Landlords are being advised to look out for tenants who go away over the Christmas holidays and sublet their rental properties without consent.
According to research from Total Landlord Insurance there has been a 14% increase in the number of malicious and accidental damage claims received this year as a direct result of illegal subletting, through holiday rental sites such as Airbnb.
The firm believes that many travellers will be using such sites to book accommodation for their break over the festive period, a high season for renting out property, and whilst the majority of holiday rentals will be hosted responsibly, there will be cases where tenants sublet without the relevant permissions.
However some action is on the horizon. Airbnb has announced that it will limit hosts from letting properties for longer than 90 days without official consent in London from spring 2017 and property owners using the site will be notified when they are coming up to their limit and where to apply for an extension to let a property for longer.
Airbnb has taken action after receiving criticism from several different parties for supposedly allowing landlords to let properties via its platform for longer than 90 days a year, despite this being against planning rules. Concerns about longterm lets on sites like Airbnb centre around the relative lack of regulations that need to be followed and safety checks that need to be carried out when compared to a traditional let.
The Association of Independent Inventory Clerks (AIIC) has welcomed Airbnb’s announcement, noting it has been wise to react before any official action was taken against it. The inventory association has previously criticised landlords using short term lets websites for longer tenancies.
It argued that tenants and landlords leave themselves open to damage or financial implications due to the minimal checks and paperwork needed to let a property via a short term lets website. It pinpointed the lack of requirements for deposit protection and the unlikelihood of inventories being compiled as two of the biggest issues.
‘Short term lets are supposed to be short term for a reason and landlords who are not adhering to the rules could be putting the future of their investment at risk,’ said Patricia Barber, chair of the AIIC. She also called for the limit to be introduced in other UK cities such as Liverpool, Manchester, Bristol and Newcastle which also have high Airbnb usage.
One of the main problems is that the short term letting industry it is unregulated and Eddie Hooker, chief executive officer of Total Landlord Insurance, believes that it presents new risks for home owners and landlords. ‘Whilst off on vacation themselves, tenants may consider subletting to earn extra easy income, but according to findings from the National Landlords Association (NLA), almost half of tenants who sublet their property do so without their landlord’s permission,’ said Hooker.
He explained that subletting can breach a landlord’s mortgage terms and also invalidate their existing insurance policy so it’s vital for them to be aware of the problems it can present. ‘An increasing number of landlords are suffering accidental and malicious damage to their properties, generating a rise in claims, because tenants have sublet to another tenant,’ he added.
There are also examples of both landlords and tenants using Airbnb rentals as a complete business model, as short term lets often attract higher levels of rental income. Airbnb has recently changed its terms and conditions to prevent properties from being offered for more than an aggregate 90 days in any one calendar year unless relevant council permissions have been obtained.
The vast number of buy to let insurance policies insist that tenants are living at the property under assured shorthold tenancy agreements in order for genuine claims to be accepted.
According to Paul Shamplina, founder of Landlord Action who also works with Total Landlords Insurance’s parent company Hamilton Fraser, anyone can fall victim to a subletting scam.
He advises landlords to be on their guard when tenants are due to be vacating a property and to make sure that new tenants have been checked and a proper property inspection and inventory carried out.
Specifically regarding subletting, he advises landlords to look out for signs and speak to neighbours to find out if there is a high volume of people coming and going from the property and/or excessive noise.
‘Landlords who suspect their property has been sublet over the Christmas period should look at popular holiday websites to see if the property has been advertised. Most tenancy agreements include a clause that prevents subletting and, if this is the case, you should notify the original tenant of their breach of contract,’ he said.
