For landlords, there’s more than one way to generate a return from a property.
Alongside the traditional private rental model, corporate lets can offer a different route. Longer-term agreements, reduced day-to-day management and, in some cases, more predictable rental income can all make them an attractive option for landlords looking to diversify how their properties are let.
They can also support a much wider range of housing needs, whether that’s accommodation provided through a business, a housing association or a local authority.
The challenge is that the arrangements sitting behind a corporate let don’t always fit neatly within conventional buy-to-let criteria. Longer agreements, different relationships between landlord, corporate tenant and occupier, and alternative rental structures can all add layers to a case.
At CHL Mortgages, that’s exactly the kind of complexity we believe specialist lending should be built to deal with. That’s why we’ve taken a fresh look at our approach to corporate lets and made a number of significant changes designed to give you and your landlord clients more flexibility.
Looking beyond a three-year agreement
One of the biggest changes is the extension of our existing three-year maximum term for a corporate let agreement.
We’ll now consider agreements for longer than three years, provided they’re for less than 21 years and end before the mortgage term expires.
That’s a substantial shift.
The corporate let market can involve agreements that run for considerably longer than three years, particularly where a landlord is working with a local authority or housing association.
By allowing longer corporate let agreements within these limits, we can take a much more flexible view.
It’s an approach designed around the realities of more complex letting arrangements, giving brokers greater scope to support landlords entering into longer-term corporate agreements.
More flexibility in how corporate lets are structured
But there’s more to a corporate let than just the length of the agreement.
In a conventional buy-to-let arrangement, the rent will normally pass from the occupier to the borrower. With a corporate let, there’s usually another party in the middle. The property could, for example, be leased to a housing association or local authority, with the end occupier paying rent to that organisation, which then pays the borrower.
We’re expanding our criteria to allow for this type of arrangement, meaning we can now support cases where the occupier pays rent to the corporate tenant, which then pays the borrower. The corporate agreement and any onward tenancy or licence will need to meet our Acceptable Lettings Policy, including the restrictions we have around further letting by the end occupier.
It might sound like a technical change, but in practice it gives us greater scope to support different corporate let structures. Rather than expecting a corporate let to behave like a conventional tenancy, our criteria can better reflect the structure that genuinely exists.
Supporting a wider range of occupiers
That same thinking applies to the end occupier.
We’re also broadening the proposition to support a wider range of occupiers across different corporate let arrangements. That could include social housing provided through local authorities or housing associations, as well as accommodation provided by established companies for their employees.
It gives us greater scope to support these types of cases, and for me, that’s what specialist lending should be about. Understanding the different ways landlords operate and having a proposition that gives brokers more options when a case doesn’t fit the standard mould.
Extending our support for rental guarantee schemes
We’re also extending our approach to rental guarantee schemes.
We can now support schemes where the source of the guarantee can be clearly traced. That could be government-backed funding paid through a local authority, or an established corporate entity providing longer-term or temporary accommodation for its employees.
It gives brokers another route for clients using more specialist letting arrangements and broadens the range of corporate let cases we can consider where the source of the rental guarantee is clear.
Corporate lets, built for complexity
There’s a reason we talk about CHL Mortgages being built for complexity.
Complexity isn’t only about unusual property types or complicated borrower structures. Sometimes it’s in the letting arrangement itself – who’s leasing the property, who ultimately occupies it, where the rent comes from and how all of those relationships fit together.
Corporate lets bring those elements into the same case. With our expanded criteria, we can support a much wider range of corporate let arrangements.
For brokers, that means more options when a case doesn’t fit the conventional buy-to-let tenancy model.
So, if you’ve got a landlord considering a corporate let, whether that involves a business, housing association, local authority or a more complex rental structure, talk to the CHL Mortgages sales team.
We’ll take the time to understand how the arrangement works, what sits behind it and whether we can find a way to make the case work. And as you’d expect, every case will remain subject to underwriting and our lending criteria, including the requirements of our Acceptable Lettings Policy. Because when there are more moving parts, that’s exactly where complex buy-to-let lending should come into its own.
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