Company Let - risks/benefits?

travel_freak

Hi there,

Please can anyone offer advice on renting a property out on a COMPANY LET for 12 months? An agent I'm using say they have the MoD (Ministry of Defence) as a client and they think they can let my property out to them.

However it would be under a tenancy which they described as being "outside of the Housing Act" and for 12 months. So it will NOT be an assured shorthold tenancy.

Has anyone done one of these before and are there any particular risks or benefits to consider?

It seems the ideal solution to me as it's a reputable tenant, at hopefully a good rent and only one person in the property so less wear and tear.

One problem would be that I think my mortgage doesn't allow these types of tenancies - has anyone ever approached a lender for special permission for this type of let and was it forthcoming? Do you think if I say I'm having difficulty getting a tenant and ask for permission for this let the lender (Chelsea) might give permission? Perhaps they would just want to approve the agreement?

Many thanks for any advice.

Regards,

Alan_M_2

Ask to see a draught copy of the contract along with terms and conditions then take it from there.

real1314

One point with company lets is that they have no security of tenure at all.

At the end of the term, they MUST vacate. You don;t have to go through the same lengthy process that you have to with ASTs.

prudryden

I did a company let with Amazon. They used a relocation agent to find the employees a suitable property. But, lo and behold, when it came to signing the contracts, the employees signed themselves. So, in essence, it really wasn't a company let because the employees themselves were responsible.
They were fantastic tenants who were IT specialists. Needlessly to say, I called on their expertise quite a few times.

travel_freak

Many thanks for the comments so far. Please, does anyone have experience of asking a lender for permission to do this type of let when the mortgage actually rules it out? I'm just wondering how accommodating my lender may be? Altho' perhaps if I say I'm desperate to find tenants and this is the only option otherwise I may not be able to pay the mortgage I guess they may be more obliging?!

My only vague knowledge of these type of lets is that they were safer for a landlord as the poster above mentions re security of tenure so I guess from that point of view my mortgage lender couldn't object but then I'm wondering why they rule out these sorts of lets to begin with?

Regards,

silvercar

In practical terms, the mortgage company are hardly likely to find out (provided your mortgage is paid on time).

If you were applying for the mortgage in the knowledge that you were going to let the property under a non-AST agreement, you could be accused of obtaining money by deception ie fraud.

Having already got your mortgage, you are "merely" in breach of one of the mortgage conditions. Although this means that the mortgage company could pursue a civil matter against you, this is hardly likely.

prudryden

I expect that Silver is dead on. Can someone explain why this is outside the AST format of renting?

The lender will never foreclose on your property, even if they found out, as long as the mortgage is being paid. It would be too much hassle for them.

travel_freak

Hi,

Thanks silvercar and Prudryden for your further comments. I'm inclined to agree that it's unlikely the mortgage lender would ever find out or, if they did, that they'd do much about it. I'm just an old worrymonger and thinking I should cross the Ts and dot the Is with them just in case!!

I don't know why it falls outside the AST regime but I was just told by the agent that because this is a company, a company cannot enter into an AST so it's different type of contract.

My buy to let seems particularly restrictive as I remember it said that I could only let for periods of 6 months at a time even on an AST which I think is a bit mean as a lot of tenants would prefer the security of a 12 month minimum term.

Regards,

silvercar

My buy to let seems particularly restrictive as I remember it said that I could only let for periods of 6 months at a time even on an AST which I think is a bit mean as a lot of tenants would prefer the security of a 12 month minimum term.

You could always use a 12 month AST with a break clause at 6 months.

I don't know why it falls outside the AST regime but I was just told by the agent that because this is a company, a company cannot enter into an AST so it's different type of contract.

I recall hearing something similar.

I'm just an old worrymonger and thinking I should cross the Ts and dot the Is with them just in case!!

If you want to ask your lender the question, do so on a no-name basis, just to keep your options open.