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Problems about renting a property to a limited company

flatsHere is a question to the blog clinic from Pat who is a landlord

I am a landlord and about 15 months ago I rented a flat to two individuals who insisted the tenancy was set up in the name of their company, a newly formed IT business, on a 12 month contract.

Everything seemed good and proper, they paid six months rent in advance, and then rent was paid on time until the end of the 12 months. However, then the rent stopped and I could not contact the company directors, no keys were returned. I assumed they had left and visited the flat but the building porter told me that it was still occupied.

About a month later, I received an email from one of the directors saying that the company had closed but there was an employee living in the flat with his wife but did not give his details (he said the occupant had my phone and email). I am now receiving money into my account but it is much less than the asking rent, I have no idea who is paying it.

1  If I want to serve notice, who do I serve it on?
2  By accepting the lower rent am I entering into a contract with the occupier?
3  Can I put up an Abandonment Notice and change the locks?

I am rather stuck at the moment, please help. I certainly will not be renting my property to a company again.

When renting to a limited company you need to remember, that the tenancy is not an assured shorthold one as the Housing Act 1988 which set up ASTs only applies to living people.  So you cannot use the eviction process used for ASTs, eg section 21 and section 8 notices.  You need to use the slightly different procedure used for common law / unregulated tenancies.

Here are your answers:

1. You need to end the tenancy using an old style Notice to Quit and then issue proceedings based on that notice.  I  describe the procedure in my Landlord Law eviction kit.

The notice to quit should be served on the company at its registered office address.  You can find out what this is from doing a search  at Company’s House, which you can do online.

2. It is difficult to say for sure without further information, but before the notice to quit has been served, you will probably be deemed to be accepting the money from the occupier on behalf of the tenant.

However after your notice to quit has been served you need to make it clear that if any money is accepted, this is as ‘mesne profits’ only.

3. No.  An abandonment notice has no legal status and if you do this you will be committing a civil and criminal offence under the Protection from Eviction Act 1955.  See this article.

On a general note, letting to limited companies is fine, but it is a good idea to take a personal guarantee from the directors as a condition of renting. Then if anything happens to the company, you still have someone to sue for your rent.

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Important note. If you are reading an old post, remember that the law may have changed since it was written.

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About the post author:

Tessa Shepperson

Tessa is a lawyer and specialises in creating products and services which help landlords and letting agents learn and understand landlord & tenant law. For example, she runs the Landlord Law website (now in its 14th year) and is a director of Easy Law Training Ltd and Your Law Store. Tessa also sits on the Property Redress Scheme Council. When not working she enjoys reading, cooking and messing around on the computer. You can also find her on Google

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Tessa is an English lawyer specialising in residential landlord and tenant law.

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