Why do Limited Companies face a tougher time with eviction? 

The Renters’ Rights Act means landlords operating as a company face different rules than landlord owners. 

By Tom Entwistle, LandlordZONE

A record share of new buy-to-let purchases in 2025 went through limited companies, drawn in by tax treatment that favours incorporation. What far fewer of those new company landlords appreciated is that the Renters' Rights Act has quietly rewritten the rulebook on possession. 

It means that corporate landlords are treated differently from an individual landlord operator when it comes to evicting a tenant.  

Some of the differences are straightforward and easy to understand. But some of it is; a lot less straightforward and a bit more nuanced than the available online guidance would suggest. For example, part of it, the personal liability for directors, barely features in landlord discussions at all.

This article covers the position in England. It is intended as general information for landlords and letting agents. It does not constitute legal advice. Landlords and company landlords should take advice from a qualified housing law solicitor.  

The incorporation boom meets a possession regime built around people

Paragon Bank's most recent landlord survey found that 63% of respondents now expect to buy through a special purpose vehicle (SPV), with take-up highest among younger landlords and a third of all landlords it seems are considering moving existing properties into a company structure. 

The tax logic behind that move is well documented on LandlordZONE. What is less often highlighted is the fact that Section 8 of the Housing Act 1988, as rewritten by the Renters' Rights Act, was drafted with individual landlords in mind. 

A company is a separate legal entity, an owner of property with no main residence (home) of its own, no family and no right of audience in its own court hearings. Each of those facts is very relevant when it comes to a limited company that needs its property back.

Ground 1 is simply not available to a company

Since 1 May 2026 when the RRA rules became law, a landlord with a genuine need to move into their own rental property can use Ground 1 to do so, provided the tenancy is at least twelve months old and four months' notice was given.

The definition of the members of the landlord’s “family” who can move in under this ground was widened by the RRA to include parents, grandparents, siblings, children and grandchildren, along with a spouse, civil partner or cohabiting partner.

None of these criteria help a corporate landlord. A limited company cannot have a main residence or a “principal home,” and it cannot have “close family members” either. 

The whole point of the corporate ringfence is to have the company's affairs legally separate from those of its directors and shareholders. So, any director who wants to live in a property owned by their company cannot, under the RRA rules, serve a Ground 1 notice hoping to find a work around. 

The only lawful route along these lines is via Ground 1A. It means selling the property to a director personally. But with the stamp duty land tax and capital gains tax involved with the transfer, between a company and its director, attracts a considerable amount of tax liability. Anyone considering this should get proper accountancy advice. 

Court representation 

This question is a little more nuanced than “you must hire a solicitor”.

It's often said that a limited company cannot represent itself in court and must always use a solicitor. That’s not entirely true. The usual litigant in person (LIP) rules don’t readily apply so it’s broadly right as a starting assumption, but the position is a little more complicated. 

Under Civil Procedure Rule 39.6, a company does need the court's permission to appear other than through a qualified lawyer. But permission can be granted, typically for a director or employee to appear on the company's behalf, provided the company has passed a proper board resolution authorising that person to act. 

Courts don't readily grant this permission for contested matters. A busy county court hearing a defended Section 8 claim is not necessarily the best setting, no matter how sympathetic the judge, that discretion will be exercised.

The safest assumption for any company landlord facing a contested possession claim is to budget for solicitor's fees. The other point is that costs recovery works differently too. Even where a company does appear without a lawyer, CPR 46.5 treats it as a litigant in person for costs purposes, capped at two-thirds of what a represented party could recover. 

What was, for many landlords, a low-cost accelerated process under the old Section 21 rules is now, for a company under Section 8, a proceeding where legal costs need to be budgeted for from the outset, win or lose.

Ground 1A and the twelve-month reletting trap

Ground 1A, the mandatory ground allowing a landlord who genuinely intends to sell to recover possession, is available to companies on the same terms as individuals. You need four months' notice, not possible in the first twelve months of a tenancy. It also requires the landlord (Company) to be able to show a genuine intention to sell if challenged. 

The mechanism that catches this out is the reletting restriction. Once a Ground 1A notice is served, the property cannot be relet, or even marketed to relet, until twelve months from the date of service. That’s regardless of whether the sale actually completes. 

If a buyer withdraws, or the price doesn't meet expectations, or the company simply changes its mind, the property must sit empty with no rental income for up to a year. Any attempt to relet early can result in the former tenant, or the local authority, applying for a rent repayment order, which is now up to two years' rent. For a company whose main or only income is from just one property's rent, this represents a big risk. 

The end of an informal resolution

Under the old regime, plenty of tenancies ended with a conversation between landlord and tenant, rather than a formal procedure. The landlord and tenant would agree terms, with a letter, email or text message confirming a moving-out date. 

Not anymore. The Renters' Rights Act closes that door for everyone. Attempting to end a tenancy by any means other than a valid Section 8 notice on the prescribed form now potentially constitutes an unlawful eviction or harassment under the Protection from Eviction Act 1977.

With local authorities able to impose substantial fines, a civil penalty of up to £40,000 as an alternative to prosecution, with examples already of around £35,000 for this offence, or they could pursue a criminal prosecution with an unlimited fine.

This risk isn't formally any higher for a company than for an individual, but the practical exposure often is. A local authority weighing up how much benefit of the doubt to extend is likely to take a different view of a professional corporate landlord, i.e., one with a limited company.

An informal text from a director, asking a tenant to leave “as a favour”, would very likely be judged in a different light against a standard of a professional operator, not a first-time landlord.

The angle most guidance misses

Directors can be personally liable. This is where the position for incorporated landlords genuinely differs from anything an individual landlord needs to think about. This point has had far less attention than the changes to eviction grounds.  

The Act extends personal liability to company officers. Where an offence under the housing legislation is committed with the “consent or connivance of,” or is “attributable to any neglect on the part of,” a company officer (director), a company secretary or other officer, that individual can be prosecuted or penalised alongside the company itself.

Rent repayment orders have been widened in the same direction. They are now extended to superior landlords and company directors specifically to close the loophole exposed by the Supreme Court's decision in Rakusen v Jepsen [2023].

This was where an intermediary company shielded the ultimate landlord from liability. This is no longer the case for a director (or individual landlord) who may have assumed that incorporating simply moved liability onto the company. This is worth remembering. A botched eviction can now follow the individual, not just the company.

Some key points:

- Ground 1 is not available to your company. If a director needs to occupy a company property, plan for a Ground 1A sale and take tax advice before serving any notice.

- Assume you'll need a solicitor for any contested Section 8 hearing. CPR 39.6 permission for a director to appear is discretionary, not a right, and costs recovery as a litigant in person is capped even when it's granted.

- Before serving a Ground 1A notice, be pretty sure of a sale. The twelve-month reletting restriction ban applies from the date of service, whether or not the sale completes.

- Never end a tenancy informally, for example, by text, email or conversation. Use the prescribed Section 8 form, correctly completed, for every ground you rely on.

- Keep the evidence, a paper trail of board decisions and management instructions relating to any possession action. This is now an important director’s personal protection, not just good corporate governance.

[Main image credit: Cottonbro Studio]