Renting to a company via a Company Let

tallac

I'm landlording for a single property and until now I've been directly dealing with the tenants via a typical short assured tenancy agreement. However, I was recently contacted by a property company who wish to take a long term rental agreement for the property under a Company Let. They have the intention to sub-let the property during the long term period.

On the surface, this seems ideal for me as I don't have to worry about all the overhead involved with finding new tenants each time they change. I've been sent a sample contract from the company. It all seems okay on the surface but I've not got a lot of experience in this so I wouldn't be able to spot if there is anything missing from the contract.

Is there anything I should be concerned about or how can I ensure I'm doing a good level of due diligence?

anselld

Reach for the barge pole.
In exchange for "not worrying about the overhead" you are surrendering all control over the selection of tenants, the management of the tenancies and maintenance, the return of your property if/when wanted, etc, etc.  You also need to ask yourself why another Company can relieve you of an overhead whilst making money themselves.  And finally, any rent guarantee or other contract term is only as good as the Business offering it, which can be dissolved at any time.  If you don't actually want to be a Landlord it would be better to sell.

theartfullodger

Avoid:

A legal quagmire

Grumpy_chap

tallac said:

I'm landlording for a single property and until now I've been directly dealing with the tenants via a typical short assured tenancy agreement. However, I was recently contacted by a property company who wish to take a long term rental agreement for the property under a Company Let. They have the intention to sub-let the property during the long term period.

On the surface, this seems ideal for me as I don't have to worry about all the overhead involved with finding new tenants each time they change. I've been sent a sample contract from the company. It all seems okay on the surface but I've not got a lot of experience in this so I wouldn't be able to spot if there is anything missing from the contract.

Is there anything I should be concerned about or how can I ensure I'm doing a good level of due diligence?

My tendency would be to avoid simply because it is more complicated than simply doing things myself.

There are, however, two types of "company let".

"Company let" where a company takes the property and provides the accommodation for use only by their employees.  This is something I would do as the company has funds to put anything right and the employees will, generally, take care of the property as they may face disciplinary action through the HR dept if they do not treat the property with appropriate respect.

"Company let" where a company takes the property and allows literally anyone to sub-let, quite often supplementing the local authority housing.  This means you have no idea at all who will be in the property, nor is recovering the property simple if the need arises.

tallac

Grumpy_chap said:

tallac said:

I'm landlording for a single property and until now I've been directly dealing with the tenants via a typical short assured tenancy agreement. However, I was recently contacted by a property company who wish to take a long term rental agreement for the property under a Company Let. They have the intention to sub-let the property during the long term period.

On the surface, this seems ideal for me as I don't have to worry about all the overhead involved with finding new tenants each time they change. I've been sent a sample contract from the company. It all seems okay on the surface but I've not got a lot of experience in this so I wouldn't be able to spot if there is anything missing from the contract.

Is there anything I should be concerned about or how can I ensure I'm doing a good level of due diligence?

"Company let" where a company takes the property and allows literally anyone to sub-let, quite often supplementing the local authority housing.  This means you have no idea at all who will be in the property, nor is recovering the property simple if the need arises.

It's definitely the latter. These posts have got me concerned now. I thought it seemed like a good idea but it does feel concerning.

eddddy

tallac said:

On the surface, this seems ideal for me as I don't have to worry about all the overhead involved with finding new tenants each time they change. 

I imagine that, currently, when you get a new tenant , you (or your agent) does some thorough checks on a prospective tenant to try to ensure they'll be good tenants - pay their rent on time, look after the property, etc. Maybe checks like:

• References from their previous landlord
• Reference from their employer
• Affordability checks
• Credit checks

Are you planning to do equally thorough checks on the company and their directors, to ensure they'll be good tenants - pay their rent on time, look after the property, etc?

(Bear in mind that the only requirements for setting up a company as a director are that you are over 16 and not disqualified. So for example, you can be incompetent, inexperienced, dishonest or perhaps even a convicted fraudster.)

user1977

Grumpy_chap said:

tallac said:

I'm landlording for a single property and until now I've been directly dealing with the tenants via a typical short assured tenancy agreement. However, I was recently contacted by a property company who wish to take a long term rental agreement for the property under a Company Let. They have the intention to sub-let the property during the long term period.

On the surface, this seems ideal for me as I don't have to worry about all the overhead involved with finding new tenants each time they change. I've been sent a sample contract from the company. It all seems okay on the surface but I've not got a lot of experience in this so I wouldn't be able to spot if there is anything missing from the contract.

Is there anything I should be concerned about or how can I ensure I'm doing a good level of due diligence?

My tendency would be to avoid simply because it is more complicated than simply doing things myself.

There are, however, two types of "company let".

"Company let" where a company takes the property and provides the accommodation for use only by their employees.  This is something I would do as the company has funds to put anything right and the employees will, generally, take care of the property as they may face disciplinary action through the HR dept if they do not treat the property with appropriate respect.

"Company let" where a company takes the property and allows literally anyone to sub-let, quite often supplementing the local authority housing.  This means you have no idea at all who will be in the property, nor is recovering the property simple if the need arises.

And in either case, it won't be an AST, so you'll want a solicitor to review / negotiate the lease.

Also bear in mind any constraints you have on what sort of tenancy you put in place (mortgage, insurance, title/lease covenants...).

propertyrental

Quite likely your landlord;s isurance will be invalid/need changing. Most LL insurance policies are designed for ASTs, which this would not be.

Likewise if you have a BTL mortguage it is likely to stipulate AST - so any commercial/ non AST lease would be a breach of your mortgage terms (thiugh you could always ask your lender).

Mutton_Geoff

A friend did this. The company provided accommodation for temporary workers at nearby huge supermarket.

They put a total of 9 beds in the 3 bed house. Lots of neighbour complaints about noise & litter. When they finally left, damage exceeded the deposit and the company who had rented it took it to the wire with a small claims hearing and settled in full on the morning of the case.

Mega hassle. To be avoided.

RAS

There's a recent thread where a LL has finally got her house back from the council nearly two years after the tenancy was due to end because the sub-tenant could not move on and the damage is way over the deposit. 

There also appear to be some people who are now renting properties to run them as AirBnBs. Minimises their set-up costs and they can rake it in meantime.

I'd add overhearing a recent negotiation between a couple of businessmen and a landlord being "sold" a similar deal. Their plan was to let it as "shared accommodation for people struggling to find accommodation". They were confident that it could be tenanted at a price that would be would be benefits. That might just be supported accommodation for which there is no housing benefit limit and frequent concern that people with health and dependency issues are not getting much support.

_Penny_Dreadful

tallac said:

I'm landlording for a single property and until now I've been directly dealing with the tenants via a typical short assured tenancy agreement. However, I was recently contacted by a property company who wish to take a long term rental agreement for the property under a Company Let. They have the intention to sub-let the property during the long term period.

On the surface, this seems ideal for me as I don't have to worry about all the overhead involved with finding new tenants each time they change. I've been sent a sample contract from the company. It all seems okay on the surface but I've not got a lot of experience in this so I wouldn't be able to spot if there is anything missing from the contract.

Is there anything I should be concerned about or how can I ensure I'm doing a good level of due diligence?

Short Assured Tenancy? Are you in Scotland? 

Scotland or anywhere in the UK as a fellow landlord I would not touch such an arrangement where I let to a company for the to sublet with a 20’ barge pole. If you have a mortgage you may find the T&C prohibit you from such a commercial let as may the T&C of your insurance.