Owning rental property through a limited company can have its advantages, but beware of additional rules that apply. This month, Anna Pettinger demonstrates how landlords can be caught out by the Companies Act…
I own multiple rental properties in a limited company. Despite providing my tenants with the usual prescribed information, I have been accused of not complying with the Companies Act. What should I be doing differently to serve valid notices?
Although we don’t see many cases where limited companies own properties (especially individuals operating as limited companies), there are reasons why it can be favourable for landlords. However, a few extra rules apply.
A notice or possession claim can be defended on technicalities, unrelated to housing law, that concern how documents are signed and increasingly, tenants facing eviction are being advised of these by housing officers.
As a brief overview, the Companies Act 2006 states that documents issued on behalf of a company only become valid by:
- The affixing of its common seal
- The signatures of two people authorised to act for the company or a director’s signature made in the presence of a witness who attests to it.
There are cases where Section 21 notices have been considered invalid because the prescribed information given in relation to the deposit protection scheme had not been completed in accordance with the Companies Act. In other words, the prescribed information certificate did not contain the signatures of two authorised officers or one director and a witness.
Whilst how a document is executed may seem trivial, it can lead to very costly and lengthy delays to possession hearings. If you do not serve valid prescribed information, your tenants could claim compensation and this can cause major issues for a landlord.
The regulations also relate to the tenancy agreement, which is a legally binding contract, entered into on your company’s behalf. It is, therefore, vital when signing documents that they are executed properly and you are fully aware of your obligations. Failure to do so could leave you open to a minefield of problems and difficulties obtaining possession of your property.
To find out more about the specific legal requirements of limited company landlords, don’t hesitate to contact me. We can assist you with the provision of all necessary documentation and advise on the best course of action. Email: anna.pettinger@tayloremmet.co.uk
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