COMPANY LETS

What are the differences between a company let and an ordinary lease?

We assume that you mean by an ‘ordinary lease’ a lease that covers Short Assured Tenancy set up under the Housing (Scotland) Act 1988.  This is the usual type of lease used for residential lets as it provides a greater degree of security to a Landlord than other types of lease.

The Housing (Scotland) Act 1988 introduced fixed term tenancies that give a landlord the right to regain their property by following a set process of notification and court action.  It removed the fear of sitting tenants and the large number of rights that could exclude a Landlord from his property. 

This does not mean to say that any type of lease offers such protection to a Landlord as a poorly constructed lease or even worse, no lease at all will often deprive a landlord of his legal protection when things go wrong.

That said a Short Assured Tenancy lasts for a minimum period of six months and can continue by ‘tacit relocation’ for many years. Tacit Relocation is the process where a new lease is automatically created in the absence of a lease extension or new Short Assured Tenancy lease, imparting the same terms and obligations on Landlord and Tenant as the original lease.  Bringing a short Assured Tenancy to a close has to conform to the procedure stated in the regulations.  Eviction under a Short Assured Tenancy is not a quick process.  Much depends on applying the right process at the right time.  Physical eviction without a court order is not an option. 

Company Lets are a different type of contract, which is what a lease is after all.  We find that our corporate and relocation contacts prefer two types of letting arrangement, either the company takes full responsibility and places its choice of staff within your property, or the staff member takes out a Short Assured Tenancy and the company acts as Guarantor. 

The latter approach is becoming more and more popular with companies as the onus is on the employee to respect a property and pay the rent.   There is also the issue of gaining creditable references when employers move key employees to Scotland from abroad.  The company let or the company acting as Guarantor removes these referencing difficulties.  Moreover the restraining factor of the company being directly involved and able to deduct costs and other expenses from the employee’s wages if necessary usually results in a trouble free let. 

The true company let involves the employer acting as the ‘tenant’, placing their choice of employee within your property.  There is usually no restriction on the number of employees that stay in your property or the period that they stay there for. 

The downside to Company Lets is the level of wear and tear that can ensue, especially when any dispute over damage results in legal action.  To counteract this we offer our landlords rental and legal protection to see off any potential claim.  Company Lets tend to include break clauses within the lease.  Usually the lease is set up on a twelve-month period with a break clause at six months.  However as the contract is negotiable, some companies may wish to vary this and include short notice periods to conclude a lease.

Finally we are increasingly finding that companies are using relocation agents to find suitable properties for their staff rather than do the work in-house.  The relocation agent takes the entire hassle away from the employee, as they will draw up lists of potential properties, which they then view on behalf of the tenant.  Occasionally the employee will leave all the arrangements to the relocation agent and not even view the property before moving in.  Our Key-Lets website therefore offers you a great opportunity to put your property before potential tenants throughout the world as well as their relocation agents or employers.