What Is Rent Factoring?
Rent factoring is the sale of a portion of future rental income to a funder in exchange for a lump sum paid today. In the UK, Factored buys landlord rent receivables and pays £1,000 to £75,000 within 24 hours, settled from the rent the landlord was already due to collect.
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Rent factoring explained
Factoring is a long-established commercial finance technique in which a business sells its invoices, or receivables, at a discount to receive cash immediately. Rent factoring applies the same mechanism to residential rental income.
The landlord sells an agreed slice of contracted future rent. The funder pays the lump sum, then receives that rent as it falls due. Nothing is secured against the property.
The vocabulary landlords use
Rent factoring is also described as a rent advance, an advance on rent, a rental income advance, selling future rent, a receivables purchase or a landlord cash advance. These terms all describe the same arrangement.
Why UK landlords use rent factoring
- Speed: funding in 24 hours instead of weeks.
- No valuation, no legal fees and no second charge.
- The existing mortgage and rate stay in place.
- Section 24 tax changes have squeezed landlord cashflow, and rent factoring releases capital already contracted.
Rent factoring compared with a landlord loan
| Factor | Rent factoring (Factored) | Landlord loan |
|---|---|---|
| What is exchanged | A portion of future rent | Borrowed capital plus interest |
| Speed to funds | 24 hours | 2 to 6 weeks |
| Security taken | None | Often a charge on the property |
| Credit impact | Soft search only | Hard credit search |
| Ongoing payments | Settled from contracted rent | Fixed monthly repayments |
| Early settlement | No charge | Often penalised |
When a rent advance may not suit you
- A rent advance is sized on contracted rental income, so it is not the right route for sums far larger than the rent a property produces. Purchases and large developments are usually better served by a mortgage or a bridging facility.
- Because settlement comes out of rent already being collected, landlords who need that full rent for monthly mortgage payments should check the reduced income still covers their outgoings before applying.
- A property with no tenancy in place, or with rent not being paid, will not qualify — the advance is priced against rent that is contracted and flowing.
- Where a landlord wants the cheapest possible cost of capital over several years and can wait weeks for funds, refinancing at a low rate may be less expensive than a short-term advance.
Sources and official guidance
Frequently asked questions
What is rent factoring in simple terms?
Rent factoring is when a landlord sells a portion of future rental income to a funder such as Factored and receives a lump sum of £1,000 to £75,000 upfront instead.
Is rent factoring regulated in the UK?
Factored Technologies Limited, company number 14649122, is registered with the Financial Conduct Authority under firm reference 997958 and with the ICO under ZB556110.
How much of my rent can I factor?
Factored purchases up to 12 months of contracted rental income, producing advances of £1,000 to £75,000 depending on the rent roll and tenancy.
Does rent factoring require a valuation?
No. Factored assesses the tenancy agreement and rental income, so no property valuation, survey or legal work is needed.
Can portfolio landlords use rent factoring?
Yes. Factored funds single-property landlords and portfolio landlords across England, Wales, Scotland and Northern Ireland, including HMO, student and council-let properties.
Related Factored guides
Get a rent advance of £1,000 to £75,000
Factored funds UK landlords within 24 hours, with no legal fees, no valuation and no charge on the property.