Companies as Landlord or Tenant

In most cases both the landlord and the tenant will be real people as opposed to organisations. However, this is not always the case. If a property is owned by a limited company, then that company will be deemed to be the landlord and the tenancy will still be an AST. If an agency is to be involved, it will be instructed by the limited company and will take instructions from an officer of the company, usually a director. It is prudent to check with Companies House or ask for proof that the party purporting to be a director of the company is genuinely a director of the company.

In most cases both the landlord and the tenant will be individuals as opposed to organisations. This is not always the case. If a property is owned by a limited company, the company will be deemed to be the landlord and the tenancy will still be an AST. If an agency is to be involved, it will be instructed by the limited company and will take instructions from an officer of the company, usually a director. It is prudent to check with Companies House or ask for proof that the party purporting to be a director of the company is genuinely a director of the company. An agency can sign an agreement where the landlord is a limited company in the usual way, if so instructed.

Alternatively, it is possible for a tenant to be a limited company. In this instance the tenancy cannot be an AST. Instead it will be a contractual tenancy outside the Housing Act 1988 and an appropriate agreement should be used. It will be some form of contractual tenancy, i.e. a tenancy that exists because of a contract, not because of a law. Section 21 or Section 8 Notices will not apply. The tenancy will come under the common law of contract. This will mean that whatever terms are incorporated in the body of the contract will become part of the contract and legally enforceable. For example, it is entirely possible for a term to be included in a contractual let which states that either party must give three months notice or that either party can agree to break the contract at any time even within the fixed term. Neither of the above two clauses would be valid within an AST.

A Company Let will still be governed by equitable principles; or that which is just, fair and reasonable. For example, a clause stating that either party can give one or two months notice would be deemed to be reasonable whereas a notice stating that the contract is terminated after 7 days and that the occupants must vacate the property would be unreasonable and unenforceable.

With a Company Let the limited company (or PLC) will be deemed to be the tenant at law and any and all legal notices sent by the landlord or agent must be addressed either to the company’s registered address, the address on the tenancy agreement (most usual) or any address where the company carries on doing business. It is common practice to agree the appropriate address at the commencement of the tenancy. The actual occupants of the property will not be tenants. It is the company who will be the tenant. The occupants, who will almost always be employees of the limited company, will be deemed to be licensees of the company. It is usual to serve all legal documents on the property as well as on the tenant limited company and to ascertain the identity of the occupants. It is not normally necessary to reference the occupants because the legal relationship will be between the landlord and the limited company.

In summary, where the definition of a landlord or a tenant includes a limited company as a  party on a tenancy, if the landlord is a limited company it will still be an AST but if the tenant is the limited company, the agreement will be a Contractual Tenancy.