The rise of corporate tenancies

Emma Garfitt, Partner in the Landlord Financing & Conveyancing team at Blacks Solicitors LLP, explains the changes and why many landlords are looking beyond the Renters' Rights Act.

What is a corporate tenancy, and why is it becoming more popular?

A corporate tenancy, sometimes called a common law tenancy, is granted to a company instead of an individual. The landlord grants the tenancy to a corporate body, such as a housing association, local authority, social housing provider or relocation company, which may then let individuals occupy the property under separate tenancy or licence arrangements.

Landlords have long valued the flexibility of corporate tenancies, and that flexibility has become more appealing since the Renters' Rights Act 2025 came in. Under the new regime, fixed-term assured tenancies have been abolished and all assured tenancies are periodic, alongside wider changes to possession, compliance obligations and rent increases.

Why corporate tenancies fall outside the Renters' Rights Act

Unlike assured tenancies granted to individual occupiers, corporate tenancies generally fall outside the Renters' Rights Act. To be an assured tenancy under the Housing Act 1988, a tenancy must be granted to an individual who occupies the property as their only or principal home. A company can't meet that test, so a tenancy granted to one falls outside the assured tenancy regime and many of the Act's reforms.

Because of this, some landlords are looking at corporate tenancy structures to get more contractual certainty and longer-term arrangements.

Benefits

Corporate tenancies can have genuine fixed terms, usually three or five years, with break clauses where appropriate. That gives landlords more certainty over occupation and rental income.

In many arrangements, housing associations, local authorities or specialist accommodation providers agree to pay rent whether or not the property is occupied, and that guaranteed income appeals to some landlords.

Dealing with a single corporate tenant can also make rent collection simpler and reduce day-to-day management. But guaranteed rent isn't the whole picture. Landlords should still check the corporate tenant's financial strength, how the property will be used and any occupation arrangements before signing up.

Risks and considerations

Landlords shouldn't assume a corporate tenancy is a risk-free alternative. These arrangements come with their own legal and practical issues, especially where a mortgage lender is involved.

For example, a landlord might grant a tenancy to a housing association, which then houses individuals or families. The landlord's direct relationship is with the housing association, but it is still important to understand who actually lives in the property and what their legal status is.

Mortgage lenders will usually review the tenancy agreement and any proposed sub-tenancy arrangements, looking past the corporate tenant at the wider occupation structure and how it affects their security.

Where a property is let on an assured tenancy, lenders can usually rely on the statutory possession rights in the Housing Act 1988. Those protections may not work in the same way under a corporate tenancy. In particular, Ground 2 of Schedule 2 to the Housing Act 1988, which lenders often rely on in possession proceedings, doesn't apply where a corporate tenancy structure is used, so recovering possession can be more complicated in practice.

For this reason, lenders commonly require corporate tenancies to be limited to three or five years and to include properly drafted break clauses. These help protect the lender's ability to recover possession if it needs to take enforcement action during the term.

The tenancy agreement should also set out repair and maintenance responsibilities clearly, because corporate tenancies don't automatically allocate them the way many residential tenancies do. Clear drafting at the start helps avoid uncertainty and disputes later.

Due diligence

Before entering into a corporate tenancy, landlords should know:

• who the corporate tenant is

• how the property will be used

• who will actually live there

• whether any sub-tenancies or licences will be granted

• whether the arrangement meets the lender's requirements

• what happens if the tenancy needs to be ended.

Corporate tenancies can look straightforward, but the structure behind them can have significant legal and practical consequences. Doing proper due diligence at the outset can prevent costly problems later.

In summary

Since the Renters' Rights Act reforms, corporate tenancies have become more attractive, with possible advantages such as fixed terms and guaranteed rent. But they work under a different legal framework, with risks relating to occupiers, lenders and the corporate tenant itself.

Landlords should approach them with the same care as any significant property investment. Specialist legal advice can help make sure the structure achieves what the landlord wants commercially while protecting both the landlord's interests and the lender's security.

For more information, visit www.lawblacks.com