What is a Company Let UK?

Are you a landlord considering renting your property to a company in the UK? Have you ever wondered “what is a company let UK?” and how company lets differ from traditional tenancies and what legal framework governs them? In this blog post, we will explore the world of company lets, discussing their definition, purpose, key differences from traditional tenancies, and the legal framework that governs them. We will also delve into rent and financial considerations, ending a company let tenancy, and the pros and cons of company lets for landlords. By the end of this post, you will have a comprehensive understanding of company lets and the factors to consider when renting your property to a company.

Short Summary

• Company Lets in the UK are a form of tenancy agreement distinct from traditional tenancies.
• Tenants in company lets lack rights and protections compared to those with an assured shorthold tenancy.
• Landlords must be aware of legal obligations, rent levels, deposit protection and termination requirements when renting to a company.

Understanding Company Lets in the UK

At its core, a company let is a type of tenancy agreement between a landlord and an organization, typically used for providing housing to employees. These agreements are not subject to the same regulations as traditional tenancies, as the Housing Act 1988 does not apply to company lets.

As a result, landlords and tenants in company lets experience a different set of rights and obligations compared to those in traditional tenancies.

Definition of a Company Let

A company let is a tenancy arrangement where a corporate entity rents out a piece of property for its workers. It differs from a regular contract since it is not based on a standard agreement. This type of agreement is known as a non-assured tenancy agreement, which falls outside the regulations of an assured shorthold tenancy agreement. Company lets are governed by common law rules and the Housing Act 1988.

When setting up a company let, it is crucial to consider rent levels, rent increases, review clauses, as well as deposit protection.

Purpose of Company Lets

The primary purpose of company lets is to provide accommodation for employees and directors who are relocating or working on a project in a different location. In these cases, organizations utilize company lets to secure housing for their personnel and ensure their comfort and convenience.

Typically, a non-assured tenancy agreement is employed for a company let.

Key Differences from Traditional Tenancies

One key difference between company lets and traditional tenancies is that company lets are not considered assured shorthold tenancies, as the Housing Act 1988 regulations only apply to individuals, not companies or organizations. Furthermore, companies in company lets are not considered consumers and therefore do not benefit from the protection of consumer laws.

Another significant difference lies in the regulations governing rent increases, evictions, and tenancy deposits. The occupier of the property and the corporate tenant in company lets have fewer rights and protections than a private tenant with an assured shorthold tenancy under common law tenancy. This means they are less protected. This distinction can have considerable implications for both landlords and tenants in company lets.

Legal Framework Governing Company Lets

As mentioned earlier, common law rules, rather than the Housing Act 1988, apply to company lets. This means that tenants in company lets have fewer rights, while landlords have more control over the tenancy.

In this section, we will explore the legal framework governing company lets and how it impacts the relationship between landlords and tenants.

Common Law vs. Housing Act 1988

The main distinction between common law and the Housing Act 1988 is that the latter is a specific legislative instrument that regulates the relationship between landlords and tenants in the UK, while common law tenancies fall outside statutory frameworks and are subject to common law rules.

Key differences between the two legal frameworks include the rights and obligations of both landlords and tenants, the notice periods and eviction procedures, and deposit protection.

Tenant Protection and Rights

Due to the application of common law rules instead of the Housing Act 1988, tenants in company lets do not enjoy the same level of protection and rights as those provided by assured shorthold tenancy agreements. In essence, tenants in company lets have fewer rights, while landlords possess increased control over the tenancy.

This means that tenants in company lets are more vulnerable to eviction and other forms of landlord interference. They are also unable to take advantage of the security of tenure provided by assured shorthold tenancies, which can provide tenants with greater peace of mind.

Landlord Obligations and Responsibilities

Despite the differences in legal frameworks, landlords in company lets are still required to fulfill certain legal obligations and responsibilities, even if they are not specified in the tenancy agreement. These include responsibility for most repairs to the exterior or structure of the property. Additionally, landlords are entitled to enter the property for inspection and repair purposes, provided they give reasonable notice to the tenant.

The termination of a company let tenancy is relatively easy, as long as the landlord follows the notice period stated in the tenancy agreement and meets the notice requirements of the Protection from Eviction Act 1977.

Rent and Financial Considerations

Rent levels for company lets are not regulated and can only be increased by mutual agreement or through a rent review clause. This gives landlords more flexibility in setting rent levels based on factors such as location, property size, and demand.

Additionally, tenants in company lets are required to pay a deposit, but unlike assured shorthold tenancies, this deposit is not protected by the Tenancy Deposit Scheme.

Setting Rent Levels

When determining rent levels for company lets, factors such as the location, size of the property, condition of the property, and demand for similar properties in the area should be taken into consideration.

Furthermore, the quality of furnishings and appliances may also be a factor to consider when setting the rent levels.

Rent Increases and Review Clauses

Rent increases in company lets can be achieved either through a rent review clause included in the tenancy agreement or by introducing a new tenancy agreement with a revised rental charge, which would require the company’s consent and signature.

Rent levels for company lets are not regulated, and rent increases generally follow market rates.

Deposit Protection

In company lets, there is no legal requirement to protect a deposit in a tenancy deposit protection scheme, unlike assured shorthold tenancies. This means that landlords have more control over the deposit and its return. But also that tenants do not have the same level of protection for their deposit.

Ending a Company Let Tenancy

Landlords can easily end a common-law tenancy after the fixed term, but during the fixed term, eviction can only happen if the tenant breaches the agreement. Notice periods for a company are at least four weeks, but can vary depending on the breach.

In this section, we will discuss the process for ending a company let tenancy and the associated notice periods and requirements.

Notice Periods and Requirements

The notice periods for terminating a company let tenancy are generally a minimum of four weeks, but can differ based on the breach. Landlords must adhere to the notice period stipulated in the tenancy agreement as well as the notice requirements mandated by the law, such as the Protection from Eviction Act 1977.

Eviction Procedures

Eviction of a tenant in a company let is only possible if the tenant breaches the agreement during the fixed term. To terminate a company let tenancy, landlords must serve a Notice to Quit, typically requiring a minimum notice period of four weeks.

For advice on eviction procedures, the Eviction Guide as part of the Landlord Law service is a great resource. It provides detailed information on the process and steps to take.

Breach of Tenancy Agreement

A breach of tenancy agreement is defined as a tenant’s failure to adhere to the terms of the tenancy agreement. If a tenant breaches their tenancy agreement, the landlord may decide to evict them and reclaim the property.

In some cases, the landlord may pursue forfeiture of the property as a consequence of the tenant’s breach.

Pros and Cons of Company Lets for Landlords

Company lets can offer several advantages to landlords, such as longer tenancy agreements and higher rental income. However, landlords may also face risks and challenges, such as company insolvency and loss of control over tenants.

In this section, we will explore the benefits and drawbacks of company lets for landlords.

Benefits of Renting to a Company

Renting to a company can provide landlords with assured rent, extended tenancies, and rental assurance. It can also offer advantageous taxation for higher rate taxpayers and certain tax advantages for landlords who own multiple properties.

Additionally, companies tend to rent for lengthy periods of time, providing stability and reliability in terms of rent payments. This can be especially appealing to landlords seeking a stable source of rental income.

Risks and Challenges

Despite the benefits, landlords should be aware that renting to a company carries risks and challenges. For instance, companies may become insolvent, leaving landlords without rental income and potentially facing the task of finding new tenants.

Moreover, landlords may lose control over the tenancy, as they are not in direct contact with the individual tenants and must rely on the company to manage the property and its occupants. Additionally, there may be higher costs associated with renting to a company, such as legal fees and the cost of setting up a company tenancy agreement.

Summary

In conclusion, company lets are a unique type of tenancy agreement between landlords and organizations for providing housing to employees. They differ from traditional tenancies in terms of tenant protection, rent increases, property possession, and ending the tenancy. The legal framework governing company lets is based on common law rules, which provide tenants with fewer rights and landlords with more control over the tenancy.

When considering renting to a company, landlords should weigh the pros and cons carefully. Company lets can offer longer tenancy agreements, higher rental income, and tax advantages, but also come with risks such as company insolvency and loss of control over tenants. By understanding the intricacies of company lets, landlords can make informed decisions about whether this type of tenancy is the right choice for their property and circumstances.

Frequently Asked Questions

What is a company let tenancy?

A company let tenancy is a rental agreement between a limited company and a landlord, whereby the company rents a property to provide accommodation for its employees or directors. This type of arrangement can be beneficial for both parties, with the tenant getting access to the desired premises and the landlord receiving regular rental income.

17 Jan 2022.

Why do landlords not like company lets?

Landlords tend not to prefer company lets as they often come with added financial pressure. This is because the tenants usually require a higher quality of fixtures and fittings than residential lets, which can be expensive for the landlord to provide.

In addition, companies usually sign longer leases, which gives the landlord less flexibility and makes it difficult to maximise profits.

What is the difference between a company let and an assured shorthold tenancy?

A company let is a form of tenancy agreement that is used when renting property to a business, rather than an individual. These agreements are governed by the Law of Property Act instead of the various Housing Acts, meaning the tenant does not have the same protection as those with an assured shorthold tenancy.

As a result, common law applies to this type of tenancy.

Can you serve a Section 8 on a company let?

Based on the information provided, it is not possible to serve a Section 8 notice on a company let. Instead, landlords should issue a Notice to Quit in writing. This notice will follow the duration of the company let agreement.