The Difference Between An AST And A Company Let Agreement | Landlord Resources | #5

The overwhelming majority of private landlords in the UK use an Assured Shorthold Tenancy agreement – or AST – to let out their residential properties.

ASTs are governed by the Housing Act 1988, which offers buy-to-let investors the following legal protection…

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  • ASTs are usually issued for six or 12 months, which gives landlords the opportunity to decide whether or not to renew the agreement at the end of the fixed period.
  • Landlords can evict a tenant after an initial fixed term of six months without a legal reason. If a landlord decides not to renew the tenancy, they need to issue a Section 21 Notice to Quit, so-called because it operates under section 21 of the Housing Act 1988.
  • Landlords can also terminate a tenancy before the fixed period elapses. To do this, they must obtain an order for possession from a court. Before applying to the court for such an order, the landlord must issue the tenant with a Section 8 Notice to Quit. This notice, which takes its name because it operates under section 8 of the Housing Act, needs to state that the landlord intends to seek possession of the property and the grounds on which possession is sought.
  • For the majority of 17 grounds covered by section 8 of the Housing Act – including rent arrears, antisocial behaviour and breaches of the terms of the agreement – a landlord is required to give the tenant just two weeks’ notice to quit.
  • ASTs are not usually subject to rent controls, which gives landlords the right to increase the amount they charge tenants after they have signed the rental agreement.landlord-4

Free download #1

An Assured Shorthold Tenancy agreement forms part of a landlord’s raft of necessary paperwork. This is why Property Division is pleased to offer you a free AST agreement. Simply print off two copies, sign one and hand it to your tenants, then get your tenant or tenants to sign the other and hand that agreement to you.

However, ASTs do not cover agreements where tenants pay more than £100,000 in rent per year or when a limited company rents a residential property.

The latter often involves companies renting residential accommodation and letting the property to their employees, usually under a licence agreement (as opposed to a tenancy).

While the employee will usually pay rent and other costs to the landlord, ultimately the company is liable.

Assured Shorthold Tenancy Agreement Form

The advantages of company lets

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    Landlords receive a high level of assurance that rent and other outgoings will be paid on time

  • The landlord’s point of contact is usually the company’s human resources department, not the tenant, which can reduce a buy-to-let investor’s administration costs
  • Negotiations are often more professional, resulting in a smoother completion of the letting transaction
  • Companies are more likely to pay higher rents for quality properties
  • Company lets are often agreed for longer periods than ASTs, reducing the risk of void periods
  • Company lets to employees from overseas can provide maximum exposure of the property within the expatriate community and can reduce the risk of vacant periods

However, it is worth bearing in mind that because the law does not consider companies to be individuals, company lets deny landlords many of the rights they are granted under the Housing Act, including the option of using Section 8 and Section 21 Notices to Quit.

Free download #2

While the majority of company lets relate to properties in London and the south-east of England, the market is strong in other parts of the UK. This is why Property Division is offering buy-to-let investors the opportunity to widen your search for tenants by giving you a free Company Let Agreement.

Simply download the document, print off two copies, sign one and pass it on to the company you are making the agreement with, then get a company representative to sign the other and hand that agreement to you.

 Company Let Agreement Document

About the author:

I have been dealing with Properties in London since 2005 and i never stop being fascinated by it! Amazingly, London seems to be on a sphere of its own when it comes to properties like no other city in the world. Property investment, development and technology are things that have always intrigued me and whenever get a chance to share my thoughts, i do!
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