Sometimes, lettings are made to a limited company rather than for individuals – and this form of letting is often called corporate housing. Although the more significant difference is that the company lets are reserved for companies only, there are other crucial differences related to laws and regulations, and that is what this guide is about – a guide to corporate letting.
What do you need to know about corporate letting
When you are renting a property to people, they are considered assured shorthold tenancies (ASTs). On the other hand, companies are not considered ASTs because the Housing Act of 1988, which sets up the protective code that governs ASTs, applies only to individuals, and not artificial beings like companies, for instance.
This means that the underlying common law governs the company lets, which is the legislation that existed before the creation of the Housing acts and Rent Act. Companies are businesses, and they are not considered individuals.
What are the practical effects of this regulation?
The practical effects of this regulation are that, when you are a landlord of a company let, you should not use the standard AST agreements found in online shops, for instance, but rather a tenancy agreement designed explicitly for company lets. Also, you cannot evict tenants with the same procedure and paperwork, and you are not able to use section 8 or 21 possession notices (you will typically use the old-style “notice to quit”).
What about the tenants?
Be very careful with the tenants of company lets – and always make sure you trust the company. First, understand the reason why someone is trying to rent your property via company let. Some possible reasons for this are:
- The company wants to accommodate some employee who would not be eligible to rent a place or who would not pass standard referencing otherwise.
- They want to have taxation benefits.
- They want to provide accommodation to a group of employees on a short-term basis.
Company lets can be very lucrative, but you will not have control over whom the company places in the property once let – property damage is something to be worried about. That is why you need to make sure the company is trusted and also ensure that you know the steps to repossess the property.
How you can protect your position
The ideal picture is that you know everything there is to know before letting the property to a company.
First of all, you can always check the references of the guarantors thoroughly, and make sure you are also getting credit checks done. Besides that, do a search against the company at Companies House – if you have an expensive property, then the best thing to do is to buy a more detailed report about the company and check the last few years’ accounts.
If even after doing all this you are still unsure, make a choice to let for no longer than six months at a time (so that you can know better about the tenants and the company’s use of the property), or, if the tenancy agreement is longer than six months, make sure that it has a break clause. Of course, always ask for a tenant or damage deposit – this will leave your mind more at ease if the company to what you are letting the property crashes.
Another tip is to be close to the day-to-day aspects by asking for details of the people who will be living in the property, and also then check their history. If that is not possible, ask for a guarantee from at least one director of the company that is letting the property (preferably, ask for two guarantees).
Hopefully, with these tips, you are going to have an enjoyable and profitable letting experience.
What are the good and bad things about corporate letting?
As we mentioned, corporate letting can be very demanding in terms of planning and regulation – and the standards of the firms are typically very high. However, firms also pay high rents and will provide you with a good profit margin.
Corporate letting for a multinational company is an excellent way to profit faster with tidy tenants who take care of the furniture and leave you free of hassles. Other companies, though, can be a headache – making demands you cannot meet, with irresponsible tenants overall. However, most landlords agree that tenants of regular, residential contracts are more likely to trash your place and fail to pay the rents than corporate let tenants.
It is also essential to provide a pristine environment with very high-quality amenities to succeed in the corporate letting business – and that is why most landlords do not go down this path and prefer renting to individuals.
Also, letting periods tend to be shorter because companies typically sign short term contracts – this can be both a bad and good thing, depending on your situation.
How to find clients as a company let landlord?
As with any other businesses, there are many ways one can become a company let landlord. One idea is to call the human resources sectors of corporations, offering your services whenever they need accommodation for their employees or employees of visiting companies, for instance.
Another way to find clients as a company let landlord is to speak to relocation agents – these people deal on a daily basis with employees who need to be relocated for some years – typically IT personnel, management consultants or engineers. Most of these relocated professionals are from other countries, and most British companies prefer the economy to elegance.
What are corporations looking for?
Since the maximum lease for a corporate let is three years, and there are tax benefits, most companies with employees with an expatriate visa, for example, will choose to let a property.
Also, corporations looking for short-term lets (two to three-months lets) will often choose a serviced apartment with concierge service. Companies find it easier when everything is taken care of – cleaning, bills, and laundry.
Is corporate letting the best choice for you?
If you bought the property to let, then make sure to make the property smart with elegant furnishings before letting it to companies. Make a renovation with new bathroom fittings, a fitted kitchen with modern amenities and wooden floors or new carpets.
Also, make sure you have a savings fund or another source of income because it is likely that you will put up with some non-rental periods.
Guide to Corporate Letting – Tips to letting more often for companies
To let more often for companies, make sure that you follow some steps:
- Decorate and furnish your apartment to justify the larger rent instalments.
- Approach a lettings agent before approaching the firm directly – most companies prefer reaching a trusted agent.
- Letting to a company typically requires that the property is near utility shops, supermarkets, rail station, bus stops, etc.
- Hire a member of ARLA (Association of Residential Letting Agents) to manage your property.
- Provide excellent service always: by responding quickly to tenant’s problems, questions and emergencies.
- Of course, make sure you provide a good and reliable internet connection.
- Pay 1% stamp duty on rents of £60,000 or over a year.
- Find tenants with one of the 200+ recommended agents by the ARA (Association of Relocation Agents).