LETTING PROPERTY TO A COMPANY
Letting property to a company can be a useful money spinner.
Property expert David Lawrenson of www.LettingFocus.com says, "When company profits boom, they often can’t find all the high quality people they need locally or indeed anywhere in the UK. And even if they can, they cannot persuade them to permanently move to another part of the UK for what might be a short contract.
For many companies buying a property and then using it to let out to their employees is too much hassle.
So these companies are in the market to rent from private landlords. It’s flexible and meets the company’s short term needs."
COMPANY LETS - PROS AND CONS
But what are the pros and cons of letting to this market, how does this market break down into segments, what are the risks and what sort of property should you buy to achieve success in this market?
Let’s start by looking at the structure of the market - Who is renting and why?
First, there are the foreign expatriates sent to work in the UK from their company overseas. They are concentrated in London but are also in other major cities like Edinburgh and Manchester.
They prefer to be near the centre so that travelling to work time is reduced though there are some who like to be in posh out of town locales with decent travel connections - places like Weybridge fit the bill, especially for those who come with their families and who after large houses close to foreign schools.
LETTING IN LONDON
In London there are a number of foreign schools and they tend to be concentrated around the centre and further out in West London rather than on the eastern side of town, though there is some demand for property close to Canary Wharf.
Most foreign expats on company lets will only consider something near the tube as that is about the extent of their “mental map” of London and the same also goes for British “out of towners” on company lets too. Well off executives on company lets just don’t travel on buses and cannot seem to get the hang of overground trains.
Then there are individuals who will want smaller one and two bed properties, again reasonably close to the centre and near to tube or tram routes.
In London, if you are interested in this market but your property is not close to a tube (by which I mean less than 5 minutes walk) then you may struggle.
FURNISHING FOR COMPANY LETS
Don’t come unstuck on furnishings and find out what the market wants first.
Bear in mind that those relocating with their families may bring all their furniture with them whilst singletons may expect you to provide a fully furnished place.
And of course, if you furnish, the standard has to be as good as any hotel. So forget MFI and Ikea.
Foreign expats in particular will look for large rooms and lots of storage space.
Generally, this market will be less price sensitive than normal lets - after all it is the company who is paying!
However for that they will expect not only good furnishings but a prompt and efficient service if anything goes wrong. So if the washing machine breaks down on a bank holiday, you’ll probably have to fix it that day and the extra call out cost will have to go and hang itself.
GETTING PAID IF YOU LET A HOME TO A COMPANY
Many companies will pay quarterly in advance which is obviously very good for your cash flow. But do check to make sure the company is solid financially and that you will get paid.
If in doubt about this consider letting direct to the employee, putting the tenancy contract in their name.
To get into this market, you have to have lots of cash to buy in a decent area and if the property is not up to scratch you will have to spend a lot to meet the high demands of this market.
At the lower end of the company let market, there is a market from say smaller companies to house say, their middle management IT staff. Here, you can get away with letting in slightly less expensive areas, but forget any really “gritty” locations.
Remember the corporate letting market can quickly turn down whenever the global stock markets and company profits slide as happened in 2008 and 2009.
ADVERTISING FOR COMPANY LETS
To find tenants, free papers and on line resources may not hit an upmarket client base.
You may need to plug into up-market letting agents and relocation agents with good contacts with firms. In fact, many big firms will only work through up market letting agents.
Take time to get the contract right. If you let direct to a company, an assured shorthold tenancy will not do.
Speak to us if you need more advice.
ABOUT DAVID LAWRENSON AND LETTINGFOCUS
At LettingFocus.com our main work is our consultancy, in which capacity we help organisations and public bodies with their products and services for the private rented sector.
But in addition to our work for organisations, we also offer a limited amount of unbiased consultancy advice for private landlords.
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Copyright 2011 David Lawrenson. This article must not be copied or re-used without the author and copyright owner’s prior permission.
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