Letting to companies is a buy to let area that is doing quite well

When company profits boom they can’t find all the high quality people they need in the UK. 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 first. 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 like to be in posh out of town locales with decent travel connections like Weybridge.

Some will come with their families and will be after family houses which are 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!

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 forget it.

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 Your Home to a Company

The majority of companies will pay quarterly in advance which is obviously very good for cash flow.

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 “gritty” locations.

Remember the corporate letting market can quickly turn down whenever the global stock markets and company profits slide as has happended in 2008 and 2009.

To find tenants forget “Loot” and other free papers. You will need to plug into up-market letting agents and relocation agents with good contacts with firms. In fact, many firms will only work through agents.

If you are interested in the corporate lettings market, but would like to know more why not contact me to attend one of my property seminars or arrange a one to one property investment training session.

About David Lawrenson and LettingFocus

I’m David Lawrenson from property mentors LettingFocus.com. I'm author of the buy to let book “Successful Property Letting - How to Make Money in Buy to Let” which is the UK’s top selling property title. Click here for buy to let book.

What’s unique about lettingfocus.com is that we offer unbiased landlord information because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer or bridging loan financier.

In our corporate consultancy role, we also provide consultancy advice on the private rented sector to companies and public sector organisations.

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