Letting to a Limited Company

Company lets may be for a residential property where the limited company is the tenant and installs its employees in the property. Company lets are also for commercial purposes, so offices, shops, workshops and industrial premises all come under this type of letting.

Many landlords see letting to a limited company as an advantage over letting to an individual tenant. This very often can be the case for several reasons, but there are also some disadvantages here as well.

Indeed, in the old days, before the advent of the Assured Shorthold Tenancy, letting to a company was the safest route for landlords because the tenancy avoided rent control and full security of tenure afforded by the then Rent Acts.

Lets to company employees are often for longer periods and as the rent is paid by the company you can usually rely on your rent money to be reliably paid on time, providing the company is a solvent and going concern.

Household name companies, local authorities, hospitals and academic institutions of course are of course totally reliable. This may not necessarily be the case with small companies and in particular new start-ups with little or no trading history or assets behind them.

A company let cannot use an assured shorthold tenancy agreement (AST). A commercial (company) letting agreement (Common Law Letting Agreement) or lease is required, which in effect allows a person (employee) to occupy the premises as a licensee while the company is the tenant and pays the rent, and comply with the lease covenants.

Landlords and agents should ensure that the company does not allow a business to be carried on from the premises as this could in effect become a business (commercial) tenancy, giving security of tenure under the Landlord & Tenant Act 1954.

Letting to a small company, particularly in the case of a new start-up, whether a business (commercial) or a residential tenancy is more risky. It is common in the circumstances to seek personal guarantees from the directors.

Our Company and Company Plus Checks will thoroughly analyse a company’s financial history and standing and will give you all the information you need about its operating history and identify its directors.

The Company Plus Check gives all of the usual company checks as above, plus personal Basic Credit Checks on up to 3 directors and 2 trade reference checks for the company.

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