We’re seeing a growing trend among landlords who choose to rent their property on a corporate let rather than a standard assured shorthold tenancy (AST), and lenders are evolving to deliver propositions that meet this increasing demand.
A company let to a corporate entity is typically categorised as a commercial tenancy and has different terms and conditions to a residential tenancy.
Contracts are often tailored to suit the needs of the business and the landlord – but there are a number of organisations that offer standardised agreements that are recognised by a number of lenders.
For example, Serco is an organisation with more than 7,000 properties in its portfolio that it uses to house asylum seekers, and we work with lenders that are happy to accept a Serco arrangement as part of their policy.
There are a number of advantages for landlords in letting to a limited company in this way. Lease terms are often for a longer period than an AST and offer guaranteed rent during this period, so investors don’t have to worry about potential void periods.
In addition, given that the terms of a lease are more akin to a commercial tenancy than a residential one, it’s often a requirement for the corporate tenant to return the property in exactly the same condition as it was presented at the start of the arrangement.
There may be different requirements for investors regarding taxation and insurance when it comes to letting to a corporate tenant and, needless to say, any landlord interested in exploring this avenue should look into all of the considerations for them and their portfolio. However, when it comes to financing the investment, there’s a growing number of options.
Even where the people living in the property may be considered vulnerable, such as asylum seekers, for example, lenders are increasingly well-versed in underwriting corporate lets, and the increased competition in this sector means that rates are also becoming more competitive. We even work with one lender that has set up a specialist division to handle this type of property investment.
This is a very different market to standard buy-to-let (BTL) business and it’s important to understand the criteria and appetite of the lenders involved in this area. So, if you have investor clients who want to diversify their portfolio into corporate lets, pick up the phone and speak to an expert.
At Brightstar, not only do we have experience in successfully placing these cases, we also have access to lenders and products that you may not be able to reach directly.
