A company let tenancy agreement is a specific type of contractual arrangement where a company, rather than an individual, is named as the tenant on a rental property. This structure is frequently used in commercial real estate for offices or warehouses, but it also applies to residential lets where a company rents property to house employees on a regular or cyclical basis. While this offers a lucrative opportunity for landlords, the agreements are often avoided due to the perceived complexity involved in drafting them. However, resources are available to help streamline the process, including customisable templates that allow landlords to select specific clauses to suit their corporate tenancy needs.
It is crucial to understand that lettings to companies or other non-natural persons cannot be assured shorthold tenancies (ASTs). Instead, they are classified as "contractual tenancies." This distinction means they are not covered by the statutory regimes that provide tenants with security of tenure, such as the Housing Act 1988. Consequently, these tenancies can be terminated more easily, provided the landlord complies with the notice period stipulated in the agreement and the requirements of the Protection from Eviction Act 1977, which generally mandates a minimum notice period of four weeks.
Defining the Scope of Corporate Lets
The term "company let" covers any arrangement where a landlord lets property to a company rather than a private individual. These arrangements generally fall into two categories:
- Company Let/Corporate Residential Agreement: This involves a landlord renting property to a company under a special arrangement that allows the company to house its employees in a residential building.
- Commercial Tenancy: This covers the leasing of office spaces, retail stores, or industrial facilities for business operations.
While the distinction between long and short commercial tenancy agreements primarily revolves around the lease’s duration and associated terms, the concept of short-term residential agreements also applies when formed between a landlord and a company.
Key Differences from Assured Shorthold Tenancies
Company Let Tenancy Agreement templates differ significantly from standard AST templates in two important respects:
- Deposit Protection: Landlords do not need to comply with Tenancy Deposit Protection legislation, as this requirement is relevant only to ASTs.
- Occupancy: The agreements explicitly allow the property to be occupied by employees or directors of the company, rather than just the named tenant individual.
Other types of contractual tenancies (non-ASTs) include high-value properties where the annual rent exceeds £100,000, lettings where the tenant does not occupy the property as their only or principal home (e.g., a second home), and lettings by resident landlords.
Essential Elements of a Corporate Tenancy Agreement
When drafting or reviewing a company let tenancy agreement, several key elements are typically included to ensure clarity and legal compliance:
- Duration of Tenancy: The agreement must specify the start and end date of the lease.
- Rent and Payment Terms: Details regarding the rent amount, due dates, and penalties for late payment are essential.
- Property Use: Clear guidelines on how the property can be used are vital, particularly in commercial leases where specific purposes may be dictated.
- Maintenance and Repairs: The agreement should outline responsibilities for property maintenance and repairs, which may vary depending on the nature of the lease.
- Termination Conditions: Conditions under which the lease can be terminated by either party must be clearly defined.
- Security Deposit: The amount and conditions for the return of the security deposit at the end of the lease should be detailed.
- Insurance Requirements: The tenant must adhere to any insurance obligations, such as liability insurance or property insurance. It is noted that insurance for corporate lets can be more expensive or require specific coverage, raising overall costs due to the comparative rarity of lenders offering these products.
- Renewal Options: If applicable, details about options for renewing the lease should be included.
It is imperative for both the landlord and the tenant to carefully review and understand the terms of the tenancy agreement before entering into such an arrangement. Legal advice may be sought to ensure that the terms are fair and comply with relevant laws and regulations.
Templates and Customisation
To assist with the creation of these agreements, various templates are available. For example, a Company Let Agreement Template (PDF/Word) allows landlords to sidestep the issue of complex drafting by selecting the specific bits of the agreement they wish to include. Some services offer a custom, completely personalised commercial lease agreement that can be created in approximately five minutes, tailored to the specific company's needs. Alternatively, generic templates can be downloaded.
When using such templates, it is important to note that content provided by third-party publishers is often supplied "as is," with no guarantees of completeness, accuracy, or timeliness, and without representations, warranties, or other contractual terms. Publishers generally do not represent or warrant that the material supplied will be accurate, current, uninterrupted, error-free, or omission-free.
Conclusion
Company let tenancy agreements serve a distinct market, bridging the gap between residential housing for employees and commercial operations. While they offer flexibility for companies and income opportunities for landlords, the lack of statutory protection found in ASTs necessitates careful drafting. Understanding the fundamental differences—such as the exclusion from deposit protection schemes and the specific notice requirements under the Protection from Eviction Act 1977—is essential. By utilising available templates and seeking legal advice where necessary, parties can navigate these contractual tenancies effectively.