Corporate lets gain favour amongst landlords

Corporate tenants are becoming increasingly popular with buy-to-let landlords, according to research from specialist buy-to-let lender Mortgage Trust.

A Mortgage Trust survey revealed that 27% of landlords target the corporate tenant market when letting their property. This has jumped from 14.4% since the beginning of the year.

Couples still remain the most desirable tenants, with just over half of landlords (52%) claiming they target this market, followed by single people (34%) and families not on housing benefit (28%). However, the percentage of landlords claiming that they target these tenants when marketing their properties has fallen since January.

The growth in the popularity of corporate tenants reflects the financial benefits that this market offers. Lettings are usually arranged over periods for longer than a year and as the rent is being paid by a business, there is less chance of the tenant defaulting.

Mortgage Trust managing director John Heron says: ‘Corporate tenants offer landlords stability and they also tend to pay above average rents because they demand high quality properties and want the right locations for their employees.

‘This market is going from strength to strength as more businesses turn to the private rented sector to house employees that may have to work on a short-term contract away from home or from another country. It’s a cost effective alternative to these companies actually owning property.’

However, landlords looking to let to corporates have to ensure that their property is of a high standard. Mark Horak, lettings manager at Andrew Reeves & Co’s Belgravia office, says: ‘These properties have to be furnished so that the tenant can literally move in, you need to supply everything apart from the food! They also need to be furnished to a high-specification.’

Top tips for letting to corporate tenants

Location – is your property near office developments? Has it got good transport links and local amenities. Corporates want property that is convenient for their employees to get to work, but is also a nice place to live.

Upgrade – Businesses want property that is fully furnished and that tenants can simply move in to straight away and start living. This includes items such as towels and bed linen, in addition to the standard items like televisions and stereo systems.

Contract - The type of letting agreement corporates want differs from company to company. Some businesses will want to let the property for a long-period, while others will want short-term lets. Alternatively, a company may want just one tenant for the length of the contract, while another may ask that the tenant will constantly change during the length of the agreement. Make sure you specify the type of deal you want.

Deposits – Some businesses will pay an upfront deposit, but some firms simply guarantee that they will reimburse landlords for any repairs needed. Make sure you’re aware of the policy that the company you’re dealing with operates.

Agents – It’s unlikely that major corporations will deal with individual landlords. Instead, they will work with a lettings agent that has a number of properties and landlords on its books. It may be worth signing up with an agent if you intend to target the corporate market. It may be more expensive, but could be beneficial in the long-term.