Corporate buy to let mortgages explained

A corporate buy to let mortgage is ideal for landlords looking to rent property to a business, rather than to individual tenants. 

In this arrangement, the tenancy agreement is between the landlord and the company. The company is responsible for paying rent and managing the property, while their staff are occupying it. This setup is common as businesses need accommodation for employees.

What is a corporate let?

A corporate let is a rental agreement where a limited company (or other organisation) rents a residential property from a landlord. The company, not the occupants, is the legal tenant.

The individuals living in the property are usually employees, directors, or contractors of the company. They do not have a direct tenancy agreement with the landlord.

This structure differs from a tenancy, where the agreement is between the landlord and the individual tenant. Corporate lets typically fall outside standard tenancy rules because the tenant is not a private individual.

Although the terminology is similar, corporate buy to let mortgages are different from limited company buy to let mortgages. The latter is simply a buy to let mortgage for a landlord operating in a limited company or special purpose vehicle (SPV) structure, their properties are still usually rented out to individual tenants. 

Who offers corporate buy to let mortgages?

Not all buy to let lenders allow corporate lets. In fact, many specifically exclude them due to the different legal and risk profile. As a result, landlords often need a specialist lender or product that explicitly permits letting to a business.

Lenders that do accept corporate lets will usually want to understand:

• Who the tenant company is
• What the company does
• How long the company has been trading
• If there are any break clauses in place
• Whether the occupants are employees or subtenants
• The expected duration and structure of the agreement

Why landlords use corporate lets

There are several reasons landlords choose to let to companies rather than individuals.

One of the main advantages is perceived stability. A well-established company can be seen as a more reliable tenant than an individual, particularly if it has strong financials and trading history.

Corporate lets can also offer:

• Reduced void periods, especially if the company has an ongoing need for accommodation
• Potentially higher rental income in some cases
• Less day-to-day tenant management, as the company may handle internal affairs themselves

This model is particularly popular in areas with strong demand from contractors, such as cities with major infrastructure projects, financial centres, or large corporate hubs.

Risks, lender concerns and requirements

Despite the potential benefits, corporate lets introduce additional risks from a lender’s perspective.

One key issue is control over occupancy. The landlord may not know exactly who is living in the property at any given time, as the company can rotate staff in and out.

There may also be:

• Higher wear and tear due to multiple or short-term occupants
• Increased risk of the property being used in a way that breaches mortgage or insurance conditions
• Complex legal situations if the company defaults or becomes insolvent

Because of this, many lenders either avoid offering corporate let mortgages, or impose strict conditions.

Lenders may also place restrictions on the types of businesses that can rent the security property. This criteria varies from lender to lender, but many prefer home-grown British businesses to occupy corporate lets.

Lastly, some landlords may require specialist insurance that explicitly allows letting to companies, multiple/rotating occupants, and potentially higher levels of wear and tear. However, standard buy to let insurance policies can be applicable in some cases. Regardless, failing to disclose the nature of a corporate let arrangement to an insurer could invalidate the policy.

Tenancy agreements and legal structure

Corporate lets do not usually use standard tenancy agreements. Instead, they are typically structured as common law tenancies. Many lenders are particular about this rule.

This has several implications. The agreement is governed more by contract law than by housing legislation, and the company is fully responsible for rent and compliance with the terms of the lease.

The occupants of a corporate let do not have the same rights as occupants bound by a standard tenancy. For example, there are no government-regulated tenancy deposit schemes for corporate lets, meaning that deposit disputes can be trickier to navigate.

Legal advice is essential when setting up corporate let agreements to ensure compliance and clarity, if this is unfamiliar territory.

Is a corporate buy to let mortgage right for you?

A corporate buy to let mortgage is a niche but valuable option within the wider buy to let market. 

As with any specialist area of property finance, working with a broker who understands lender appetite for corporate lets can make a significant difference in securing the right deal.

For the expert advisors at Commercial Trust, the tighter lender criteria often associated with corporate buy to let mortgages is not an obstacle. Contact them today to find the best rate for you.