Are you a landlord looking to diversify your portfolio or secure a more stable rental income? Then, consider corporate lets. This growing trend could offer you longer-term security, fewer void periods, and potentially fewer headaches – provided you understand the ropes. Here’s everything you need to know about corporate lets, including the benefits, risks, and key things to watch out for before diving in.
What Is a Corporate Let?
Simply put, a corporate let is where you rent your property to a company rather than an individual tenant. The company becomes your tenant, and it’s their responsibility to manage the property’s occupancy, whether for housing employees, contractors, or, in some cases, vulnerable individuals such as asylum seekers.
Unlike the usual assured shorthold tenancy (AST), corporate lets are considered commercial. This means the rules, terms, and conditions differ—and they’re often negotiated to suit both you and the company.
Why Are Corporate Lets Gaining Popularity?
There’s been a clear shift in the rental market as more landlords move away from ASTs and explore corporate letting. Why? Because in the right circumstances, it can mean:
- Guaranteed Income
With a corporate let, the company is usually contractually bound to pay rent consistently—no matter what happens with its internal occupancy. This removes the worry of void periods and unreliable tenants.
- Longer Tenancy Periods
Corporate lets typically run longer than a standard 6- or 12-month AST. These longer leases provide much-needed stability, especially in uncertain economic times.
- Reduced Wear and Tear
Companies renting your property often include clauses ensuring the property is returned in its original condition. This can save you significant money on repairs and refurbishments compared to private tenants.
- Opportunities in Growing Markets
There’s a growing demand from sectors such as relocation agencies, multinational firms, and government-backed initiatives. For instance, organizations like Serco manage thousands of properties for social housing purposes, and lenders are increasingly familiar with supporting such arrangements.
What’s the Catch?
While corporate lets can be a win-win, they’re not without their risks or additional considerations. If you’re tempted, here’s what you need to bear in mind:
- It’s a Commercial Tenancy, Not an AST
The legal protections you’re used to under an AST might not apply here. For example, you may have different eviction processes if something goes wrong. Make sure your tenancy agreements are watertight; consult a legal expert if in doubt.
- Tax Implications
Corporate lets often fall under different tax rules. Depending on how your rental income is structured—personal or via a limited company—your tax liabilities could shift. Seek advice from a qualified accountant to avoid unexpected bills.
- Insurance Adjustments
Your standard landlord insurance might not cover corporate lets. You may need to upgrade to a specialist policy, which could cost more. Ensure your insurance covers every scenario the tenancy could bring, from building damages to legal disputes.
- Not All Lenders Are on Board
Not every buy-to-let mortgage provider allows corporate lets. These tenancies are considered a niche market, and some lenders consider them riskier. The good news? A growing number of specialist lenders are now offering competitive rates for corporate lets, so there’s plenty of scope to shop around.
Spotlight on Financing: The New Normal for Corporate Lets
Here’s where things get interesting. A few years ago, financing a corporate lease could have been a real headache, with limited options and hefty fees. Today, lenders have wised up. Many now offer tailored products for this market; competition means rates are improving.
Some lenders even have dedicated divisions for corporate lets, underwriting these cases with a more open mind. This is particularly helpful if the property is part of a social housing scheme or housing vulnerable individuals.
Don’t rely on your local bank if you’re considering this route. Speak to a broker with experience in this area—they’ll know which lenders best fit your circumstances.
How to Make Corporate Lets Work for You
If you’re ready to explore corporate letting, here’s a quick roadmap to get started:
- Understand the Market
Research the demand for corporate lets in your area. Properties close to city centres, business hubs, or government contracts (such as housing for asylum seekers) perform well.
- Prepare Your Property
Corporate tenants often expect a higher standard of furnishing and amenities than residential tenants. Think professional-grade kitchens, durable flooring, and fully furnished rooms.
- Tailor Your Agreement
Work with a solicitor to create a clear and comprehensive contract. This should outline everything from rent payment terms to property maintenance responsibilities.
- Partner with the Right Lender
Find a lender who understands corporate lets. Better yet, work with a mortgage broker with access to specialist lenders who can negotiate on your behalf.
The Bottom Line: Is It Worth It?
Corporate leasing isn’t for everyone, but it can be an excellent option if you want stability, guaranteed income, and the chance to tap into niche markets. However, the success of this strategy hinges on preparation. Before jumping in, ensure you understand the tax, legal, and financial implications.
At The Mortgage Blog, we’ve helped landlords navigate the world of corporate lets. From finding the right lender to structuring a sustainable investment plan, we’re here to take the guesswork out of property investment. As with any financial decision, research, preparation, and expert advice are key. Don’t leave it to chance – get it right the first time.
So, if you’re ready to explore corporate letting, contact The Mortgage Blog today, and let our team of experts help you secure the best deal. Simply call our office at 0333 335 6595 or message us to speak with a member of our dedicated buy-to-let team.
