Can a Limited Company Rent a Residential Property

At Towerstone Accountants we provide specialist property accountant services for landlords property investors and individuals earning rental income across the UK. This article has been written to explain can a limited company rent a residential property in clear practical terms so you can act with confidence. Our aim is to help you understand what applies to your situation reduce the risk of errors and know when it is worth getting professional support.

Yes, a limited company can rent a residential property in the UK, and this happens far more often than many people realise. It is common in business relocation, temporary accommodation for directors or staff, property investment structures, and specialist letting arrangements. However, while it is perfectly legal, renting through a company is not the same as renting as an individual, and there are important legal, tax, and practical differences that need to be understood.

People often ask this question for very different reasons. Some are directors wondering whether their company can rent a house for them to live in. Others are landlords considering letting to a company rather than a private tenant. Some are business owners trying to structure accommodation efficiently. The answer depends not just on whether it is allowed, but how and why the company is renting the property.

In this guide, I will explain clearly and practically whether a limited company can rent a residential property, how it usually works, the different scenarios where it is used, and the advantages and risks for both tenants and landlords. By the end, you should understand when this arrangement makes sense and when it can cause problems.

The basic legal position

There is no law in the UK that prevents a limited company from renting a residential property.

A limited company is a legal person. It can enter into contracts, including tenancy agreements, in the same way an individual can. This means a company can be named as the tenant on a residential lease.

However, the type of tenancy, the rights involved, and the protections available are often different when the tenant is a company rather than a private individual.

Company tenant versus individual tenant

This distinction is crucial.

Most private renters are individuals renting under an assured shorthold tenancy, commonly known as an AST. ASTs come with strong legal protections for tenants, including deposit protection rules and restrictions on eviction.

A limited company cannot usually hold an AST, because ASTs are designed for individuals who occupy the property as their only or main home.

When a company rents a residential property, the tenancy is usually a company let, sometimes called a contractual tenancy or common law tenancy.

This changes the legal balance significantly.

What is a company let?

A company let is a tenancy where the tenant is a company rather than an individual.

In a company let:

• The tenant is the limited company

• The property may be occupied by an employee, director, or client

• The tenancy is governed by contract law rather than housing legislation

This means the rights and obligations depend largely on what is written in the tenancy agreement.

From a landlord’s perspective, this can mean fewer statutory restrictions. From a tenant’s perspective, it means less automatic protection.

Common reasons a limited company rents a house

There are several common scenarios where a limited company rents a residential property.

One of the most common is director accommodation, where a company rents a property for a director or senior employee to live in, often due to relocation or temporary work arrangements.

Another is employee housing, particularly for short term assignments, overseas staff, or specialist roles where accommodation is part of the employment package.

Companies may also rent residential property for serviced accommodation, training purposes, or temporary housing during projects.

In property investment, some companies rent residential property as part of rent to rent arrangements, although this has its own legal considerations.

Can a director live in a company rented property?

Yes, a director can live in a property rented by their company, but this raises important tax implications.

If a company rents a house and allows a director or employee to live there for personal use, HMRC will usually treat this as a benefit in kind.

This means:

• The director or employee may be taxed personally

• The company may have additional reporting obligations

• National Insurance may apply

The tax treatment depends on whether the accommodation is wholly necessary for the job or primarily for personal benefit.

This is an area where people often assume incorrectly that company rental avoids personal tax. In many cases, it does not.

Is renting through a company tax efficient?

Sometimes, but often not in the way people expect.

If a company rents a property purely for business purposes, such as housing staff temporarily where it is necessary for work, the rent may be an allowable business expense.

If the property is effectively the director’s home, HMRC will usually see this as personal benefit provided by the company, triggering tax charges.

Using a company to rent your own home does not automatically reduce tax and can actually increase complexity and cost.

Mortgage and lender considerations

If you are a landlord, it is important to understand that not all residential mortgages allow letting to companies.

Many buy to let mortgages restrict tenants to individuals under ASTs. Letting to a limited company may breach mortgage terms unless the lender has given consent.

Some lenders are comfortable with company lets. Others are not. Always check your mortgage conditions before agreeing to rent to a company.

Ignoring this can put you in breach of your mortgage, which is a serious risk.

Insurance implications for landlords

Letting to a limited company also affects insurance.

Standard landlord insurance policies are often designed around AST tenants. Company lets may require different cover.

Landlords should inform their insurer if the tenant is a company. Failure to do so can invalidate cover.

Company lets can sometimes be seen as higher risk by insurers, depending on usage and occupancy arrangements.

Deposit protection rules

This is another area where differences arise.

If a company is the tenant, statutory deposit protection rules usually do not apply, because those rules are designed to protect individual tenants under ASTs.

Instead, deposit handling is governed by the contract.

This can be attractive to landlords, but it also means the tenancy agreement must be clear and fair to avoid disputes.

Eviction and notice periods

Because company lets are not ASTs, eviction rules are different.

There is no Section 21 process. Instead, termination depends on:

• The notice period set out in the contract

• Any break clauses

• General contract law principles

This can make it easier for landlords to regain possession, provided the agreement is properly drafted.

For companies, this also means less statutory security of tenure.

Length of company lets

Company lets are often shorter term than private residential tenancies.

Common terms range from six months to two years, although longer agreements do exist.

Because the arrangement is contractual, flexibility can be built into the agreement, but this requires careful drafting.

Can a company rent under an AST at all?

In limited circumstances, yes.

If a property is rented to a company but is clearly intended for occupation by a named individual as their main home, some landlords still use AST style agreements.

However, this can blur legal boundaries and create uncertainty. Many solicitors recommend avoiding ASTs where the tenant is a company and instead using a properly drafted company let agreement.

Clarity is essential.

From a landlord’s perspective, pros and cons

Letting to a limited company can have advantages.

Rent is often paid reliably, sometimes in advance. The tenant may be less emotionally attached and more businesslike. Eviction can be more straightforward if the contract is clear.

However, there are also downsides.

Wear and tear can be higher, especially if multiple occupants use the property. Usage may change over time. Mortgage and insurance restrictions must be managed carefully.

Company lets are not automatically better, they are simply different.

From a company’s perspective, pros and cons

For companies, renting residential property can provide flexibility and convenience.

It avoids buying property outright, keeps accommodation costs predictable, and can support recruitment and relocation.

The downsides are complexity, potential tax charges, and scrutiny from HMRC if arrangements look personal rather than business related.

Using a company to rent property should be driven by genuine business need, not just perceived tax advantages.

Rent to rent and company tenants

Some companies rent residential property from landlords and then sublet it, often as serviced accommodation.

This is legal in principle but highly dependent on permissions.

Landlords must give explicit consent, mortgage lenders must allow it, and local licensing and planning rules may apply.

This is a specialist area and not something to enter casually.

Councils and housing benefit considerations

Some companies rent property to house clients or service users under council backed arrangements.

These often involve specific contracts and compliance requirements. They are very different from standard private renting and usually involve close oversight.

What should be in a company let agreement?

A well drafted company let agreement should clearly state:

• That the tenant is a limited company

• Who may occupy the property

• How rent and deposits are handled

• Notice periods and break clauses

• Repair and maintenance responsibilities

• Restrictions on subletting or usage

Because statutory protections are limited, the contract itself is critical.

Common mistakes people make

One common mistake is assuming a company tenant is safer or simpler without checking mortgage and insurance terms.

Another is assuming tax savings that do not exist.

Some directors also fail to understand benefit in kind rules, leading to unexpected personal tax bills.

Clarity at the outset avoids most problems.

When renting through a company makes sense

Renting through a company often makes sense when accommodation is genuinely required for work purposes, such as temporary relocation or staff housing.

It can also make sense for landlords who understand company lets and have the right mortgage and insurance in place.

It makes less sense where the arrangement is essentially personal housing dressed up as a business expense.

When it does not make sense

It is usually not sensible if the goal is to avoid personal tax without genuine business need.

It can also be unsuitable for landlords with restrictive mortgages or who want the simplicity of ASTs.

Complexity without benefit is rarely a good trade.

Getting advice matters

Because company lets sit at the intersection of property law, tax, and employment considerations, professional advice is strongly recommended.

A short conversation with an accountant or solicitor can prevent costly mistakes later.

Final thoughts

A limited company can rent a residential property in the UK, and this is entirely legal. However, it changes the nature of the tenancy, the legal protections involved, and often the tax treatment.

For landlords, company lets can offer flexibility but require careful checks on mortgages and insurance. For companies, renting residential property can support genuine business needs but often triggers tax consequences if it provides personal benefit.

In my experience, problems arise when people assume company renting is a shortcut or loophole. When done for the right reasons and structured properly, it can work well. When done casually or for the wrong reasons, it can create more cost and complexity than it saves.

As with most property decisions, understanding the full picture before committing is the difference between a sensible arrangement and an expensive lesson.

If you want to keep going you may also find our guidance on do you pay tax on rental income and is there vat on rent useful. For a broader overview of rental income rules reporting requirements and ongoing responsibilities you can explore our rental income hub which brings together our property tax guidance in one place.