What are company lets?
By choosing to rent your property to a business instead of an individual, as a landlord, you can often attain a more secure and lucrative operation. Businesses looking for high-end properties to house employees, consultants or guests, over short, medium or long periods, will often provide higher rents and easier to manage terms than their more-traditional counterparts. With a company let, it’s a business that takes responsibility for the property, the rent, its upkeep and care, as opposed to an individual. However, nothing is ever set in stone. Every landlord should take the utmost care to protect their property and income. That means thorough research, expert legal advice, and watertight contracts.
What are the main differences between a company let and a private tenant?
A company cannot enter into a traditional shorthold tenancy agreement under most country’s housing laws. This means that a specific business contract must be drawn up between parties to cover all eventualities. A company rental contract will fix a rent figure, one that is unchallengeable unless under an appropriate rent review. An individual may be entitled to challenge rent amounts under local statutory laws.
Eviction processes aren’t typically governed in the same way. In the UK, for example, individual or joint tenants are protected by the Housing Act 1988. These laws don’t apply to company lets that operate under their own unique contracts.
However, despite the difference in contracts and arrangements, carrying out an eviction at the end of a company contract term should be a straightforward procedure.
Consumer law protects individual and joint tenants (as opposed to a company let) from unfair treatment. A company can’t ever be considered a person, so isn’t appointed the same type of protection.
The responsibility to provide the same type of protection as offered by consumer law becomes the responsibility of the company. In many situations, this relieves the landlord of responsibilities, making life a deal simpler under this system.
The 3 best reasons to rent to a company
1. Higher rents and guaranteed income
A company that needs a higher standard of property in precisely the right area will often have more money in its budget to secure such a facility. For the landlord, this means being able to ask for higher rents during negotiations. To acquire the property that covers all the needs of the business, the director or manager in charge of the acquisition will be happier to pay a premium rate to secure it.
Another reason a company is likely to pay a higher rental fee is that the money is coming out of company funds as opposed to directly out of an individual’s personal budget. This ‘business transaction’ is merely an expense among many others.
For the individual, any money they can save by renting a lower-priced property means more money available for the other areas of their life. A private renter is likely to be much more scrupulous when making these types of financial decision.
When renting to a company, you’re going to get paid whether they have a tenant in place or not. This type of guaranteed rental income takes much of the stress of seeking out replacement tenants over time. As long as you choose the company renting your property wisely, you stand to enjoy many benefits over more traditional lets.
2. Professional negotiations and more widely available contact points
When you’re working with a large company or corporation, you’ll be dealing with people who know how to do business. They will have legal specialists, and also understand exactly how to work with others to get what they need efficiently and with the correct legal expertise. In some cases, tracking down an individual tenant can be problematic. Understanding when a tenant is and isn’t available, how best to carry out each negotiation, and what happens when things go awry, can lead to huge amounts of frustration, never mind following through with legal costs and proceedings. A company let provides you with a reliable point of contact—more often than not during office hours, with year-round availability. If your manager isn’t available, there should always be someone in the office to take messages and deliver your requests.
3. Higher quality tenants
This isn’t always guaranteed, but when dealing with larger companies and corporations the type of people they do business with and need to home in high-quality properties, are generally those from more affluent and higher classes of society. Typically, the quality of tenant improves by association.
Possible problems of company letting and how to evade them
Unfortunately, all that glitters is not gold, but with a little care and vigilance, letting to a company can create a seamless and simple way to achieve a steady and generous income.
But what are some of the typical problems to arise from this system?
Given that every contract is unique between landlord and business, there is a chance of issues arising during negotiations. This is where an experienced solicitor, in property rental and landlord law, will be a valuable asset. They’ll understand the nuances of the negotiation, making sure you’re well protected and covered in all eventualities.
The lack of a deposit
Unless written into the contract, deposits aren’t always applied as they are in traditional lease situations. This can make recouping the costs of damages far more complicated than deducting them from a sum designed to take care of such problems.
Constantly changing tenants
Depending on their typical business operation and the expected use of the property, company let tenants can change frequently. A landlord has no say over who lives in their property and who doesn’t. The company may not hold the same level of respect for the building or its contents.
In more dubious cases, a tenant may try to utilize a company let to rent a property where, as an individual, they would fail traditional referencing or requirements. In such instances, it’s imperative to seek out what type of tenant will occupy the residence, and if available, check references to make sure they’re legitimate.
Any business can take a downturn in its operation, and sadly, many will end in insolvency. Recovering unpaid rent is almost impossible in such instances. For this reason alone, thorough research must be carried out when choosing who you are about to enter into a contract with. Having a director sign as a guarantee is another safeguard against losing income in this area.
Renting to an agent creates all the same guarantees, without the pitfalls
Instead of renting your apartment or property direct to a company, entering an arrangement with an agency like ours, you’ll be guaranteed not only a very generous rent for your property, but the care and consideration of true professionals, treating your property as if it were their own. We handpick and match our guests to our properties, making sure every candidate is suitable and comes with an excellent reputation. We become the landlord at every level of the process. That means we look after the upkeep of the apartment, any damages, and associated costs. You couldn’t find a simpler solution, a more straightforward process, and without any of the risk.