Tenancy extension

Trebor01

Hi, I was wondering if anyone could advise.

My current tenant has a 2 year AST on my property, and is approx half way through tenancy period. They would like to extend the tenancy for a further 5 years now, and change this to a company let through their own business.

I am happy for them to stay on, and would just like to know if (1) the existing tenancy needs to run to the end for the full 2 years before it can be changed, and (2) are ther any issues with swapping to a 5 year plus extension and the terms now that it would become a company let.

thesaint

Do you mean that a company would be the tenant, and not the individuals?

sandsni

Will it affect your insurance if it is let to a business rather than an individual? I don't know if that would be considered the same as someone running a business from the premises.

Trebor01

The let would be for the same people but as a company let instead of the individuals. I don't think the insurance changes, but will check it out.

thesaint

So what happens if the company dissappears?

theartfullodger

Trebor01 wrote: »

The let would be for the same people but as a company let instead of the individuals. I don't think the insurance changes, but will check it out.

A let to a company cannot be (may not be.. legally is not allowed to be..) an AST; so you'll need a different tenancy agreement & different eviction processes etc etc etc. See clause 4 of Schedule 1 of the 1988 Housing Act...
http://www.legislation.gov.uk/ukpga/1988/50/schedule/1

5 years?? You must be mad....

I would only do a company let if I got a personal guarantee from a Director who checked out against creidt check & reference check. ANYONE can get a company set up with £1 share capital (what you MIGHT get back if it goes bust..) within 24 hours... And only for 6 or just maybe 12 months....

Be careful!!

Check your insurance ( and mortgage..), paperwork: Likely you are only covered for AST -type tenancies & tenants....

BitterAndTwisted

Have a think about what LIMITED LIABILITY means.

I wouldn't touch this with someone else's barge-pole.

G_M

No you don't have to wait till the current AST ends. You can terminate the existing tenancy at any time by mutualconsent.

A 5 year tenancy must be Executed as a Deed (it's over 3 years) and needs to be witnessed.

A company let will not be an AST - it's a whole different legal baby!

* Do you have a mortgage? If so, do the terms of your CTL/BTL allow a non AST?
* Will your insurance be valid?
* Would you be happy if the company allowed different occupants to live/stay there every month? Every week? It could happen.
* What happens if there are rent arrears and the company folds?
* etc etc

sandsni

Just had another thought. Have you checked your property regularly during the past year? The police are recommending that LLs be wary of long leases as they can be fronts for organised crime, especially if the "tenants" think the LL won't check up on what they are actually doing in the property.