Breakthrough Spring 2017 | Page 37

More than just a safe address for micro companies
moon r ' us
Horizon
prism & CO
Astro Nuts INC
any
micro
manics LTD
Satellite city
Space LTD
Rob ' s robots

What is a virtual tenancy ?

More than just a safe address for micro companies

People need space to live , businesses need space to work , technological advances mean that many businesses ’ space needs are minimal . In an increasingly digital economy , certain businesses – especially fledgling or smaller businesses – can be run from a single laptop . This could be anywhere from a coffee shop to the entrepreneur ’ s kitchen table .

All businesses need a postal address , however , and those registered with Companies House need a registered office with a physical address . Using a home address may not be appropriate or desirable even if that is where the company is run from . A virtual tenancy gets around this problem – enabling a company to have an address without the expense of actually owning or renting a physical property that they do not need .
A virtual tenancy can be a lease of a small space , or even just a licence to use an address , with a contract to provide services . It differs from a traditional lease in that a tenant does not have to occupy the actual space and may not be able to . For example , leasing a post box would give a tenant a postal address but could not be used as an office . This post box could be in the common parts of a building already let by a landlord or could be in an unused room .
Michael Goldfinch paralegal , Wright Hassall LLP ’ s Science Parks team
Michael advises on the development and ongoing management of various science and technology park sites . Wright Hassall LLP is a Business Affiliate of UKSPA
A registered office needs to have a physical address large enough to enable someone to inspect the company records . This could be just a plaque on a wall adjacent to a reception area , enabling a landlord to let a small physical area to a large number of virtual tenants .
What do virtual tenancy landlords need to do ?
The landlord needs to provide an address where the tenant can receive post , either storing it for the tenant to collect , or forwarding it to them .
For a more comprehensive virtual tenancy , the virtual landlord provides somewhere for the company records to be held , e . g . at reception in a building . This costs more than a simple mail drop service , and will depend on the location of the registered office and the credibility of the landlord . For the average level of service , science and innovation parks can secure £ 50 – £ 75 pcm while exclusive locations demand more than that .
Why virtual tenancies ? Tenants
• It is a cost effective way for tenants to comply with Companies House legal guidelines and requirements .
• Tenants acquire credibility by association with the location .
• Virtual tenancies can give the impression that the tenant company is bigger than it really is .
• If cashflow is constrained , a tenant can save money by moving from a physical tenancy to a virtual tenancy without customers noticing a change in address . Landlords
• Virtual tenancies are an efficient revenue stream .
• They require little to no set-up costs and take up only a small amount of physical space .
• In light of the low costs the income generated is almost entirely profit .
• A downsizing tenant can be retained while their business recovers .
spring 2017 | UKSPA breakthrough | 37