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The Appeal of the Corporate Tenant
What is a Corporate Tenant?
It is where a company secures the property on behalf of their employee, usually because they’re relocating from abroad or from another city. Under this arrangement, the company, and not the individual, is responsible for all the tenant’s obligations, including the payment of the rent and all the utility bills. Although the company is your tenant, most companies will have some written agreement with their employee to ensure they look after your property as if they were the tenant themselves.
What are the Pros?
Higher Rental Corporate tenants tend not to negotiate rental price as they are provided with an allowance. It is also most likely that the rent will be on time every month.
Longer Rental In many cases Corporate Tenants are posted in the country/city on a fixed-term basis; meaning that they will work in their employment position for fixed periods (I.e. 1 Year, 2 Years, 5 Years, etc.). In many cases, Corporates are here on long-term contracts and are able to sign leases above the standard 12 Months.
Quality Tenant Corporates tend to be quality tenants that take good care of the property as they are from a solid professional background!
Considerations of Corporate Lets
You will need to check that it is a legitimate business and that it is financially sound and you can download information via companieshouse.gov.uk.
You will need to know who the company signatories are, again this information is a public record and we would recommend that 2 of the authorised signatories are included on the agreement.
The company must be registered in the UK, however, you may find that the signatories reside abroad, so you will need to obtain their signature using a verified electronic signing platform.
Make sure you use the correct tenancy agreement too. If letting to an individual you use a standard Assured Shorthold Tenancy (AST), but this is not suitable for a company let, for which you will need a non-housing act agreement (could be called a Company Let Agreement). This will have different legislation covering the landlord & tenant so ensure you understand the differences.
When agreeing to a company let, make sure that it is for specific employees who are named in the tenancy agreement, otherwise, there is a danger the company might fill the property with too many tenants or may switch occupants without your knowledge. Occasionally, companies rent properties to sub-let to other tenants at a profit. These so-called rent-to-rent schemes are risky because the companies involved might go out of business leaving the landlord and tenant out of pocket.
Many companies use their own tenancy agreements, but the landlord has the right to propose amendments if necessary. It is advisable to obtain legal advice on any contract you use for your rental property as you will be bound by it.
Watch out for break clauses inserted into company contracts. You may find that the company has a clause stating that they can relocate their staff with only a 30 or 60-day notice period so you could find the tenancy period a little uncertain.
Corporates can be quite demanding too. They will almost definitely insist on a professionally prepared inventory and check-in and check-out report, quite often they will also hire their own inventory clerk to undertake negotiations with your chosen clerk.
The deposit on a non-housing act tenancy is not covered by Deposit Protection Scheme Regulations under the Housing Act so it can be held by the Landlord or Agent for Landlord, however, the company might insist on the deposit being held by an independent third at the Landlord’s cost.
On the whole, having a corporate tenant can be the most desirable of all rental agreements. As London continues to accommodate a thriving and expanding expatriate community it would seem like the obvious choice for many landlords. However, there are risks to take into account and handling a corporate tenant is very different from having an individual to deal with, whom you can meet and negotiate with on a one-to-one level.
What are the Cons?
Administrative Support Companies often have rigid administrative procedures that will require the Landlord to produce monthly invoices and corresponding receipts (Once monthly rent is transferred).
Property Condition To attract a Corporate Tenant, the property must be in pristine condition and stylishly decorated. In most cases, since their budget allowance is substantial, they tend to consider mostly middle/high-end developments. Companies are generally looking for higher-end properties, often with swish bathrooms and very well-equipped kitchens with all modern amenities. Corporate tenants may also request extra accessories such as pillows, duvets, bedding, etc. They may even require pre-installed services such as Internet or Cable TV.
24 Hour Service Many corporate tenants will insist on a 24-hour service to ensure any problems which arise will be immediately dealt with, many will demand that they have an agent to deal with, and not the landlord themselves. However, landlords who invest in properties with a 24/7 service not only attract lucrative corporate tenants but gain a positive reputation for future tenancies.
Right To Rent Checks Under the Immigration Act, Right to Rent checks requires landlords/agents to determine the immigration status of all prospective adult tenants or occupiers by checking ID before the start of a tenancy. Where a company rents a property it is important that you name the occupants and that you undertake the Right to Rent checks in accordance with current procedures. At the time of publication, the Government’s has no firm plans in place concerning amendments to Right to Rent checks after Britain leaves the EU, there landlords or agents must continue to conduct checks in accordance with existing procedures until new guidance is issued. While it looks likely there will be changes regarding the eligibility to rent based on nationality, it’s important to remember that any future changes cannot be backdated.