For those who aren’t familiar with the term, ‘Corporate Letting’ or a ‘Company Let’ as it is also known, is an arrangement between a landlord and a business that leases the property from the landlord to house one of their employees. This is often arranged by a specialist Corporate Letting agency.
Rather than sign an agreement with the employee to let the property, the landlord enters into an agreement with the company that the employee works for, shifting from the traditional concept of a standard Assured Shorthold Tenancy agreement (AST).
There are many benefits to corporate letting that a great many landlords might not be aware of, from guaranteed rent to more reliable tenants. The demand for corporate letting has increased substantially in the UK (in spite of the pandemic) and now, amidst a cost of living crisis, corporate letting could offer many landlords an alternative to traditional property management services and a valuable increase in their rental income.
How Does Corporate Letting Work?
As we mentioned before, traditionally, corporate letting is an agreement between the landlord of a property and a company that rents the property from the landlord in much the same way as an AST. The type of tenant is usually a company employee relocating for work.
This can either be for a few months on a short-term project or work contract or, potentially much longer, as some relocations for corporate workers can last years! The company pays for the cost of renting and living in the property on behalf of their employee as part of their package to relocate.
There are some misconceptions that corporate letting is just subletting a property and that subletting itself – is illegal. However, this is quite simply, not true. The most basic requirement is for the tenancy agreement to explicitly state that subletting or housing of employees is permitted at the property. On the contrary, a corporate let could actually give landlords greater security when letting their property, compared to a traditional assured shorthold tenancy.
Landlords can get their property back much more quickly than they would with a regular tenant if there are any breaches to the agreement (whereas to do this under a standard AST agreement can take more than three months and require court action!).
A corporate let is not protected under the same laws as a standard AST allowing landlords to act much faster when they want to take back their property. A corporate let is therefore more likely to be invested in the condition of the property and keeping to the terms of an agreement.
Ultimate responsibility for the condition of the property rests with the company renting it and not the employee living there although, it’s common for the company renting the property to perform periodic cleaning and maintenance checks to ensure the property is well-kept.
In addition, their employees are more likely to take care of the property, as they won’t want to risk falling out with their employer over the lodgings they have provided for them!
Is Corporate Letting a good option for Landlords?
We mentioned earlier that corporate let agreements are easier to end and landlords have added security against damage to their property. On top of this, corporate lets pay significantly above the market rent on a property, which is news many landlords might want to hear!
As an added bonus, the employees that will be housed in a property are typically from prolific and high-end companies and as such, are more likely to be reliable, hard-working and trustworthy individuals- a dream tenant in other words!
Additionally, the company letting the property from the landlord will usually take on certain liabilities for the state and condition of the property, meaning that the landlord can expect far fewer calls to deal with things than usual.
Corporate lets are typically, very reliable agreements that not only pay well but also, can potentially save landlords plenty of time and money each year as well.
However, it is worth mentioning that corporate letting comes with expectations for landlords that some might struggle to meet. The demand for high-quality and well-maintained property is considerable.
Even if you own a property in an attractive area of a city like London, if the place doesn’t meet the requirements for the company looking to rent it, then they won’t. This could price out many landlords who can’t afford to make the necessary improvements to their property to make it more attractive as a corporate let.
Furthermore, due to the shorter contract lengths for most corporate lets, landlords who self-manage their properties might find it difficult to keep them occupied throughout the year. If a landlord doesn’t have the right connections or access to corporate clients, they can be left with an empty property that they will then need to rent out immediately, before they suffer any further losses to their rental income.
However, it is also possible for a landlord to partner up with a company that specialises in corporate letting and works with multiple companies to house their employees (such as Flex Living). Partnering up with a corporate letting specialist is a great way to minimise income loss and keep a property occupied throughout the year.
Why Landlords Should Consider Switching To Corporate Letting
As you may have guessed, unfortunately, corporate letting doesn’t work everywhere. In cities like London, Birmingham and Manchester it has been incredibly successful as tech companies, banks, and consultancies all have large operations in cities of this size, meaning the market for corporate rentals is much bigger compared to rural areas and smaller cities.
However, as we mentioned earlier, the cost of living is rising and there are many things concerning landlords about the future besides this. The rental market is changing and companies like Airbnb, and OpenRent have already caused much of a shake-up to the way that people rent. Corporate Letting, is another chapter in this story and the chances, are it is here to stay.
As such, if you are a landlord with a property that might already be suitable for a corporate let (or have a property you think you could easily convert to meet the standards required) why wouldn’t you try out corporate letting? With the increased rent and high-quality tenants- what’s not to love about this improved way of letting?
With rising interest rates, inflation and energy prices, landlords need more rental security to avoid selling their properties due to the increasing cost of living. If you’re a landlord who feels they may need to increase their rent but are worried this might put off attracting tenants to live at your property -corporate lettings could very much be the solution for you.
Where Can I Find Out More About Corporate Letting?
Flex Living offers corporate letting services in London and other key cities in the UK. We form lasting partnerships with landlords to bring in better, guaranteed rent every month, with 0% voids and a higher quality of tenants to their properties.
Follow the link to our page to find out about corporate letting, as well as other useful articles for landlords and more information about the services we offer!
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Millie is a perfectionist with a passion for property and writing articles. You’ll find her researching the latest housing trends and the newest up and coming areas worth investing in. Read more about Millie here.