Company or Private Let ?

by Readers Question

3 years ago

Company or Private Let ?

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Company or Private Let ?

One of our prospective tenants wants to have a company tenancy, but he wants his name on the tenancy as well.

He claims that this way he will benefit from the rent being deductible as cost and he needs his name on the tenancy agreement to enable him to apply for utilities.

For example like this: The tenant: Mr John Doe – Example Ltd. I am concerned that in case we will need to evict we will have a legal problem with the name(s) in the repossession procedure.

Has anyone got any experience and/or advice regarding this?

Many thanks

Charlescompany



Comments

Mark Alexander

3 years ago

Hi Charles

I have a tenant who is a vet who asked for exactly the same thing. I agreed.

One think to watch out for though, it's not an AST, it a Corporate Letting Agreement. The wording is different and you don't have to protect the deposit.
.

money manager

3 years ago

Highly unlikely thay will need to, but the eviction /tenancy cessation process is easier.

Charles Fonteijn

3 years ago

Thank you. I have no experience with repossessions in such cases. What is the (easier) process? Do I use the N5 (Claim form for possession) & N119 (Particulars of claim for possession) forms?

John Walker

3 years ago

Hi Charles,
I was at one time in exactly the same situation as Mark Alexander describes. Would it not be possible for the tenancy agreement to be in the name of Mr. ABC trading as XYZ? You would need to check that XYZ was a legitimate company, trading profitably.
Ask to see the audited accounts for the previous 2/3 years if you have any qualms.

John

Angela Cooper

3 years ago

Sounds a bit dodgy to me. im self employed and work from 1 spare room in my house so can claim for a % of household costs such as mortgage interest, council tax, gas and electricity. my house is not in my businesss name but the expenses are simply listed in my tax return. Paying these expenses and showing the payment by receipt and where the payment came from is enough. Also im a private landlord and my Scottish lease and landlords insurance forbids any commerical use at the property.

money manager

3 years ago

Reply to the comment left by "Angela Cooper" at "30/05/2015 - 12:04":

Angela, could I suggest you re read HMRC's guide to allowable expenses for the S/E working from home.

Charles Fonteijn

3 years ago

Reply to the comment left by "John Walker" at "30/05/2015 - 11:32":

Hi,
Thank you for your comment. My situation was slightly different. We are talking about a let to a Limited Company. The owner of this limited company was asking for his name be included in the tenancy. I have made a company let but have written in the tenancy: Example Ltd represented by Mr John Doe. Mr John Doe is actually living in the property and develops software from home. I am not sure if in case of court action to evict this will be considered a company let. It might be considered an assured shorthold tenancy and the normal eviction procedure applicable to ASTs might have to be used. I remember that in the eighties the company let was thought be a way to circumvent legislation applicable to residential lettings and I was told it would not work. Maybe the same applies in this case?

John Walker

3 years ago

Hi Charles,
Might an acceptable alternative be to let to Mr. ABC trading as XYZ Ltd, in which case it would be patently obvious the tenant is ABC. The rent would need to be paid by ABC, whether directly or via his trading company is possibly immaterial, though do check this out with your solicitor. ABC's arrangement with HMRC is not your concern, as long as the rent is paid when due is the end of your interest in the matter. You, like all other landlords, are in business to make a profit. Take due heed of all other comments, and should you feel in any way uneasy about the letting be prepared to walk away and seek another tenant. It may cost a little in the short term but pay dividends in the future.

Angela Cooper

3 years ago

Reply to the comment left by "money manager" at "30/05/2015 - 14:29":

Money Manager, is this the item you suggest i re read?

Expenses if you're self-employed

If you work from home
You may be able to claim a proportion of your costs for things like:

heating
electricity
Council Tax
mortgage interest or rent
internet and telephone use
You’ll need to find a reasonable method of dividing your costs, eg by the number of rooms you use for business or the amount of time you spend working from home.

Example
You have 4 rooms in your home, one of which you use only as an office.

Your electricity bill for the year is £400. Assuming all the rooms in your home use equal amounts of electricity, you can claim £100 as allowable expenses (£400 divided by 4).

If you worked only one day a week from home, you could claim £14.29 as allowable expenses (£100 divided by 7).

Angela Cooper

3 years ago

Reply to the comment left by "John Walker" at "31/05/2015 - 11:25":

yes i agree with John Walker, trust your instincts and if it doesnt feel right then walk away, id rather wait a few weeks for a tenant than have to go thro months of trying to get one out or financial worry of unpaid rent!

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