The subletting dilemma: how letting agents can help landlords

The subletting dilemma: how letting agents can help landlords

Subletting is marmite. Some landlords love it; others hate it. If all goes well then it can benefit everyone. But it can leave a nasty taste in the mouth when things go wrong. Below we reveal the common pitfalls and explain how, with a bit of helpful advice from their letting agent, subletting can be a landlord’s best mate.

The legal dimensions

Working out what’s legal and illegal when it comes to subletting is murkier than mud. Each case has its own merits. It all depends on the type of tenancy agreement and what clauses are included. 

However, the legalities usually hinge on whether a landlord has given the tenant permission to sublet a property. If a tenant is doing it behind their landlord’s back then it’s usually a breach of the tenancy agreement that could result in eviction. If the property is affordable housing then it could even result in prosecution and a fine. Ouch. 

But there are also circumstances in which subletting is fine. If a tenant has a fixed term tenancy, and there’s nothing preventing subletting in the contract, then landlord’s consent isn’t actually required.

It’s best practice, therefore, for agents to discuss subletting with their landlords before contracts are drawn up. Better to get everything in writing to avoid future squabbles or shenanigans. 

The case for subletting

While subletting is sometimes suboptimal, it can often be advantageous too. For example, if a normally reliable tenant is experiencing financial problems, then subletting a room could help them to pay their rent.

It’s also worth noting that ‘mesne tenants’ – the official term for tenants who sublet – have the same legal responsibility as landlords. They’ll need to perform right to rent checks, organise rent collection, cover any damages, and carry out necessary repairs. Subletting is therefore a great way for landlords to reap financial rewards with reduced responsibilities.  

So called ‘rent to rent’ plans – when someone rents a property with the intention of subletting from the start – can also work out if well intentioned. These plans offer landlords a guaranteed amount of rent for a set period so they don’t have to worry about vexing void periods. The amount offered is usually less than market value but the flipside is certainty.    

The case against subletting 

The problem, of course, is that for every reputable subletting tenant, and every reputable subletting company, there’s always the possibility of rotten apples. And that’s when problems arise. 

Landlords lose control over who lives in their property when they allow subletting; they might end up with bad subletting tenants or too many subletting tenants. This can lead to increased damage, overcrowding, unsanitary conditions, and a violation of the local council’s HMO (multiple occupation) rules. Not good. 

HMO rules complicate matters and could lead to fines of £20,000 or more. There are also additional responsibilities for HMO landlords and increased fire regulations. Therefore, it’s vital to tell your landlords what requires an HMO licence: three or more unrelated people sharing a kitchen or bathroom, or five or more occupants in a property of 3 storeys plus. 

Subletting could also be a breach of the terms and conditions of a landlord’s mortgage or insurance conditions. It could lead to problems if a landlord wants to terminate a tenancy but a subletting tenant wants to stay put, too. The latter can cause a right royal ruckus. 

How agents can help out

Although letting agents can’t give legal advice, they can still help landlords to avoid common mistakes. For example, they can warn your landlords about inadvertently creating a legal relationship with a subtenant by collecting rent directly. The mesne tenant should always shoulder this responsibility.  

The main way letting agents can help, however, is to be their landlords’ eyes and ears on the ground. Carry out regular property inspections and look out for the tell-tale signs of multiple occupancies: additional clothing, sleeping bags, excess rubbish, multiple toothbrushes, extra suitcases etc.

Subletting scammers – those who sublet the property without permission for a higher rent – are a real problem, especially as over 3 million people live as unofficial tenants in the UK. These unscrupulous scammers will often do anything to make a buck, including turning good landlords’ properties into multiple occupancy bedsits.

The importance of tenant referencing

Remember that prevention is always better than cure. Agents can therefore do their landlords a solid by spotting bad eggs (and cracking the problem) before events get out of hand. The best way to do this is through uber-rigorous tenant referencing processes.

The final word

Overall, if a tenant has been fully vetted, and your landlord understands the risks and rewards, then subletting could be safe sailing. However, always make sure that the tenancy agreement is explicit and includes any limitations. And never take a chance on a chancer. 

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