It is believed that many rent to renters are operating without the landlord’s knowledge or consent, according to LetRisks, a provider of landlord insurance and tenant referencing.
It says that some tenants have purportedly taken on a tenancy agreement of multiple properties, then sublet the properties to unsuspecting third parties, who are unaware of the true situation.
It is not usually in the landlord’s interests to agree to a rent to scheme because there may be difficulties in obtaining possession as there is no contractual relationship between the landlord and the actual occupier.
As tenants find it difficult to find rental accommodation the problem of subletting property without consent, has increased within both the private rental market and the social housing sector.
In a recent investigation, HJK, a specialist fraud investigations company, found that in 8% of the social housing tenancies they investigated, the tenant had a mortgage, bank account, active credit or utility bills registered at another residential address.
Illegal subletting can take various forms, from the tenant that signed the tenancy agreement subletting rooms out to various other tenants to using it as holiday lets, instead of living at the property. It can also involve a tenant letting a property and then renting it on at a higher price, or tenants renting a property and sub letting it to criminal gangs, who use the property for illegal activities, perhaps drugs.
Most tenancy agreements will contain a clause preventing sub letting. Traditionally it has been regarded that a person who is sub letting is a tenant, who for a one off reason has moved out and granted a sub tenancy. This is incorrect if the landlord has not been approached and granted permission.
The firm is warning that the tenant is in breach of the tenancy agreement and the landlord can issue possession proceedings for breach of tenancy. The landlord, however, would need to prove that the tenant has illegally sublet. In this situation, possession proceedings can become costly, as proceedings are brought using discretionary grounds. The Court may refuse to grant possession if the rent is paid and no financial loss suffered.
‘There is nothing unlawful about taking a tenancy and subletting. Indeed, many commercial tenants are landlords to a sub-tenant. But Rent to Rent businesses are growing and exploiting both tenants and landlords,’ said Alexandra Sollohub of PainSmith solicitors.
Michael Portman, managing director of LetRisks wants landlords to be aware of this and to seek advice if they discover that their property is being sublet without permission, as all sorts of problems can arise.
‘For example the landlord has no control over the occupiers or their actions, but may be pursued if noise or nuisance arises. Many organisations sub letting include the right to carry out repairs and maintenance and then deduct the cost from the rent, again a situation over which the landlord has no control. And if the sub letter goes bust, the landlord has no contract with the occupier and may experience difficulty repossessing,’ he explained.
LetRisks says that landlords should carry out thorough pre tenancy checks and be clear who will be living at the property but appreciate the difference between one off subletting for innocent reasons such as a tenant moving out and his brother moving in, and profit making professional sub letters.
If a landlord discovers that a property is being sub let without permission he should take legal advice. Landlords can take our insurance to cover such instances. Good quality policies will include cover for legal expenses incurred in gaining possession for breaches of the tenancy agreement.
