Subletting my BTL to a company?
Discussion
Not sure if anyone may have experience in this area, or perhaps be able to spot things I haven't thought of.
In short, I own a BTL flat that I've privately rented for c.13 years. I manage it myself. It will become available again in April so have been looking at options as the world is a little less favourable to landlords than 5 years ago when it was last up for rent!
I am considering letting it out directly to a company who run corporate serviced accommodation. The basics of the arrangement are that they are the 'tenants' and responsible for the contract. They pay me the monthly rent and they will also take care of general (minor) maintenance. I have no contact with anyone they let to, they run it all. Basically I just get my monthly rent and am totally hands off.
Obviously they are responsible for damages, they'll furnish it etc.
They take a 2 year tenancy with a 6 month break clause. It however is not an assured tenancy within the meaning of the Housing Act 1988.
This is a new arena to me so I can see multiple benefits in this but of course pitfalls. They have sent me their contract which seems upfront and has the clauses I'd expect in respect of unpaid rent, termination, responsibilities etc.
My key questions are around eviction if this does not follow standard AST procedure (get legal advice?), what happens if the company goes bust and/or phoenixes, and things like rent guarantee insurance which I'm not sure could be applied here.
I can, and obviously do, reference new tenants, but referencing a company is new to me, bar looking at their books on Companies House!
I've tried to keep this fairly brief but happy to give more detail.
Would be really helpful to her from anyone who may be in this sector, or just the general excellent business brains of PH!
In short, I own a BTL flat that I've privately rented for c.13 years. I manage it myself. It will become available again in April so have been looking at options as the world is a little less favourable to landlords than 5 years ago when it was last up for rent!
I am considering letting it out directly to a company who run corporate serviced accommodation. The basics of the arrangement are that they are the 'tenants' and responsible for the contract. They pay me the monthly rent and they will also take care of general (minor) maintenance. I have no contact with anyone they let to, they run it all. Basically I just get my monthly rent and am totally hands off.
Obviously they are responsible for damages, they'll furnish it etc.
They take a 2 year tenancy with a 6 month break clause. It however is not an assured tenancy within the meaning of the Housing Act 1988.
This is a new arena to me so I can see multiple benefits in this but of course pitfalls. They have sent me their contract which seems upfront and has the clauses I'd expect in respect of unpaid rent, termination, responsibilities etc.
My key questions are around eviction if this does not follow standard AST procedure (get legal advice?), what happens if the company goes bust and/or phoenixes, and things like rent guarantee insurance which I'm not sure could be applied here.
I can, and obviously do, reference new tenants, but referencing a company is new to me, bar looking at their books on Companies House!
I've tried to keep this fairly brief but happy to give more detail.
Would be really helpful to her from anyone who may be in this sector, or just the general excellent business brains of PH!
If it's mortgaged you will need the permission of the lender, they may not be happy without an AST and or you may have to move to a more 'commercial' funder, whom would assess the leaser.
Also, does the local council/housing association have a housing need? They will often 'rent' it from you and maintain the property (its guaranteed monies).
Also, does the local council/housing association have a housing need? They will often 'rent' it from you and maintain the property (its guaranteed monies).
Do you have a standard BTL mortgage? The terms may dictate that you can't do that.
As an aside, when I was contracting away from home, during the work, I took on a flat for 6 months and my Ltd company was issued an AST, which actually can't be an AST as it wasn't my main accommodation. The letting agent didn't really understand that it was all null and void, and I didn't tell them.
As an aside, when I was contracting away from home, during the work, I took on a flat for 6 months and my Ltd company was issued an AST, which actually can't be an AST as it wasn't my main accommodation. The letting agent didn't really understand that it was all null and void, and I didn't tell them.
FLGirl said:
Not sure if anyone may have experience in this area, or perhaps be able to spot things I haven't thought of.
In short, I own a BTL flat that I've privately rented for c.13 years. I manage it myself. It will become available again in April so have been looking at options as the world is a little less favourable to landlords than 5 years ago when it was last up for rent!
Re. the bold I'd agree to a certain extent and if I was thinking of starting in the BTL world now I might think twice but as an established LL I'm happy to continue self-managing my properties. There is great demand atm for rentals so you shouldn't have too many issues finding a good tenant. Stick with what you know; I wouldn't risk my properties with the type of outfit you describe. Remember, they are a business looking to make a profit from the arrangement.In short, I own a BTL flat that I've privately rented for c.13 years. I manage it myself. It will become available again in April so have been looking at options as the world is a little less favourable to landlords than 5 years ago when it was last up for rent!
FLGirl said:
Yes, it is on a standard BTL mortgage. I have checked the clauses and there isn't anything re subletting but appreciate they may want to know. If it was a no from them it would be a no overall.
Mine, (before it was paid off), stated that it couldn't be used as a HMO, a holiday let, that family of the LL couldn't live in it, and it must be let on an Assured Shorthold Tenancy agreement. Also insurance was similar. Plus no void longer than 30 days, which is a pain, if you want to decorate every room before you advertise.
FLGirl said:
Thank you all for your input (sorry, multi quoting is a pain!).
I’m getting an inkling “no” may be the consensus
I think that’s fair and on balance having full control of my property is preferable.
My concern with it is this is the kind of scheme being promoted by "property guru's", selling courses to the naive and inexperienced.I’m getting an inkling “no” may be the consensus
I think that’s fair and on balance having full control of my property is preferable.
"No money down property investing", "rent to rent" & “rent to serviced accommodation”
Appeals to people with no experience and no assets.
Giving control of a major assets over to someone, no matter how good the contract is. If they have no assets then the contracts worthless. You have no security or recourse if it goes wrong. I assume they've no assets, otherwise they'd purchase properties to let out themselves.
The arrangement to me looks like you take the risk and they take any reward. If they aren’t successful, they’ll pocket the money, walk away and you will be last to be paid.
Either sell it, re let on an AST or manage it as a short term let youself (if mortgage allows). I also note its a flat, so likely leasehold. With flats the leasehold often prohibits short-term letting.
Edited by CaiosH on Thursday 29th February 17:20
I wouldn’t have such an issue with the letting itself, however there are a couple of issues which have been touched on above.
Firstly, you may have to switch to a commercial mortgage and away from a BTL mortgage.
Secondly, a council may consider you are going from a C3 residential use to a C2 hotel/ serviced apartment use.
Firstly, you may have to switch to a commercial mortgage and away from a BTL mortgage.
Secondly, a council may consider you are going from a C3 residential use to a C2 hotel/ serviced apartment use.
CaiosH said:
My concern with it is this is the kind of scheme being promoted by "property guru's", selling courses to the naive and inexperienced.
"No money down property investing", "rent to rent" & “rent to serviced accommodation”
Appeals to people with no experience and no assets.
Yep this stinks of rent to rent t"No money down property investing", "rent to rent" & “rent to serviced accommodation”
Appeals to people with no experience and no assets.
Edited by CaiosH on Thursday 29th February 17:20
tness, idiots thinking they can pay a monthly rate and sub through Airbnb and skim the difference. Rinse and repeat and this time next year Rodney...Lots or poor advice on here as usual.
OP, as you correctly identify, there are lots of advantages to corporate lets.
I rent apartments to a corporate for use by execs and gov officials.
It’s fantastic in nullifying all the risks of rent voids, section 22 nonsense and endless requirements for residential lets.
Other advantages:
- my properties are often only occupied Monday to Friday or a even less
- the nature of the occupying person is normally highly educated/conscientious
- my agreement is with a large corporation so admin is taken care of efficiently
- rental increases are yearly without quibble
- i get no phone calls about maintenance, albeit my properties rarely needed them
- i can cease the arrangement with 30 days notice
I always stipulate a named individual in each contract so they cannot put just anyone they wish in the property. This is quite important for me.
Be aware of the very high standards of property expected with the model above. Think luxury one beds done out like a boutique hotel. Parking essential.
I have just ended an agreement on a property that ran for 6 years (im selling it) and the place looks untouched, not even a lick of paint required as I gather the exec was rarely ever there and certainly never cooked.
The corporate has supplied all furniture for that property and then simply left it all in situ at the end of our agreement (with my permission of course).
I would only ever entertain corporate lets and have only positive experiences.
OP, as you correctly identify, there are lots of advantages to corporate lets.
I rent apartments to a corporate for use by execs and gov officials.
It’s fantastic in nullifying all the risks of rent voids, section 22 nonsense and endless requirements for residential lets.
Other advantages:
- my properties are often only occupied Monday to Friday or a even less
- the nature of the occupying person is normally highly educated/conscientious
- my agreement is with a large corporation so admin is taken care of efficiently
- rental increases are yearly without quibble
- i get no phone calls about maintenance, albeit my properties rarely needed them
- i can cease the arrangement with 30 days notice
I always stipulate a named individual in each contract so they cannot put just anyone they wish in the property. This is quite important for me.
Be aware of the very high standards of property expected with the model above. Think luxury one beds done out like a boutique hotel. Parking essential.
I have just ended an agreement on a property that ran for 6 years (im selling it) and the place looks untouched, not even a lick of paint required as I gather the exec was rarely ever there and certainly never cooked.
The corporate has supplied all furniture for that property and then simply left it all in situ at the end of our agreement (with my permission of course).
I would only ever entertain corporate lets and have only positive experiences.
Edited by DoubleSix on Friday 1st March 07:28
Are these corporate tenants running businesses from the properties?
If they are, how does that tie in with the planning regulations applicable to the individual properties?
I'm not questionning what you are doing - I'm just asking to find out how you go about converting residential properties into commercial properties within the planning regs.
If they are, how does that tie in with the planning regulations applicable to the individual properties?
I'm not questionning what you are doing - I'm just asking to find out how you go about converting residential properties into commercial properties within the planning regs.
Eric Mc said:
Are these corporate tenants running businesses from the properties?
If they are, how does that tie in with the planning regulations applicable to the individual properties?
I'm not questionning what you are doing - I'm just asking to find out how you go about converting residential properties into commercial properties within the planning regs.
I read it as leasing to the corporate entity who fills the property with tenants.If they are, how does that tie in with the planning regulations applicable to the individual properties?
I'm not questionning what you are doing - I'm just asking to find out how you go about converting residential properties into commercial properties within the planning regs.
There are a lot of reasons not to do it, most of them covered above.
It can and does work though if you get the right people involved, not fly by nights who have been on a one week property course. I know someone who does it (as the owner not the tenant), it works for him as he lives overseas. He did find it difficult to get insurance though and I am not sure it has occurred to him to let his mortgage company know.
Sounds like you are hands on though if you currently manage it yourself, why not carry on? Yes things have changed in the last 5 years but it's not all bad news. There will be more demand than ever and there are plenty of decent tenants out there, you can afford to be choosey. I advertise myself on Rightmove (via Open Rent) but I sometimes use an agency to do a tenant find which always results in a better quality tenant, it's well worth a few weeks rent, they know exactly the type of tenant I am looking for. You will more than likely get a rent increase too if you have previously let to long term tenants.
It can and does work though if you get the right people involved, not fly by nights who have been on a one week property course. I know someone who does it (as the owner not the tenant), it works for him as he lives overseas. He did find it difficult to get insurance though and I am not sure it has occurred to him to let his mortgage company know.
Sounds like you are hands on though if you currently manage it yourself, why not carry on? Yes things have changed in the last 5 years but it's not all bad news. There will be more demand than ever and there are plenty of decent tenants out there, you can afford to be choosey. I advertise myself on Rightmove (via Open Rent) but I sometimes use an agency to do a tenant find which always results in a better quality tenant, it's well worth a few weeks rent, they know exactly the type of tenant I am looking for. You will more than likely get a rent increase too if you have previously let to long term tenants.
DoubleSix said:
Lots or poor advice on here as usual.
OP, as you correctly identify, there are lots of advantages to corporate lets.
I rent apartments to a corporate for use by execs and gov officials.
It’s fantastic in nullifying all the risks of rent voids, section 22 nonsense and endless requirements for residential lets.
That is not quite the arrangement that the OP has been offered. I would gladly let to a proper corporate, with a proper agreement in place (containing appropriate terms).OP, as you correctly identify, there are lots of advantages to corporate lets.
I rent apartments to a corporate for use by execs and gov officials.
It’s fantastic in nullifying all the risks of rent voids, section 22 nonsense and endless requirements for residential lets.
The OP is right to be questioning the merits of the arrangement that has been proposed to them. I would not let to a random company who simply wants to sub-let to Joe Random.
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