Company Let Tenancy Agreements Explained – Business Leases for Residential Properties

What is a Company Let Tenancy Agreement?

A company let tenancy agreement is a rental contract between a business (company) and a landlord, where the company leases a residential property to house its employees, directors, or other staff members. Unlike a standard assured shorthold tenancy (AST), this type of tenancy is set up specifically for businesses rather than individual tenants. Company let agreements are common in situations where companies want to provide accommodation for employees working away from home or for senior executives needing temporary housing.

This guide explains the key features of a company let tenancy agreement, the legal differences from standard tenancies, and the benefits for businesses.

How Does a Company Let Tenancy Agreement Work?

In a company let tenancy, the tenant is the company, not an individual. The company enters into the agreement with the landlord to rent the property and is responsible for the rent and the terms of the tenancy. The business can then use the property to house its employees, directors, or other staff.

Here’s how it typically works:

1. Company as the Tenant: The business (company) is named as the tenant in the agreement and is responsible for paying rent and adhering to the terms set out by the landlord.

2. Employee as the Occupant: The individual employee or director will reside in the property, but they are not the tenant. The company manages the tenancy on their behalf.

3. Purpose: Company lets are often used for corporate relocations, temporary housing for employees on short-term assignments, or accommodation for company directors and senior staff.

Key Features of a Company Let Tenancy Agreement

A company let tenancy agreement differs from a standard residential tenancy in several important ways. Here are the key features:

1. Company as the Tenant

• In a company let, the company is the legal tenant, not the individual employee. The company assumes all responsibilities, including paying rent and maintaining the property according to the terms of the tenancy.

2. No Assured Shorthold Tenancy (AST)

• A company let tenancy is not an assured shorthold tenancy (AST), which means the usual tenant protections that apply under an AST (such as security of tenure) do not apply to the company let. This includes laws around deposit protection and Section 21 evictions.

3. Contractual Tenancy

• Instead of an AST, a company let tenancy is a contractual tenancy, which gives the landlord more flexibility and fewer legal obligations compared to letting a property to an individual tenant under an AST.

4. Commercial Agreement Terms

• The terms of a company let tenancy are often more flexible and are negotiated between the company and the landlord, allowing for bespoke terms around the length of the tenancy, rent increases, and break clauses.

5. Use of Property

• The property is leased for residential use, but the agreement allows the company to decide which of its employees will occupy the property. The landlord has limited say over which specific employee lives in the property, as long as the company's use of the property remains in line with the agreement.

6. Insurance Requirements

• Many landlords may require the company to have specialised insurance to cover any risks associated with renting to a company, including liability for damage caused by employees or directors living in the property.

Benefits of a Company Let Tenancy for Businesses

A company let tenancy agreement provides several advantages for businesses, particularly those that need flexibility in housing staff. Some of the key benefits include:

1. Flexibility

• A company let allows the business to house employees on a temporary basis without requiring long-term personal rental commitments. This is especially useful for businesses relocating staff for short-term projects or housing senior employees during probation periods.

2. Simplified Arrangements for Employees

• Employees benefit from having accommodation provided by their employer, meaning they don’t need to worry about securing their own rental property or dealing with the landlord directly. The company takes care of everything.

3. Control over the Property

• Since the company is the tenant, the business retains control over who stays in the property. This is useful for businesses that need to house different employees in the same property at different times.

4. Corporate Housing for Senior Staff

• For senior executives, a company let can be a way for businesses to offer corporate housing as part of a benefits package. This is often a selling point for high-level employees who may require temporary housing while relocating.

5. Tax Efficiency

• In some cases, providing housing for employees can be tax-efficient for businesses, depending on how the accommodation is treated for tax purposes by HMRC. Companies should seek financial advice to ensure they benefit from any available tax advantages.

Legal Considerations for Company Let Tenancies

There are a few important legal considerations to keep in mind when setting up a company let tenancy agreement:

1. No Security of Tenure

• Employees staying in the property have no security of tenure, meaning they do not have the same legal protections as residential tenants under an AST. The company, as the tenant, can be asked to leave at the end of the tenancy with the notice agreed in the contract.

2. Deposit Protection Rules Don’t Apply

• Unlike ASTs, company let tenancies are not subject to deposit protection rules. However, it’s common for landlords to request a security deposit from the company, which is held as part of the contractual terms.

3. Repairs and Maintenance

• The company is generally responsible for ensuring that employees respect the property and report maintenance issues. However, the landlord is still responsible for major repairs and ensuring the property meets safety standards.

4. Lease Terms

• The lease terms are negotiable, which gives the company and the landlord more flexibility to customise the agreement. This includes negotiating rent reviews, break clauses, or specific conditions related to the company's use of the property.

How Fraser Bond Can Help

At Fraser Bond, we offer specialised advice and services for both businesses and landlords dealing with company let tenancy agreements. Our team provides:

• Drafting and Reviewing Contracts: We help draft and review company let tenancy agreements to ensure all terms are fair and legally compliant.

• Property Searches: Fraser Bond assists companies in finding suitable residential properties for their employees, considering location, budget, and specific housing needs.

• Negotiation and Support: We negotiate on behalf of companies or landlords to secure the best terms in the tenancy agreement, including rent levels, tenancy length, and break clauses.

• Legal and Tax Guidance: Our team works with legal and tax experts to help businesses understand the financial implications of providing corporate housing and ensure compliance with relevant regulations.

Conclusion

A company let tenancy agreement offers businesses flexibility and control over housing employees, whether for temporary assignments or long-term relocations. It’s a useful tool for providing accommodation without the complexities of individual rental contracts. However, understanding the legal and financial implications is key to setting up a successful tenancy.

For expert advice on company let tenancies, contact Fraser Bond today. We can help businesses and landlords create fair, transparent agreements that protect everyone involved.