Confusion Reigns Over Tenant Sub-Letting Proposals

Thursday, April 9, 2015

Landlords And Letting Agents Can Stop Tenants Sub Letting

Landlords And Letting Agents Can Stop Tenants Sub Letting

Housing Minister Contradicts Government Sub-Letting Proposals

There is already a great deal of confusion and resentment surrounding the controversial proposals to allow the sub-letting of rental properties by tenants, announced by the Chancellor of the Exchequer, George Osborne MP, during the pre-election budget, last month.

The proposals were announced by Mr Osborne during the Spring 2015 budget, without consultation with representatives from the UK’s private rental sector, industry watchdogs or campaigning organisations, causing a great deal of confusion concerning the exact detail of the ill thought out proposals, especially where conforming to current housing and private rented sector legislation.

On page 51 of the Budget Red Book, published after the Chancellor’s budget speech, it states:
“ The government is committed to make it easier for individuals to sub-let a room through its intention to legislate to prevent the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting or otherwise sharing space on a short-term basis, and consider extending this prohibition to statutory periodic tenancies.”

This proposed sub-letting legislation would create a host of problems for landlords and letting agents, including conforming with rules covering landlord insurance, buy to let mortgage lending criteria and current housing legislation, as they would effectively lose overall control of rental properties as the residing tenants would be empowered to sub-let part or all of a property they themselves were renting.Current Government Housing Minister, Brandon Lewis MP has publicly contradicted the proposal to allow the sub-letting of rental properties by tenants, by providing The Guardian newspaper with apparent “clarification “.

The published clarification reads:

“Tenants should be able to ask for permission to sublet their home without expecting a blanket refusal in every case – but landlords should also have the right to know who is living in their property. Our proposals would mean a tenant could ask for this permission under the model tenancy agreement, with landlords having the right of refusal offering reasons for that decision and within a reasonable time frame.”

This statement suggests that letting agents and landlords will still have the power to prevent tenants from sub-letting part or all of rented properties. However it also causes greater confusion for landlords and letting agents raising a few very important questions including:

  • What is the difference between the sub-tenant and a lodger?
  • Will tenancy agreements have to allow sub-letting or would it be a case of sub-letting being allowed only with the landlord’s permission?
    • What would be deemed reasonable?
  • Would tenants who are sub-letting be considered to be the landlord for the purposes of insurance, tenancy deposits, gas safety certificate, energy performance certificate (EPC), Section 21 notices and immigration checks?
  • Would subletting tenants be responsible for conforming with Housing Health and Safety Rating System (HHSR), and maintenance of the property in the portion of the property they are sub-letting?
  • How would such legislation interact with local authority landlord licensing – would a tenant who sublets also require a licence?
    • Would a reasonable cause to refuse a sub-let come under selective licensing?
    • Who will be held responsible for general landlord breaches by the sub-letting tenant?
  • What happens when the original tenant who sublets part of their rental property absconds, leaving behind the sub-tenant?
    • Could the landlord regain possession of the house, even if they don’t have a contract with the sub-tenant themselves?
    • What rights to occupy would the sub-tenant have?
  • Will this legislation also apply where a tenant moves in a partner, rather than renting out a room?
    • Can leases still forbid this or require landlord permission/change of tenancy?
    • What happens if the original tenant leaves and the partner stays?
  • Would a landlord renting out a property that is subsequently sub-let then find that the property is classified as a House of Multiple Occupation?
  • Who takes responsibility for any anti-social behaviour carried out by a sub-tenant?
  • Would tenants who sub-let be subject to provisions within the Deregulation Bill on retaliatory evictions?

Landlords who discover that tenants are sub-letting their rental property could be breaching the terms of necessary landlord insurance policies, and possibly even the conditions of Buy To Let Mortgages, depending on the strict criteria laid down by the lenders, as the landlord may not be aware of who exactly is living in their rental property.

Landlord organisations are already attempting to seek further clarification from the department for Communities and Local Government, (DCLG) because if the controversial sub-letting proposals get the go ahead it will thrown up a magnitude of problems for landlords and letting agents operating in the UK’s private rented sector.

This was written by Mike Clarke. Posted on at 11:02 am. Filed under Insurance, Landlord News. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.