As a landlord, have you considered the benefits of renting to a company? Business leases offer unique advantages over traditional individual leases. We will discuss the ins and outs of renting your property to a management company and why you should consider it.
What are company lets?
Company lets refer to rental agreements where a business, rather than an individual, rents a residential property. Typically used for accommodating employees or guests, company lets offer landlords benefits like consistent rent and professional interactions. They differ from traditional leases, with unique terms and conditions tailored to corporate needs.
What is a company letting?
Company letting refers to the practice of renting out properties to business entities instead of individual tenants. This arrangement benefits businesses that need temporary accommodations for employees or guests.
Why do landlords not like company lets?
Some landlords are hesitant about company lets due to concerns over property maintenance, potential frequent tenant turnover, and the complexities of dealing with corporate entities. Additionally, company lets might involve more intricate contract negotiations compared to traditional individual leases.
What do landlords fear the most?
Landlords often fear prolonged vacancies, unreliable tenants causing property damage, unpaid rents, and potential legal disputes. These concerns can lead to financial losses and increased stress for property owners.
By choosing to rent your property to a business instead of an individual, as owners, you can often attain a more secure and lucrative operation. Businesses looking for high-end rental properties to house employees, consultants or guests, over short, medium or long periods, will often provide rents and easier to manage by a property manager terms than their more-traditional counterparts.
Can a company be a tenant?
Yes, a company can be a tenant. When a business entity rents a property for its use, such as for housing employees or guests, it's known as a company let or corporate tenancy.
What is a company let property?
A company let property refers to a residential or commercial space rented out to a business entity rather than an individual. These properties are often used for accommodating employees, guests, or for other corporate purposes.
With a company let, or renting to a property management company, it’s just a ripe business that takes responsibility for the rental property, the rent, its upkeep and care, as opposed to an individual.
What do you need for a company let?
For a company let, landlords typically require corporate references, proof of the company's financial stability, a company director's guarantee, and a tailored lease agreement that addresses the specific needs and responsibilities of a corporate tenant.
However, nothing is ever set in stone. Every landlord should take the utmost care to protect their property and income with a revenue management system and revenue management software. That means thorough research, expert legal advice, and watertight contracts.
What are the main differences between a company let and a private tenant?
Company lets and private tenants differ primarily in the lessee. In a company let, a business entity rents the property for its employees or guests. With private tenants, individuals rent for personal use. Company lets often have specialized contracts, higher rent stability, and professional interactions, while private tenancies involve personal agreements, consumer rights protections, and individual responsibilities.
Rental contracts
A company cannot enter into a traditional shorthold tenancy agreement under most country’s housing laws and housing prices. This means that a specific business contract or a new tenancy agreement or rental management 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 clause. An individual may be entitled to challenge rent amounts under local statutory laws.
What notice do you serve on a company let?
For company lets, landlords typically serve a "Notice to Quit" rather than the standard Section 21 or Section 8 notices used for private tenants. The notice period can vary based on the terms agreed upon in the company lease agreement.
Evictions
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 and giving a tenant notice at the end of a company contract term should be a straightforward procedure.
Consumer law
Consumer antitrust 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.
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The responsibility to provide the same type of protection as offered by consumer federal law becomes the responsibility of the company. In many situations, this relieves the landlord of responsibilities, making life a deal simpler under this system.
How does a company let work UK?
In the UK, a company let involves a business entity entering into a rental agreement with a landlord. The lease is typically more flexible than standard tenancies, with terms tailored to the company's needs. While many aspects are similar to private tenancies, company lets don't require deposit protection in government schemes and often have different notice requirements.
The 3 best reasons to rent to a company knowing or not the market data and real estate tech services
1. Higher rents and guaranteed income
A company that needs a higher standard of property in precisely the right area will often have extra money in its budget to secure such a facility. For the landlord, this means being able to ask for higher rents during negotiations and boosting rental income. To acquire the property that covers all the needs of the business, the director or property managers 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 rent prices 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 and revenue management 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 property managers aren’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 new properties, are generally those from more affluent and higher classes of society. Typically, the quality of tenant improves by association.
What are the possible problems of company letting and how to avoid 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?
Complex negotiations
Given that every contract is unique between landlord and business, there is a chance of issues about rising rents 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, including giving your tenant notice.
The lack of a deposit
Unless written into the contract, deposits aren’t always applied as they are in traditional lease transaction data realpage gathers situations. Sometimes making advantage realpage's data warehouse and realpage pricing software where companies control fewer buildings. This can make recouping the costs of damages far more complicated than deducting them from a sum designed to take care of such problems.
Do I need to register a deposit that is a company let?
No, for company lets in the UK, landlords are not legally required to protect the deposit in a government-backed scheme, unlike deposits taken from private tenants. However, it's essential to outline deposit terms clearly in the lease agreement.
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.
Unsuitable tenants
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 residential property, and if available, check references to make sure they’re legitimate.
Company insolvencies
Any business can take a downturn in its operation, and sadly, many will end in insolvency. Recovering rent arrears and 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. Contact UpperKey today to get started.