writing a AST for a limited company

[Rob Lamb]

I have a question about AST and limited companies.
I have a room that I am going to let to a tenant , he is self employed and needs to do it through his company
He tells me that a AST will not work and is not allowed with LTD company, so I have to write a CONTRACT to let
Is this correct and does anyone have a CONTRACT they can let me copy please.
Rob

[Marcus]

Hi Roy,

He's right, you wouldn't be able to use an AST when renting a room to a lodger, you would need a licence. Take a look at this thread. In it Tessa explains how it works and Lisa provides a free downloadable licence agreement that, as far as I can see, makes no distinction between person or company, just Licensee and Licensor.

I'm no expert but seems plausible so worth investigating.

[Andrew]

A word of advice, when renting to a company, even a one-man-band, ask for a personal guarantee and make sure its signed and witnessed.

If your prospective tenant refuses, there may be a reason. If its his company, he'd have no reason not to give you one.

[John Corey]

Andrew's advice makes sense given the original question.

If you are renting a property to a large multi-national do not expect to get a personal guarantee from the tenant or an employee. Depend on the credit of the company in that case. In all the cases I know the company pays quarterly and they pay in advance. It does not have to be that way but it is common with some executive rentals.

Continuing the tangent - Do get legal advice so you have the details correct. Eviction is not the same when you rent to a company where they are selecting the tenant.

John Corey
Follow me on Twitter -> www.twitter.com/john_corey
www.ChelseaPrivateEquity.com/blog

[Tessa Shepperson]

I am not sure I agree that the tenant/lodger *has* to do it via his company. Why?

If he is just renting a room, I don't think a company let is appropriate. It should be in his name. If he wants to put it through his company, no doubt there is some other way to do it (maybe he should speak to his accountant).

Company lets are fairly standard for lettings of a whole flat or house (and we have a company let agreement here: http://www.landlordlaw.co.uk/page.ihtml?id=312&catparid=5&s... ) but I never heard of anyone letting a room in a shared house to a company!

[John Corey]

Tessa,

Legally why does it matter if the company rents a house vs. rents a room in a house?

John Corey
[URL="http://www.ChelseaPrivateEquity.com/blog"]www.ChelseaPrivateEquity.com/blog[/URL]
Follow me on Twitter -> [URL="http://www.Twitter.com/John_Corey"]www.Twitter.com/John_Corey[/URL]

Tessa Shepperson said:

I am not sure I agree that the tenant/lodger *has* to do it via his company. Why?

If he is just renting a room, I don't think a company let is appropriate. It should be in his name. If he wants to put it through his company, no doubt there is some other way to do it (maybe he should speak to his accountant).

Company lets are fairly standard for lettings of a whole flat or house (and we have a company let agreement here: http://www.landlordlaw.co.uk/page.ihtml?id=312&catparid=5&s... ) but I never heard of anyone letting a room in a shared house to a company!

[Tessa Shepperson]

Generally a property is rented by a company to provide accommodation for its directors and staff. It just seems wrong for this to be in the context of a room in a house shared by other tenants, or in a lodger context, with the landlord him or herself.

I can't, I have to say, put my finger just now on a precise reason why it is bad news, but my instincts as a lawyer are against it. I'll put a post on this on my blog and see if I get any answers from other lawyers. If I'm wrong I'll let you know!

By the way, I did a general post on company lets on my blog here: http://landlordlaw.blogspot.com/2009/09/letting-to-companies.html

[Rob Lamb]

Hi all Thanks for the comments, in the end I called a solicitor and he informs me that a limited company can sign up to a AST agreement, There is no legal issues with it. and it has been done before with not problems, the only risk is that the company goes under and cant pay you the rent , so to safegard yourself you can ask the employee to become the gaurantor on the rent and sign a agreement to that effect.
Regards
Rob

[Tessa Shepperson]

Er, I don't know who you spoke to, but it is not possible for a company let to be an AST. This is because s1 of the Housing Act 1988 specifically provides for a tenant to be an 'individual'. A limited company is not an 'individual' which in this context means a living person.

The question here is not, if I have understood the question correctly, whether a company can be the tenant of a property (it can) but whether it can rent a room in a shared house or be a lodger.

Technically it may be possible but personally I don't think it is a good idea. However, any letting will be regulated by the common law and not as an AST under the Housing Act 1988.

PS I too am a solicitor.

[John Corey]

If the solicitor is wrong expect to make a claim. It happens.

Tangent: The area with the most legal claims against solicitors is coveyancing. When I read the statistics it was 16% of all claims against the legal profession. No idea if it was based on volume (number of cases) or based the face value of the cases.

John Corey
Follow me on Twitter -> www.twitter.com/john_corey
www.ChelseaPrivateEquity.com/blog

Rob Lamb said:

Hi all Thanks for the comments, in the end I called a solicitor and he informs me that a limited company can sign up to a AST agreement, There is no legal issues with it. and it has been done before with not problems, the only risk is that the company goes under and cant pay you the rent , so to safegard yourself you can ask the employee to become the gaurantor on the rent and sign a agreement to that effect.
Regards
Rob

[Rob Lamb]

I asked my solicitor to check the advce he gave me re ASt
and he has now changed his mind annd said that a Limited company cannot sign a AST.
So I have a tenant (limited company moving in tonight) and i am going to have to go with a lodger licence.
Only because i have to get him to sign something.

Many thanks all
Rob


REI said:

If the solicitor is wrong expect to make a claim. It happens.

Tangent: The area with the most legal claims against solicitors is coveyancing. When I read the statistics it was 16% of all claims against the legal profession. No idea if it was based on volume (number of cases) or based the face value of the cases.

John Corey
Follow me on Twitter -> www.twitter.com/john_corey
www.ChelseaPrivateEquity.com/blog

Rob Lamb said:

Hi all Thanks for the comments, in the end I called a solicitor and he informs me that a limited company can sign up to a AST agreement, There is no legal issues with it. and it has been done before with not problems, the only risk is that the company goes under and cant pay you the rent , so to safegard yourself you can ask the employee to become the gaurantor on the rent and sign a agreement to that effect.
Regards
Rob

[John Corey]

Rob,

Good to hear you followed up and the solicitor was professional enough to acknowledge the mistake.

Stuff happens. At least you can correct the situation on the front end.

John Corey
Follow me on Twitter -> www.twitter.com/john_corey
www.ChelseaPrivateEquity.com/blog

Rob Lamb said:

I asked my solicitor to check the advce he gave me re ASt
and he has now changed his mind annd said that a Limited company cannot sign a AST.
So I have a tenant (limited company moving in tonight) and i am going to have to go with a lodger licence.
Only because i have to get him to sign something.

Many thanks all
Rob


REI said:

If the solicitor is wrong expect to make a claim. It happens.

Tangent: The area with the most legal claims against solicitors is coveyancing. When I read the statistics it was 16% of all claims against the legal profession. No idea if it was based on volume (number of cases) or based the face value of the cases.

John Corey
Follow me on Twitter -> www.twitter.com/john_corey
www.ChelseaPrivateEquity.com/blog

Rob Lamb said:

Hi all Thanks for the comments, in the end I called a solicitor and he informs me that a limited company can sign up to a AST agreement, There is no legal issues with it. and it has been done before with not problems, the only risk is that the company goes under and cant pay you the rent , so to safegard yourself you can ask the employee to become the gaurantor on the rent and sign a agreement to that effect.
Regards
Rob