Company Lets and Contractual Tenancies
This month we have added a selection of Company Let Tenancy Agreements to the Property folder. The Agreements are similar in form to our Assured Shorthold Tenancy Agreements (ASTs) but they have been tailored to meet the needs of Landlords letting residential property to companies or other non-natural persons.
Lettings to companies or other non-natural persons cannot be ASTs. This means that company lets are simply “contractual tenancies” and are not covered by any of the statutory regimes that give Tenants security of tenure. Company lets can therefore be terminated more easily than ASTs. There is also no need to protect a company tenant’s deposit in accordance with the Tenancy Deposit Protection legislation, as is required for ASTs.
Our Company Let Tenancy Agreements allow the property to be occupied by a director or employee of the tenant company, subject to the Landlord’s approval of the occupier. Some companies may not accept a clause that requires the Landlord to approve each occupier – this will be a matter for negotiation.
If the company tenant is a new company, or has an unsatisfactory financial record, the Landlord may require the company to provide one or more guarantors. Our Tenancy Guarantee can be used for a guarantor who is an individual, e.g. a director of the tenant company. Our new Tenancy Guarantee for a Corporate Guarantor should be used if the guarantee is given by a parent company or another corporate entity.
Other Contractual Tenancies
Company Lets are not the only type of contractual tenancies. There are other tenancies that are excluded from the definition of an AST. The main ones are lettings at a high value (where the rent is more than £100,000 per annum), lettings where the tenant does not occupy the property as his only or principal home (e.g. a second home) and lettings by resident landlords. We have expanded our selection of Contractual Tenancy Agreements to provide a wider range of templates for these non-AST lettings.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.