For landlords, having a reliable rental income does not always mean having enough cash available when an unexpected expense comes along. Property repairs, refurbishments, energy efficiency improvements and the costs of growing a portfolio can all require significant amounts of money.

This is the problem that UK fintech business Factored is looking to address through its landlord factoring service.

Founded by David Rabee and Ben Schuldenfrei, Factored was created to give landlords another way to access capital without relying entirely on traditional property finance. The founders have around 20 years of combined experience across property and finance and identified an opportunity to use future rental income as a way for landlords to access money sooner.

The company describes its service as a rent advance, rather than a traditional loan. In simple terms, Factored allows a landlord to receive a lump sum based on an agreed amount of their future rental income.

Instead of waiting for rent to be paid over a number of months, a landlord can access some of that future income upfront and use it for their immediate financial needs.

The idea behind the service is straightforward. As Factored explains, “landlords have an asset in the form of future rental income, but they may need access to some of that money before it is normally paid.” The service is designed to turn that future income into available capital.

What is landlord factoring from Factored?

Landlord factoring is a way of releasing future rental income as a lump sum today. Factored purchases an agreed portion of a landlord’s future contracted rental income and provides the landlord with the money upfront. The landlord then settles the advance from the future rental income covered by the agreement.

One important difference from traditional property lending is that Factored says the funding is not secured by registering a legal charge against the property. It also says landlords do not have to refinance their existing mortgage to use the service.

This can provide an alternative for landlords who want to access money without changing their existing mortgage arrangements.

Factored currently advertises advances of between £10,000 and £75,000, depending on factors including the landlord’s rental income and tenancy arrangements. The company says it can purchase up to 12 months of contracted rental income.

Who is eligible for landlord factoring?

Factored’s service is aimed at UK residential landlords, including landlords with a single property as well as those with larger portfolios.

Eligible property types can include standard buy-to-let properties, HMOs, bedsits, student accommodation, council housing and serviced apartments.

Eligibility criteria

A landlord will generally need to:

• Own a UK residential rental property.
• Have a signed tenancy agreement.
• Receive rental income on a monthly basis.
• Provide evidence of property ownership.
• Provide evidence of rental income.
• Have a signed Assured Shorthold Tenancy (AST) with at least six months remaining, according to Factored’s current criteria.
• Provide the required property and tenancy documents.
• Have completed tenant referencing.
• Complete identity and verification checks.
• Provide evidence of rental income, such as bank statements or open-banking information.
• Pass Factored’s assessment process.

Factored says it uses a soft credit check, rather than a hard credit check, as part of its application process.

The exact amount a landlord can receive will depend on their circumstances, including the level of rental income and the length of the tenancy.

What are the typical terms?

Factored currently offers funding from £10,000 to £75,000, with the potential to advance up to 12 months of contracted rental income.

The company says approved applications can be funded within 24 hours. It does not require a property valuation or a legal charge to be registered against the property, and landlords do not need to refinance their existing mortgage.

Rather than paying traditional interest on a loan, the landlord pays an agreed fee for the rent advance. Factored also says there are no early settlement penalties and that discounts may be available if an advance is settled early.

As with any form of finance, landlords should check the exact cost and terms offered to them before entering into an agreement, as these can vary depending on the individual circumstances.

Landlord factoring allows landlords how have secured rent from their tenants to use this as a way to borrow money – which can be used for upgrades, renovations or growing a property portfolio.

What can landlords use the money for?

One of the main attractions of the service is the flexibility it can provide. Landlords can use the money for a range of property and cash-flow requirements.

Common uses include:

• Property refurbishments, including kitchens, bathrooms, flooring and general improvements.
• Repairs and maintenance, particularly when unexpected work is required.
• Energy efficiency improvements, including work to improve an Energy Performance Certificate (EPC) rating.
• Tenant accommodation improvements, helping landlords upgrade their properties.
• Portfolio expansion, including costs associated with purchasing another property.
• Cash-flow management, giving landlords access to money before future rent is received.
• Emergency property expenses, such as boiler, plumbing or roofing repairs.
• Property upgrades, which may help landlords maintain or improve their properties.
• Other landlord-related costs, depending on the individual funding agreement.

For a landlord facing a large repair bill, for example, waiting several months for rental income to build up may not be practical. A rent advance can provide access to some of that future income sooner.

An alternative to traditional property finance

Factored’s approach is different from conventional property finance in several ways. Traditional borrowing can involve property valuations, legal work and changes to existing borrowing arrangements. Factored’s model instead focuses on the landlord’s future rental income.

The company says its online application process is designed to make accessing funding quicker and simpler, with approved applications potentially receiving funds within 24 hours.

When Factored launched, its founders highlighted the need for more flexible funding options for landlords of different sizes. The business was designed to work with landlords ranging from those with a single rental property to larger portfolio landlords.

The underlying idea remains relatively simple: landlords already have an income stream, but sometimes need access to that income before it is due to arrive.

By allowing landlords to release part of their future rental income as a lump sum, Factored aims to provide another option for managing property costs, improving rental homes and supporting portfolio plans without requiring landlords to refinance their existing mortgages.