Rent Income Over £25,000 per annum or to a Company and Your Landlord Rights Change says Letting Focus

One of the nice things about being a landlord right now (at least for those who bought the right type of property in the right place) is that rents are going up strongly.
Now, not a lot of people know this, but if the annual rental income is over £25,000 per annum or if it is let to a company, the let won’t be covered by a standard assured shorthold tenancy.
So what happens in these scenarios, which are increasingly common, these days?
Well, it’s actually a little involved which is why I kept it out of my book, Successful Property Letting and why even I had to check with the sage of landlord law, Tessa Shepperson at Landlordlaw.co.uk for the facts, but here goes…..
The history is that originally all tenancies were 'common law' tenancies – governed, funnily enough, by the common law.
Then, various acts of Parliament started introducing what are called “statutory codes” which governed how certain new sort of tenancies operated.
However these codes only covered certain new types of tenancy and pretty well any other type of tenancy which fell outside the codes were still governed by the 'common law'.
The main sorts of tenancies excluded from protection under the codes are and which are therefore covered by common law are as follows:
Company lets – i.e lets to limited companies - because the statutory codes are designed to protect 'individuals' only.
High rent lets - lets to tenants where the rent is over £25,000 per annum
Resident landlords - lets where a landlord has divided a large house into flats and lives in one of them. (Note - if the landlord shares living accommodation such as a kitchen and bathroom, the sharer will be a lodger not a tenant, and will have a license not a tenancy agreement)
So, what the difference between these “common law tenancies” and the Assured Shorthold tenancies?
Well, there are really just 2 main differences you need to know about…..
First, damage deposits will not need to be protected in one of the government authorised tenancy deposit schemes. These are required only for assured shorthold tenancies.
Second, the Accelerated Possession procedure is not available for landlords of common law tenancies
There are other differences too, but these are the main ones.
So, they you are – it’s nothing really to worry about.
In fact, as you won’t have to protect a deposit in one of the tenancy deposit schemes, there is arguably less to worry about and one less thing to remember to do.
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Letting to a Company and Company Lets - Things to look out for by Lawrenson of Letting Focus

This article has some useful advice on company lettings and corporate lets.
Where the tenant is a company not an individual, the tenancy agreement document will look similar to one for a normal assured shorthold tenancy (AST), but ASTs cannot be granted to companies so the tenancy will be regulated under common law not under the Housing Act 1988. This means no rent control at all and the procedure for evicting tenants is also different.
You’ll need to use tenancy agreements which are appropriate for company lets, not the normal AST forms.

Company Lets Pros
A common type of let is the 12 month company let when a lease is taken out in the name of the firm – with a break clause after 6 months.
However when letting to a company it’s sometimes a good idea to take a guarantee from one or more of the directors, just in case the company folds leaving no assets to pay rent or for damage to the property.
Some advantages of company lets are as follows…1) Company lets are always popular with companies as a cheaper option than putting an executive in a hotel and most executives prefer them to hotel living too! And for the company, dealing with a landlord is less hassle than maintaining a company flat 2) Company letting rents can be 10 to 40 per cent above what’s achievable on a longer term let 3) Many companies pay quarterly in advance 4) A big company should be more secure than an individual.

Letting to a Company - Cons
Some disadvantages are….
1) Company lets means more voids and frequent changes of tenant means more work finding new tenants and checking in and out 2) As company let rents are higher your client will expect high standards and for things to be fixed fast 3) Only quality property in up-market areas and close to business centres will rent - making entry costs high for company lets. Where furnishings are required, think expensive 4) To find tenants you’ll need up-market letting agents and relocation agents – again adding to your expenses.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the property experts and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property book for the last 3 years.
What’s unique about LettingFocus is that I offer independent unbiased
property seminars and one to one advice covering all aspects of being a landlord and investing in property.
Unlike most people in the buy to let and property “advice” business I'm not linked to a property company, developer, agent or bridging loan financier.
I can advise where to buy (which areas), what type of property to buy, when to buy, how to buy property at a low price, how to eliminate the risk of getting a bad tenant and more. I have been a landlord and property investor myself for over 25 years.

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