What is a company let and why the Housing Act 1988 does not apply
A company let is a tenancy where the tenant is a company, LLP, public body, charity, or other legal entity rather than an individual. Housing Act 1988 s.1(1) requires the tenant to be an individual who occupies the property as their only or principal home — a company cannot satisfy this condition, so any tenancy to a company is incapable of being an assured tenancy.
- No AST, no assured tenancy: the entire residential tenancy statutory framework is absent — no Section 21, no Section 8 grounds, no Renters' Rights Act 2025 conversion to periodic tenancies, no Tenant Fees Act 2019 prohibition on fees, no Tenancy Deposit Protection scheme
- Common law tenancy: the tenancy is governed by the contract and general property law. Notice periods, break clause rights, repair obligations, and permitted use are determined by what the parties agree — not by statute
- Implied common law notice where agreement is silent: a periodic company let with no agreed notice clause — common law implies notice equal to the period of the tenancy (monthly rent → one month; yearly → 6 months). This can be varied expressly in the agreement
- Renters' Rights Act 2025 does not apply: the RRA 2025 abolishes Section 21 and restricts possession for ASTs from 1 May 2026. Company lets are entirely unaffected — the landlord retains full contractual notice rights
Right to Rent, deposit protection, and key clauses in the corporate tenancy agreement
Several compliance requirements that apply automatically to ASTs do not apply to company lets. Understanding which rules apply — and which do not — is essential when setting up a company let correctly.
- Right to Rent — the company itself is not subject to right-to-rent checks. However, individual employees or nominees who occupy the property as their home must hold the right to rent. The corporate tenancy agreement should require the corporate tenant to carry out right-to-rent checks on all occupiers and to provide evidence to the landlord on request
- Deposit protection: TDP scheme does not apply. The deposit is held contractually. No 5-week cap — negotiate any deposit amount the corporate tenant accepts. Return conditions are governed entirely by the tenancy agreement
- Director's personal guarantee: always require for small or newly incorporated company tenants. If the company enters administration or liquidation with rent unpaid, the landlord is an unsecured creditor. The director's guarantee creates a direct claim against the individual
- Key clauses: permitted use (employees or nominated individuals only); prohibition on subletting without written consent; repair and reinstatement obligations; access rights for inspection; rent review (purely contractual — no Section 13 mechanism); break clause provisions; deposit terms
Ending a company let — notice, break clauses, and recovery of possession
Because a company let is not an assured tenancy, ending the tenancy requires compliance with the contractual terms rather than the statutory possession procedure. The landlord's route to recovery of possession depends on what was agreed in the tenancy agreement.
- Fixed-term expiry: at the end of a fixed term, if neither party takes steps, the tenancy continues as a periodic tenancy at common law (period = rent period). Either party must give contractual or common law notice to bring it to an end
- Break clauses require strict compliance: the required notice period must be given exactly, any conditions (no arrears at break date, property returned vacant) must be satisfied precisely. Courts interpret break clauses strictly — a technical failure renders the break ineffective
- Recovery of possession where tenant refuses to leave: issue a County Court possession claim using form N1 (no accelerated possession procedure for company lets). Obtain a possession order and enforce via county court bailiff or High Court Enforcement Officer
- Mesne profits for holdover: where the corporate tenant remains after the contractual notice expires, the landlord can claim mesne profits — the open market rental value for the period of unauthorised occupation
Practical advantages and risks of letting to a corporate tenant
Company lets offer distinct advantages over AST letting — particularly for landlords who want rent certainty, no RRA 2025 restriction, and commercially sophisticated counterparties. However, specific risks must be managed contractually.
- Advantage — no RRA 2025 restriction on possession: the landlord retains the full contractual right to end the tenancy on agreed notice. No Section 21 abolition applies; no restriction on no-fault possession
- Advantage — rent certainty: corporate tenants (particularly NHS trusts, local authorities, large employers) typically pay rent reliably. Void periods and rent arrears are uncommon in institutional company lets
- Advantage — above-market rents possible: where the corporate tenant needs to house key workers in a high-demand location, a premium rent may be acceptable in exchange for the certainty of securing quality accommodation
- Risk — insolvency: if the corporate tenant enters administration or liquidation, outstanding rent is an unsecured creditor claim — typically irrecoverable. Always require a director's personal guarantee or corporate parent guarantee
- Risk — wear and tear from multiple occupiers: where the corporate tenant rotates multiple employees through the property, higher wear and tear results. Negotiate a higher deposit, include robust reinstatement obligations, and carry out regular periodic inspections