Direct Rent VS Rent Charge

The difference between Direct rent and rent charge is how Arthur distinguishes between self-managed portfolios and 3rd party management

Identifying your management type in Arthur’s ‘Financials’ is a fundamental step to ensure that your set up reflects your business.  This is especially important if you intend to integrate with cloud accounting software later on such as Xero. Two types are available;

• Direct rent - used by those that self manages i.e collecting the rent for themselves. Direct rent assumes the receipt of rent remains as income on the tenant statement and outgoings are costs to contractors. Together these will show on an income and expenditure report. Direct rent is also used in rent to rent setups as the rent collected is classed as income. 

• Rent charge - used by those who manage on behalf of 3rd Parties e.g agencies who deduct fees from the rent before passing it on. The balance on the property owner statement is a current liability. Rent charge assumes the receipt of rents will go across to a property owner statement to be paid out.