to me in desperation. He had signed a five-year lease for a property he had never seen, trusting the promises of a deal-sourcing company. Six months in, he was drowning in losses. The property was far from what was advertised, the management company had disappeared, and he had poured his life savings into a deal that never stood a chance. His story is just one of many, and it highlights the urgent need for change in the rent-to-rent industry. After eight years in the short-term rental market, I’ve seen enough to know that this isn’t an isolated incident—it’s a systemic problem. At AirFreedom, we believe it’s time to act.

After eight years of operating in the short term rental/accommodation industry, starting my business from scratch without the guidance of franchises or pre-existing examples, I have learned the value of transparency, compliance, and integrity. At AirFreedom, we have built a reputation on these principles, ensuring that our clients’ funds are held securely, contractual agreements are honoured, and accounts are created on their behalf in full compliance with the “lack of” industry standards.

Today , we feel it’s time to whistle-blow on the troubling trends we see in the market.

I would be more than willing to collaborate with councils, journalists, Members of Parliament, or any other organisations looking to address these issues. At AirFreedom, we strongly advocate for legislation and regulation in the short-term rental market. I come from a nation where opening a hotel, or any type of accommodation listed on booking platform such as Airbnb requires an inspection to ensure compliance with safety and comfort standards for guests. This level of accountability benefits everyone involved, from property owners to guests, yet it is something we are sorely lacking in the UK. We believe such regulations would improve the industry and create a more sustainable market. This is why AirFreedom only manages properties that we can personally inspect and ensure meet our standards. Even if a property is 90 minutes away from my residence, I will visit it in person to verify its suitability and develop a tailored strategy to maximise its performance. It’s this hands-on, personal approach that defines our work, and it’s something we are passionate about maintaining. If any journalist, council, or organisation is interested in delving deeper into this issue, I would be delighted to provide insights and contribute to the conversation.

Through our SEO efforts and growing online presence, we receive a significant number of enquiries—ranging from prospective clients and projects to “dreaming investors.” These are individuals who genuinely believe that investing their life savings into a rent-to-rent opportunity will guarantee profitability.

We are always honest. If we believe a property is unlikely to be profitable, we refuse to manage it, regardless of whether the enquiry comes from a property owner or an investor. However, we’ve noticed that some of the properties we turn down due to lack of viability end up on the market as rent-to-rent opportunities. Shockingly, these properties are often offered at rental rates higher than their market value, creating a precarious situation for investors.

It’s heart breaking to see what’s happening, and we’ve decided it’s time to speak out.

a man who appears to have a problem while watching his apartment

Why This Matters

I recently received a call from a prospective client that left me deeply moved. He explained how his management company had closed its operations, leaving him with a property he could no longer manage. He had signed a five-year lease just six months ago, and this decision had cost him dearly.

When he visited the property for the very first time after our phone call, he discovered what many others in similar situations have also faced:

• The property looked decent inside, with cheap wallpaper and flooring that had been staged to look high-end in photos.

• The communal areas were a disaster, with trash piling up and an entrance that was utterly unfit to present to guests.

• Six other apartments in the same building were also struggling, none of them were profitable, and no one was taking responsibility for maintaining the shared spaces.

The property had been sourced by a deal-sourcing company, likely for a fee of £3,000 per unit. The company then passed it to a management firm—likely affiliated with the sourcing company—that subsequently shut down operations. This was a known national short-term rental management company. These national management companies often accept properties without ever visiting them, and when operations prove unprofitable, they simply walk away.

The investor was left without a management company, without cleaners, and without options.

The Human Cost: Real Stories of Rent-to-Rent Scams

This investor’s story is one I will never forget. 48 year old gentleman. He had poured his life savings into this investment, trusting in spreadsheets and revenue forecasts provided by the deal-sourcing company. These spreadsheets, he explained, predicted occupancy rates from 50% upward, leading him to believe that even at the lowest estimate, he could cover the small cost.

Reality proved otherwise. Not a single month had been profitable or reached even close to 50% or even near the area performance for that period. The property, rented at £1,400 per month, was far above the market average of £900–£1,100 for similar properties in the area. On top of this, the investor had paid a sourcing fee, a setup fee for furniture, and other costs that quickly became a financial burden.

When he asked me if I could help him sell the furniture or knew anyone who might be interested, it became clear just how dire his situation was. He had signed a five-year lease without ever visiting the property, and now he was desperate to find a way out.

Why I’m Writing This

This article is a call to action. What I witnessed with this client is not an isolated incident but part of a larger, deeply troubling pattern in the rent-to-rent market. As someone who advocates for compliance, transparency, and the longevity of this industry, I believe it’s time to shed light on what’s happening.

At AirFreedom, we’ve always stood for ethical business practices, and we’re committed to working with councils, journalists, associations, or any entity willing to address these issues. Something needs to change. As part of raising awareness about the challenges and opportunities within the rent-to-rent and short-term rental industry, I’m thrilled to share that a podcast episode inspired by these pressing issues has been created. This episode delves into the realities of rent-to-rent investments, highlighting both the systemic flaws and the need for regulatory measures to protect investors, property owners, and the wider market based on this article.

🎙️ Listen to the Podcast:

Click here to explore the episode

This podcast explores the story of a 48-year-old gentleman who trusted a deal-sourcing company, only to find himself in a dire financial situation. It touches on the systemic issues in the rent-to-rent industry and highlights the urgent need for regulation and ethical practices.

Rent-to-Rent: An Industry Shift with Unseen Consequences

The concept of rent-to-rent has gained significant traction in recent years, offering a seemingly lucrative opportunity for property owners and investors. On the surface, it appears to be a win-win arrangement:

• Property owners lease their properties, ideally for 10% below market rate, to investors for 3 to 5 years.

• The investor assumes responsibility for maintenance, furnishings, and operational costs, while the property owner retains responsibility for major replacements, such as boilers.

Deal-sourcing companies have seized this model as a business opportunity. They act as intermediaries, charging a sourcing fee (around £3,000 per deal), an additional setup fee (often £5,000 or more for furnishings and preparations), and then introducing a management company—often part of their organisation. This one-stop-shop approach is marketed as a hands-off investment solution for national and international investors.

Deal-sourcing companies present this arrangement as a win-win. They act as intermediaries, charging fees to both the property owner and the investor, while offering management services to ensure a “hassle-free” experience. However, what appears to be a promising venture often unravels, exposing deep flaws that hurt both investors and the wider market.

But in practice, this model has significant flaws, and we’ve seen it unravel for many.

Why the Rent-to-Rent Model Should Work

In theory, the rent-to-rent model has potential. When done correctly, it allows for flexibility and profitability for both property owners and investors. Here’s how it should work:

1. Negotiated Lower Rents:

For the model to be viable, the rent agreed upon between the property owner and the investor should ideally be 10% below the current market rate. This reduction provides the investor with enough room to implement other strategies if the property underperforms—whether by adjusting the nightly rate, offering longer stays, or pivoting to alternative uses.

2. Risk Mitigation:

With a lower base rent, investors can absorb fluctuations in occupancy or unforeseen market challenges, creating a buffer that ensures the sustainability of the venture.

3. A Collaborative Approach:

By negotiating fair terms, property owners and investors can create a partnership that benefits both parties, fostering trust and long-term success.

The Reality: A Broken System

Unfortunately, the reality often looks very different. Rather than negotiating rents below market rates, deal-sourcing companies simply accept whatever rent the property owner demands—even if it’s at or above market value. This undermines the entire model.

• No Margin for Error:

Without a discount on rent, investors are left with no financial flexibility. The lack of a safety net means that any dip in occupancy or nightly rates results in immediate losses.

• Short-Term Thinking:

Deal-sourcing companies prioritise closing deals quickly rather than negotiating sustainable agreements. Their focus is on collecting sourcing fees, setup fees, and commissions, rather than ensuring the long-term success of the investor.

• A Race to the Top:

Property owners, realising there’s a niche market of eager investors, often raise their rental prices. What should be a collaborative process becomes a one-sided transaction, further inflating rents and property prices in the area.

The Consequences

By accepting higher rents without question, deal-sourcing companies effectively sabotage the potential of the rent-to-rent model:

1. Investors Left Vulnerable: With no room to manoeuvre financially, investors are unable to recover from slow months or adjust to market demands, leading to significant losses.

2. Market Inflation: As more deals are closed at above-market rents, rental prices in the area rise, making housing less accessible for residents and sustainable businesses.

3. A Self-Perpetuating Problem: When investors fail, properties are recycled back into the market with the same inflated rents and promises, trapping new investors in the same unsustainable cycle.

The Illusion of a Win-Win

The rent-to-rent model is attractive in theory. A property owner benefits from steady rental income, while the investor profits from short-term letting. However, the reality is far less rosy:

1. Unrealistic Forecasts:

Sourcing companies present investors with revenue projections that seem attainable but are often inflated or based on best-case scenarios. When occupancy rates or nightly rates fall short of these estimates, the investor bears the financial loss.

2. No Accountability:

Once the deal is signed, the sourcing company steps back, leaving the investor to manage the fallout if things go wrong. Management companies, suggested by the deal-sourcing firms, rarely offer the transparency or performance needed to recover the investor’s trust.

3. Exploitation of Properties:

Many properties sourced for rent-to-rent schemes are substandard. Investors, often located far from the property, rely on photos that don’t reflect reality. Properties may look polished in pictures due to cheap wallpaper and furnishings, but the buildings themselves can be poorly maintained, with trash-filled entrances and deteriorating communal areas.

The Reality of Rent-to-Rent Deals

While the concept of rent-to-rent sounds simple, the way it operates in practice often defies logic. One of the worst aspects of these deals is how they inflate property and rental prices:

• Higher-than-market rents: Property owners, realising they can exploit this niche, often raise their rental prices when approached by deal sources. Instead of negotiating lower or fairer rents, sourcing companies often accept these inflated prices to secure a deal quickly. This leads to investors entering agreements where profit margins are razor-thin or non-existent.

• A broken system: In any other part of the world, this approach wouldn’t make sense—renting a property at a higher-than-market price would defeat the purpose of a profitable investment. Yet, in this context, it is alarmingly common.

• A ripple effect on the market: This practice has contributed to one of the highest increases in property and rental prices in the country. By creating artificial demand and driving up rents, these deals distort the market, making it harder for residents and legitimate businesses to find affordable housing.

A Strategy or a Gamble?

This dynamic reminds me of a restaurant technique I studied during my hospitality management degree: menu engineering. In restaurant management, you evaluate items on a menu to identify winners, losers, best sellers, and worst sellers type of thing. Prices are adjusted, and the menu is refined to maximise profits.

We see a similar approach being applied to properties:

• Property owners test their properties’ viability in the short-term rental market by leasing them to rent-to-rent investors.

• The investor unknowingly bears the financial risk, investing in furniture and operational costs for what is essentially a trial run.

• If the property succeeds, the owner often chooses to cut out the middleman—rent-to-rent investors—and work directly with a proven management company, like AirFreedom.

This trend turns investors into test subjects, paying to determine if a property is financially viable as a short-term rental.

The Rise and Fall of Rent-to-Rent Deals: A Post-COVID Phenomenon

The accommodation industry has witnessed many changes over the years, but none as concerning as the rise of rent-to-rent sourcing deals since the COVID-19 pandemic. At AirFreedom, we’ve observed a pattern that is not only troubling but has left a trail of financial distress and disillusionment in its wake.

A New Trend in the Market

Around 2020, as the world grappled with the effects of lockdowns and travel restrictions, a phenomenon began to emerge. We noticed a sharp increase in enquiries—both national and international—from investors asking if we sourced properties or managed them for rent-to-rent schemes. Soon, more and more ‘new’ players in the market began profiting by sourcing rent-to-rent deals, often charging upwards of £3,000 per deal.

These deals were accompanied by forecasted revenue, promising lucrative returns, sometimes based on slightly unrealistic and often inflated figures. These companies painted an enticing picture, even in worst-case scenarios like 50% occupancy rates. Many investors believed they could shoulder the financial risks, only to find themselves in untenable situations when the promised revenue never materialised.

The Reality Behind the Promise

We’ve spoken to numerous investors over the years, many of whom placed their trust—and savings—into rent-to-rent schemes. They were promised a “sane investment,” yet some properties remained empty for weeks or even months.

One striking example is Cardiff, where investors bought into these schemes, assuming the projected returns could weather even challenging conditions. Unfortunately, the reality was far from the optimistic forecasts. Properties sourced for these deals often failed to meet basic standards for hosting guests. Some were dressed up with cheap refurbishments, looking luxurious in photos but hiding poor-quality interiors and poorly managed communal spaces.

How Deal-Sourcing Companies Operate

Deal sources have identified a lucrative niche:

1. Finding the property: They approach property owners willing to lease their properties, often selling the idea of a guaranteed long-term income.

2. Charging investors: They charge investors an upfront sourcing fee (often £3,000) to secure the property, plus an additional setup fee (around £5,000 or more) for furnishing and preparing it for short-term lets.

3. Bundling services: They often recommend or own management companies to handle day-to-day operations, making it a one-stop shop for the investor.

While this might seem convenient, the underlying issue is accountability. If the property underperforms—due to low occupancy, poor management, or inflated costs—investors are left bearing the losses. Worse still, these properties are often unfit for hosting guests, with cheap furnishings masking underlying issues like poorly maintained buildings or unappealing communal areas.

The One-Stop-Shop Trap

In an attempt to simplify the process, many of these sourcing companies offered a one-stop-shop service. They not only sourced the property but also provided management, cleaning, furnishing, and maintenance services. On paper, it sounded ideal. In practice, it often turned into a nightmare.

Take StayBC, for instance—a company that quickly entered the market, offering all-encompassing services, only to vanish shortly thereafter. They left behind unpaid investors and tenants, creating significant financial losses for many in the community. Unfortunately, such stories are not uncommon.

A Recent Example of the Fallout

Just last weekend, we were contacted by an investor who had been left in the lurch. They had signed a five-year lease for £1,400 per month with a national management company, only to discover that the company had stopped operating in the area. Cleaners refused to work with them, and the property was effectively abandoned.

When the investor finally visited the property, they discovered the grim reality: while the interiors had been dressed up for photos with cheap wallpaper and flooring, the building itself was deteriorating. The entrance was littered with trash, and the overall state of the building was unfit for guests.

The Ongoing Cycle of Exploitation

What’s even more alarming is how these deals are recycled. When investors fail to make a profit and attempt to break their contracts, the properties are often reintroduced to the market with the same unrealistic forecasts. The cycle continues, ensnaring new investors who are unaware of the property’s history. We see the sourcing fee doubling and we have also seen the setup fee being then charged too when the furniture has been left behind by the previous investor. Believing or not! I know right!

A Call for Accountability

At AirFreedom, we view this as not just unethical but bordering on criminal activity. These sourcing companies exploit both the properties and the investors, leaving a lasting negative impact on the industry. It’s a vicious cycle that must be addressed, both within the industry and through broader regulatory oversight.

Moving Forward

This post is not just a critique but a call for awareness. We believe it’s crucial for prospective investors to approach rent-to-rent deals with caution. Conduct thorough due diligence, visit properties in person, and question overly optimistic forecasts. Most importantly, work with reputable management companies who prioritise transparency and long-term success over short-term gains.

The rent-to-rent model is not inherently flawed, but the way it is often executed can be disastrous. At AirFreedom, we remain committed to helping property owners and investors make informed decisions, avoiding the pitfalls of these questionable schemes.

Real-World Impact

We’ve seen countless examples of this playing out:

• Investors left with unsustainable leases: Investors sign leases for several years, only to discover they cannot sustain costs due to low occupancy rates or properties unfit for hosting guests.

• Rotating properties: Sourcing companies recycle the same properties, reselling them to new investors with the same lofty promises and revenue forecasts, perpetuating the cycle.

• Damage to the industry: Companies like StayBC, which entered the market with aggressive promises, disappeared, leaving behind unpaid investors and property owners.

The Investor as a Test Subject

Much like menu engineering in restaurants—where menu items are evaluated for profitability and adjusted accordingly—we see property owners using investors as test subjects for market viability.

• Testing profitability: Property owners lease their properties through rent-to-rent agreements to see if they can perform as short-term rentals.

• Passing the risk: Investors, unaware of this strategy, invest heavily in furniture, maintenance, and operations, only to find themselves shouldering the financial burden if the property underperforms.

• Cutting out the middleman: If the property succeeds, owners often terminate the lease at the end of its term and take over the operations themselves, cutting out the investor entirely.

This practice may seem strategic from the owner’s perspective, but it leaves investors vulnerable and creates an exploitative cycle.

The Wider Consequences

The implications of this model extend far beyond individual investors:

1. Market inflation: As sourcing companies accept higher-than-market rents, they artificially inflate property prices and rental rates, making the market less accessible for residents and legitimate businesses.

2. A cycle of exploitation: When investors fail to turn a profit, they either break their leases or abandon the properties. Sourcing companies then recycle these deals, presenting them to new investors with the same unrealistic forecasts.

3. Industry instability: Companies like StayBC have shown how unsustainable this model can be. Promising everything from sourcing to management, they disappeared from the market, leaving behind unpaid debts and disillusioned investors.

Raising the Bar: Why the Short-Term Rental Industry Needs Regulation and Accountability

At AirFreedom, we believe the time has come to call for proper legislation and regulation within the short-term rental market. As the industry grows, so do the issues arising from a lack of oversight, leaving investors, property owners, and guests exposed to the negative consequences of unregulated practices. The absence of clear standards and enforcement mechanisms has allowed unethical behaviours to flourish, creating an environment where trust is eroded, and accountability is rare.

Coming from Portugal, I’ve seen how a structured, regulated system can elevate the industry. In Portugal, no one can open a hotel, or any other accommodation business without first undergoing an inspection organised by the local council. This inspection ensures the property complies with safety, comfort, and quality standards. It’s not a box-ticking exercise—it’s a rigorous process that protects both guests and property owners, creating confidence in the market. These regulations provide clear boundaries and expectations, fostering a sustainable, professional ecosystem where businesses thrive because they operate transparently and responsibly.

Unfortunately, in the UK, this level of regulation is absent. Properties are often listed for short-term lets with little to no oversight, leaving room for the kind of issues I’ve highlighted earlier in this blog. Investors frequently commit their life savings to properties that haven’t been inspected, verified, or vetted, relying instead on promises from deal-sourcing companies or management firms with no real stake in the property’s success. The result is often devastating: properties that underperform, guests who leave unsatisfied, and investors who face financial ruin.

At AirFreedom, we’ve taken a firm stance against this. We manage only properties we can get our hands on—properties that we can visit, inspect, and personally verify. No property is too far for us. Even if it’s a 90-minute journey, I ensure that I or someone from our team physically visits the property to confirm its suitability. Why? Because every property deserves a tailored strategy that matches its unique potential, and every investor deserves a partner who takes their investment as seriously as they do. This hands-on approach is at the core of how we operate, and it’s something we believe should be standard across the industry.

Introducing regulations would not only elevate the quality of short-term rental properties but also create a more level playing field for operators. Properties that meet compliance standards would stand out, encouraging investors to make informed decisions and property owners to maintain higher standards. Imagine a future where every property listed for short-term lets has been inspected and approved, giving guests confidence in their choice and creating trust between owners and managers. This isn’t just a dream—it’s a necessity if we want the industry to continue growing responsibly.

We are not calling for unnecessary red tape or barriers to entry but for basic, common-sense measures that prioritise quality, safety, and transparency. Whether it’s ensuring a property is fire safe, has appropriate amenities, or complies with accessibility requirements, these standards protect everyone involved. As a business, we actively advocate for these changes, knowing they will not only improve the guest experience but also create long-term stability for property owners and investors alike.

I want to make it clear: I am more than willing to collaborate with councils, journalists, Members of Parliament, or industry associations to push for these changes. Whether it’s sharing our experiences, providing insights into the market, or helping develop practical frameworks, we are ready to assist. AirFreedom has always prioritised transparency, compliance, and longevity in our business practices, and we believe it’s our responsibility to contribute to making the industry better.

Regulation isn’t something to fear—it’s something to embrace. It ensures that only properties fit for purpose are brought to market, protecting investors from predatory deals and guests from disappointing or unsafe stays. It’s time we raise the bar for short-term rentals in the UK. And we’re ready to be part of that change.

Our Perspective

At AirFreedom, we rarely manage rent-to-rent properties because of these issues. However, we’ve worked with larger investors who own both traditional properties and rent-to-rent deals. Interestingly, all the rent-to-rent properties we’ve managed for these clients have ended with the property owners choosing to work with us directly, cutting out the middleman.

This speaks to the inherent flaws of the rent-to-rent model. It is often used not as a genuine partnership but as a testing ground for property owners, with investors paying the price for their experiments.

A Call for Change

The rent-to-rent model is not inherently flawed—it can work when approached transparently and ethically. But the current system, driven by deal-sourcing companies, has created a cycle of exploitation.

• For investors: Always visit the property in person, question revenue forecasts, and conduct thorough due diligence.

• For property owners: Work with reputable management companies to test the market, rather than passing the financial burden to investors.

At AirFreedom, we remain committed to transparency and long-term partnerships. The accommodation industry should be built on trust, not opportunistic schemes.

It’s time for all of us—property managers, investors, councils, and industry leaders—to come together and demand accountability. The rent-to-rent model can only succeed if it is built on transparency, regulation, and fairness. At AirFreedom, we stand ready to help lead this change, and we invite others to join us in building a more sustainable future for the short-term rental market.

FAQ: Understanding Rent-to-Rent and the Need for Regulation

Q: What is the rent-to-rent model?

A: Rent-to-rent involves an investor leasing a property from a landlord, typically for 3-5 years, with the intention of subletting it as a short-term rental. The investor handles furnishings, maintenance, and day-to-day operations, while the landlord receives a guaranteed rental income.

Q: Why is regulation needed for the short-term rental industry?

A: Regulation would:

Ensure properties meet basic safety and quality standards.
Create a level playing field for operators.
Protect investors from predatory schemes.
Increase transparency and accountability.
Build trust in the short-term rental market.

Q: What kind of regulations are being proposed?

A: Proposed regulations include:

Mandatory property inspections before listing.
Clear guidelines for revenue forecasting and rental agreements.
Licensing and certification for short-term rental operators.
Enforcement mechanisms to hold companies accountable.
Clear legal guidelines for rent to rent contracts.

Q: What can property owners do to avoid contributing to the problem?

A: Property owners should:

Work with transparent and ethical management companies.
Avoid accepting inflated rental offers.
Ensure properties are in good condition.

Q: What is AirFreedom's role in addressing these issues?

A: AirFreedom:

Advocates for industry regulation.
Manages only properties that meet high standards.
Provides transparent and ethical property management services.
Is willing to collaborate with councils, journalists, and policymakers to enact change.

Q: How can I support the call for regulation?

A: You can: