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Are you curious about corporate lets and whether you should consider them as a letting strategy in London?
Corporate letting involves a rental agreement with a business or company instead of an individual.
Companies are constantly looking for premium, fully-furnished homes for relocating staff or visiting colleagues. In the past, businesses relied on hotels for accommodations. However, the increase in short-term rentals has made it possible to provide a more suitable dwelling place for business travellers or relocating employees.
Whether you’re planning to boost your rental income, improve your occupancy rate or prefer working with professionals, corporate letting offers an incredible opportunity for London landlords.
In this article, you’ll understand what corporate letting means and how you can benefit from it to grow your property portfolio. You’ll get answers to common questions about corporate housing and how you can maximise your property’s potential through this letting strategy.
What is a Corporate Let?
Corporate letting involves an agreement between a landlord and a company that allows a corporate tenant to live in the former’s property for an agreed rental fee. Usually, the occupants are either relocating employees, visiting colleagues from overseas, training staff, etc.
Corporate lets could be on a short-term or long-term basis, depending on how long the company needs the property. What makes this different from an assured shorthold tenancy (AST) is the fact that the property is usually required to be fully furnished (including WiFi connection). This makes it a better option than hotels because the occupants enjoy similar facilities to an actual home (e.g. kitchen). By choosing corporate housing, tenants enjoy a homely and private stay.
If you have a rental property near business hubs or a good transport link to city centres, you can consider marketing your property as a corporate let. Companies are willing to pay premium rates and some rent the property for the long term, usually 6 months or more. Working with companies also means they are more respectful of the property and would take better care of it.
What Should You Check Before Accepting a Corporate Let?
Before signing a corporate lease agreement, it’s important to remember that this won’t be an AST agreement. That means the rental agreement is not protected by the Housing Act of 1998. Landlords wanting to use corporate letting should understand the common laws governing corporate lets to know their rights.
It’s also important to vet the company thoroughly before signing any agreement. Look into their financial history and ensure they are stable enough to meet the rental fees and aren’t at risk of insolvency.
It’s also advised to request the following before signing any agreement:
- A deposit to cover any damages left by corporate tenants or anything beyond the normal wear and tear.
- A Letter of Indemnity that confirms the company’s agreement to cover outstanding costs and unpaid bills at the end of the tenancy agreement (e.g. council tax, utility bills, etc.)
- Full disclosure about the person or people who will live in the property, including reference details.
Take your time conducting due diligence to avoid complications during or after the tenancy.
How Well Can Corporate Let Property Be Looked After?
Corporate let properties usually have a standard of care that should be followed. Employees staying in a corporate let are expected to abide by this because they’re representing the company or employer. This is why corporate tenants are more respectful than those of typical assured shorthold tenancy agreements.
Corporate clients are better at general maintenance, cleanliness and upkeep of furniture. Some companies even have relocation policies that include regular inspections to ensure the employee is taking care of the property they’re staying in.
Is a Corporate Letting Strategy More Profitable?
In most cases, companies are willing to pay premium prices, especially if the property is in a good location and it meets the needs of their staff. So if you have a rental property near financial districts and business hubs, it has the potential to attract corporate clients.
What makes corporate lets profitable is the fact that it leads to lower vacancy rates. Companies usually rent the property for long periods. Even if their staff leaves the premises, landlords don’t have to worry. The company will look for the next person to stay. Even if they don’t find anyone, they’ll keep paying rent, as stipulated in the agreement.
Can an Owner Live in A Corporate Let?
This will depend on the agreement. There’s no law prohibiting this arrangement. However, most corporate lets rent the whole property for exclusive use. Landlords might not be able to live in the property.
Property owners may be able to maintain access to the property through short-term letting. Instead of letting the property over a long period, they can opt for shorter lease agreements. Get a property management company to help manage the short-term rental operations. This will leave some dates available for the owner to use the property, while the rest can be rented out as corporate housing.
What Tenancy Agreement Does Corporate Lets Use?
Most private rentals use an Assured Shorthold Tenancy (AST) agreement for long-term letting. Corporate lets use something similar, but since the property is rented by a company and not an individual, it falls outside of the AST structure. This means the agreement won’t benefit from deposit protection schemes, minimum tenancy periods, etc.
This is why you need to scrutinise the corporate let agreement. Get the help of a property management company so they can lend their expertise when it comes to these agreements. Look for those that offer lease agreements as part of their management services. These experts can help you draft a contract that will protect your rights as a landlord and maintain your property’s high-quality condition while meeting the needs of your corporate clients.
Tips to Market Effectively to Corporate Clients
Marketing to corporate clients requires a different approach. You’re not trying to attract individuals. You need to market to businesses. This means your property should meet the following criteria:
- Fully or partly furnished with high-quality furniture, equipment and appliances.
- Equipped with smart TVs, kitchenware, Wi-Fi, laundry facilities, etc.
- Has a functional and efficient workspace.
- Located near business districts or financial centres or near transport hubs going to the city centre.
Some companies require the property to be professionally cleaned and maintained. If this is part of the agreement, landlords should partner with a cleaning company. Or they can get a property management company that offers cleaning and maintenance services on top of helping them find the right corporate client.
Is Corporate Letting Right for You?
Corporate lets offer an incredible opportunity for landlords to maximise their rental income and occupancy rates. The long-term agreement provides a secure and stable source of income.
To further maximise the income opportunities, partner with a property management company. They can help screen and onboard corporate tenants, handle deposits and financial agreements, oversee cleaning and maintenance and ensure the property stays compliant with local regulations. Let property experts handle the contract negotiation and ongoing tenant support.
If you’re thinking about switching to corporate lets, contact City Relay. We can discuss your options and find tailored solutions to your property management requirements.
