Company Let Agreements are often entered into by private landlords to rent their property out to a company, which in turn makes money by sub-letting the property to others. This will often be in the form of an HMO (House of Multiple Occupation) so that individual rooms can be rented, often to students.
What are the problems with Company Let Agreements?
Such arrangements can be very beneficial when they work, but a nightmare when they don’t.
If the tenant company stops paying the landlord their rent (regardless of whether they in turn are receiving if from the sub-tenants or not) then it is the landlord’s problem to deal with. The landlord normally cannot simply reclaim the property, because the sub-tenants are likely to be residing there under an assured shorthold tenancy and therefore have protection from eviction.
In addition, the obvious route of cutting out the tenant company and taking on the sub-tenants directly is fraught with dangers to the landlord, including the possibility of taking on all the breaches and liabilities of the original tenant company!
Going down the wrong route to reclaim the property
Further, the ways in which the property can be reclaimed are highly dependent upon the specific facts in play, and a landlord can easily go down completely the wrong route, and serve all of the wrong kinds of notices at the outset. They will only find out when their claim is dismissed and they need to start all over again.
Get legal advice before acting
I cannot stress enough just how much landlords will benefit from getting early legal advice on these complicated situations. Landlords stand to lose a lot of money while they attempt to evict not only the tenant company but also the sub-tenants, and with many avenues for the process to go wrong.
Published on 16/01/2020