Every Contract a Property Company Needs in the UK (2025)
Last updated: February 2025
Legal Requirements for a Property Company
UK property companies must navigate a complex regulatory framework. Residential lettings are governed by the Housing Act 1988 (as amended), the Tenant Fees Act 2019, the Homes (Fitness for Human Habitation) Act 2018, and deposit protection legislation. Commercial leases are subject to the Landlord and Tenant Act 1954. Property development requires compliance with the Building Regulations 2010, Planning Acts, and the Building Safety Act 2022. Anti-money laundering regulations under the MLR 2017 apply to property transactions. The Renters (Reform) Act introduces further changes to residential tenancies.
Essential Contracts
The standard residential tenancy agreement under the Housing Act 1988, incorporating mandatory prescribed information, deposit protection, and How to Rent guide requirements
Long-form lease for commercial property covering rent, service charge, repairs, alienation, and whether the lease is inside or outside the Landlord and Tenant Act 1954
Contract with managing agents covering rent collection, maintenance, tenant management, and compliance with landlord obligations
Standard Conditions of Sale or Standard Commercial Property Conditions contract for property acquisitions, including title investigation and completion mechanics
Recommended Contracts
Governs property development partnerships, covering capital contributions, profit sharing, decision-making, and exit mechanisms
Contract with builders for development or refurbishment works, covering scope, price, programme, retention, and defects liability
Formal consent document for tenant alterations to the property, protecting the landlord's reversion and specifying reinstatement obligations
Loan agreement with development finance lender covering drawdown conditions, monitoring, and security over the property
Common Legal Risks for a Property Company
- Invalid Section 21 notices for residential tenancies due to non-compliance with prescribed requirements
- Deposit protection failures resulting in penalties of up to 3x the deposit amount
- Breach of the Homes (Fitness for Human Habitation) Act 2018 exposing the landlord to tenant claims
- Development cost overruns without proper building contracts with fixed prices or guaranteed maximum prices
- Anti-money laundering failures in property transactions leading to criminal prosecution
Industry-Specific Notes
The Renters (Reform) Act is fundamentally changing residential lettings — abolishing Section 21 no-fault evictions and moving to periodic tenancies. Property companies should prepare for these changes. For commercial leases, the code for leasing business premises (voluntary) promotes fair lease terms. Property companies should also consider the tax implications of holding property in a company vs personally, including the 3% SDLT surcharge and Section 24 mortgage interest relief restrictions.
FAQ
What mandatory requirements must be met before serving a Section 21 eviction notice?
Before serving a Section 21 notice, the landlord must have: protected the tenant's deposit in a government-approved scheme and served prescribed information within 30 days, provided the tenant with the current How to Rent guide, provided a valid EPC (Energy Performance Certificate) and gas safety certificate, complied with the Homes Act 2018 fitness requirements, and (in England) not committed any licensing offences. Failure to comply with any of these makes the Section 21 notice invalid. Note: Section 21 is being abolished under the Renters (Reform) Act.
Should a commercial lease be inside or outside the Landlord and Tenant Act 1954?
From the landlord's perspective, contracting out of the 1954 Act provides flexibility to redevelop or change tenants at lease end without having to prove statutory grounds for opposing renewal. From the tenant's perspective, being inside the Act provides security of tenure and the right to a new lease on terms set by the court if the landlord opposes. The decision affects property value, negotiating leverage, and long-term planning for both parties. Contracting out requires a formal warning notice and declaration process.
What anti-money laundering obligations does a property company have?
Under the Money Laundering Regulations 2017, property companies involved in buying, selling, or letting properties worth €10,000 or more per month must conduct customer due diligence (identity verification), carry out risk assessments, maintain records for 5 years, report suspicious activity to the NCA via SARs, and have written AML policies and procedures. Estate agents are specifically covered by the regulations. Failure to comply can result in criminal prosecution, unlimited fines, and up to 2 years imprisonment.
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