Leases – Contractual Tenancies and Company Lets

A residential tenancy agreement involving a company as a tenant is called a ‘Contractual Tenancy’ and is often referred to as a ‘company let’.

The tenancy agreement is signed by the Directors of the company. One or more of the company Directors also signs the agreement personally in their personal capacity as Guarantor. This means that if the company defaults on any rental payments, the Guarantor will have to indemnify the Landlord for the outstanding rent.

As with most residential tenancies, company lets are usually for a fixed period of 6 or 12 months.

As the tenant in a Contractual Tenancy is a company, the agreement falls outside of the provisions of the Housing Act 1988. There is usually a clause in the agreement which states that the Housing Act 1988 will not apply to the tenancy. Therefore, the tenant cannot rely on the provisions of the Housing Act 1988 for terminating the tenancy.

In the current economic climate the tenant company may want to have a break clause in the agreement whereby it can end the tenancy, should it start facing difficulties. Without this, the tenant is tied into the agreement until the end of the term.

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