Why Company Lets Could Be a Smart Choice for Landlords in Light of the New Renters Rights Bill

The UK property market is facing significant changes with the introduction of the Renters Reform Bill, which aims to improve the rights of tenants and create a fairer rental system. While this bill offers many benefits for tenants, it has also raised concerns for landlords, particularly around issues such as tenant rights, eviction processes, and property upkeep.

What Is a Company Let?

A company let involves renting your property to a business, rather than to an individual tenant under a typical Assured Shorthold Tenancy (AST). The company then uses the property to house employees or corporate clients. This type of arrangement can bring many benefits for landlords, especially those concerned about potential issues stemming from the Renters Rights Bill.

Key Concerns for Landlords Under the Renters Rights Bill

The Renters Rights Bill includes several provisions that aim to protect tenants, such as:

• The abolition of Section 21 “no-fault” evictions: This means landlords will no longer be able to evict tenants without providing a valid reason.

• Stricter rules around tenant deposits and notice periods, potentially making it more difficult to manage problematic tenants.

• Increased responsibility for property standards: Landlords will face stricter regulations on the upkeep of their rental properties.

• While these changes are intended to protect renters, they also introduce new challenges for landlords who may feel they have less control over their properties and more risks to manage.

Why Company Lets Could Be a Good Idea for Landlords

1. Guaranteed Rent Payments

One of the biggest concerns for landlords is the risk of rent arrears, especially in a volatile economic climate. With a company let, you enter into an agreement directly with a business, which is often more financially stable than individual tenants. As the company is responsible for paying the rent, you can enjoy more consistent and reliable payments, reducing the risk of missed or late rent.

2. No Need to Manage Tenant Issues

Under a company let agreement, the company manages the tenants (i.e., their employees or clients), taking on much of the responsibility for day-to-day tenant issues. This means fewer headaches for landlords when it comes to disputes, maintenance, or tenant behaviour. The business leasing the property has a vested interest in ensuring the property is well-maintained and that their staff or clients respect it.

3. Less Exposure to Tenant Turnover

With individual tenants, there’s always a risk of frequent turnover, which can lead to void periods where the property is empty and not generating rental income. Company lets often involve longer-term agreements, reducing the risk of frequent tenant turnover. Additionally, because the company is managing the occupants, there’s less of a need to find new tenants on a regular basis.

4. Compliance With Renters Rights Bill

Since company lets are business agreements, they are not subject to all the same regulations as ASTs. For example, the abolition of Section 21 under the Renters Rights Bill doesn’t affect company lets in the same way, providing landlords with more flexibility and control. While you still need to comply with health and safety standards, the company let structure can offer more straightforward management compared to dealing with individual tenants.

5. Reduced Risk of Property Damage

One of the fears many landlords have is that tenants won’t take care of their property. With a company let, the business leasing the property is usually more motivated to keep it in good condition, as it reflects on their reputation and business operations. Companies often have strict standards for the properties they provide for their employees or clients, so you can expect better upkeep and less wear and tear.

6. A Professional Relationship

Renting to a company fosters a more professional relationship than renting to individual tenants. Businesses are typically more invested in maintaining strong partnerships and fulfilling contractual obligations, which can create a smoother rental experience. In contrast to dealing with personal situations, such as tenant disputes or late payments, you’re working with a professional entity that values reliability and accountability.

How to Get Started With Company Lets

If you’re considering a company let arrangement, here are some steps to help you get started:

1. Do your research: Understand the specifics of a company let agreement and how it differs from a traditional AST. It's important to be clear on the terms and expectations from both sides.

2. Choose the right company: Not all companies will have the same standards. Make sure you’re partnering with a reputable business that has a strong track record.

3. Set clear terms: Ensure that the lease agreement includes clear terms regarding rent, maintenance, and property use. Just like with any rental agreement, it’s essential to protect your interests.

4. Seek legal advice: Given the differences between ASTs and company lets, it’s a good idea to consult a property solicitor to make sure the contract aligns with your needs and complies with relevant laws.

   
   

The new Renters Rights Bill may have landlords worried, but company lets offer a viable alternative that can reduce risks, simplify property management, and provide consistent income. By renting to a business rather than an individual tenant, you can bypass many of the challenges associated with traditional rental agreements, allowing for greater peace of mind and long-term security.

If you’re a landlord concerned about how the Renters Rights Bill will affect your property investment, now might be the perfect time to explore the benefits of company lets.

As a landlord myself, I understand the concerns and challenges that come with these changes. That’s why at Scorpio Properties, we specialise in offering company let services to fellow landlords. We can help you navigate these new changes while ensuring your property is well-maintained and generating reliable income. Feel free to get in touch for a no-obligation chat about how we can help manage your property with ease.