Are you considering renting out your residential property for use as serviced accommodation? Well, you might just want to consider using a Company Let agreement! But before you go signing any old document, there are a few legal considerations you should be aware of.
First things first, let's talk about the tenant's ability to pay. Now, you may be thinking, "But wait, I thought I was renting to a company, not some broke college student!" And you're right, but just because a company is renting your property, it doesn't mean they're swimming in cash. So, it's important to ensure that the company has financial stability and the ability to pay the rent. This may involve conducting a credit check on the company, as well as verifying its financial statements. And if it's a new company, it's worth getting a personal guarantor as a backup in case they aren't able to pay the rent. Because, let's face it, the last thing you want is to be stuck with a tenant who can't afford to pay the rent.
Next, let's talk about the lease term. The lease term for a Company Let agreement is typically longer than a standard residential lease, often 3-5 years. Landlords should carefully consider the length of the lease and ensure that it is feasible and realistic given the current market conditions. 3-5 years though? That's like a lifetime in internet years! It's true, but keep in mind that a longer lease term can provide landlords with more security, and less time spent worrying about finding new tenants. Just make sure you're not signing a lease longer than the lease on your own life. Termination rights are also a key legal consideration for landlords when using company let agreements. Landlords should consider their rights in the event that the tenant breaches the agreement or fails to pay the rent. It is important to include provisions in the agreement outlining the steps that will be taken in case of a breach, such as the right to terminate the tenancy or seek damages, and a 'break clause' will grant you just that. Because, honestly, sometimes you just need to cut your losses and move on.
Repair and maintenance obligations are also important legal considerations when using Company Let agreements. Landlords should clearly outline the repair and maintenance obligations of the tenant in the agreement. This should include who is responsible for any repairs or maintenance required during the tenancy, as well as any costs involved. You probably don't want to be stuck footing the bill for repairs when it wasn't your fault - it's not exactly going to help you build wealth.
Finally, let's talk about insurance. Landlords should ensure that the company has appropriate insurance coverage for the rented property. This may include public liability insurance and insurance for any business-related activities that will be conducted on the property. Check out this video, where we dive deep into all the main types of insurance coverage that landlords need to know about.
Overall, it is important for landlords to carefully consider the legal implications of Company Let agreements before entering into this type of arrangement. It is recommended to seek legal advice to ensure that the agreement is fair and protects the landlord's interests. And remember, even though it's a serious legal document, be sure to enjoy the process.