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The Impact of Subletting in the Private Rented Sector

Last Updated: 25/02/2016 10:38:30   Tags:

On many, many occasions I am asked whether “subletting” is illegal. It isn’t... it is a breach of contract however; understanding the correct definition of “subletting” helps. We take a property from a landlord, rent it out to a tenant and then the actual tenant “sublets” the property in return for money.
 
Technically the actual tenant will take on the responsibilities of the landlord;
If the actual tenant asks permission to sublet, the landlord / agent has some idea of what is going on and more importantly, of the kind of documentation (if there is any) being used between the actual tenant and  (let’s call them ) the sublessee. However, it is often through property inspections or an issue, that the landlord / agent discover that subletting has taken place.
 
That’s where the problems arise. The situations we come across often relate to the fact that the actual tenant has vacated and left behind the sublessee or the tenant is having problems with the sublessee who refuses to vacate. Remember, the sublessee does not have the rights the actual tenant has.
 
One of the growing concerns for agents at the moment is the impact of this new phenomenon that is Airbnb you may have stayed in a property which you booked through Airbnb. The UK is a big market for Airbnb, with over 81,000 properties listed on the platform here and 2.2 million tourists using the service to stay in Britain in 2015 alone. And it is very lucrative for an actual tenant who decides he is going to advertise the property on Airbnb and make a very nice profit. Birmingham Midshires have made it clear in their mortgage agreement that a sublet through Airbnb will be considered a breach of the mortgage agreement.
Another point for concern – and this time for the actual tenant – is Right to Rent. If the actual tenant sublets and is found to be taking money from an illegal immigrant, without having followed the Right to Rent checks, they will be liable for the civil penalty.


Consider the following :
Ensure that whomever is responsible for property visits is vigilant – it is not difficult to spot that another person – or people are residing at the property.
 
If you are aware that the actual tenant is subletting – ie; a company who takes on the property for a 3 year period to then sublet to professionals or students, check the paperwork they are using.
 
Have a clear understanding of the consequences if the actual tenant vacates leaving you with the sublessee who has no idea who you are. If the sublessee has signed a “licence agreement”, s/he does not have the protection afforded to them by an AST.
 
In short, this cannot be avoided, but pay attention, ask the right questions, be vigilant.