The dangers of tenants sub-letting

The dangers of tenants sub-letting

This year’s Budget outlined plans to make it illegal for private sector tenancy agreements to include clauses that prevent the sub-letting of the property. This appears to be an ill-thought out, knee-jerk reaction to try and alleviate some of the pressures on the PRS due to a lack of new homes being built nationwide, and there are various problems arising for both tenants and landlords if tenants are allowed to sub-let.

Here are just a few of the issues:

1) The landlord loses control over who is living in the property

2) As a result of above, there could be issues relating to anti-social behaviour, a lack of security for the property and a lack of correct contact information for current tenants (in case of emergency or access requirements)

3) The original tenant will not be sufficiently well informed to ensure the sub-letting tenant receives all the correct information when they move in (whereas it is mandatory for us to supply a check-in pack to all original tenants at check-in). The sub-letting tenant would also lack a proper lease

4) The sub-letting tenant is at the mercy of the original tenant e.g. if they pay six months’ rent upfront to the original tenant but the original tenant then decides to stop paying the landlord. There is also the risk of the sub-letting tenant not having a proper lease

5) There is the risk of the sublet being illegal (e.g. a four bed flat with a HMO for four could be sub-let to five people, making the landlord a criminal - unbeknown to him!)

6) There could be issues with council tax and utility accounts and debt collection if no-one is sure who lives there

7) The original tenant presumably in such cases becomes the ‘landlord’ in the contract between him/her and the sub-letting tenant, so there is also the issue of whether the original tenant takes responsibility for paying the sub-letting tenant’s deposit money into a Tenancy Deposit Scheme (which is mandatory). Who then would be liable for non-placement of the funds?

8) Landlords are being pushed to be responsible for checking the immigration status of all tenants. Who will be responsible for checking the sub-letting tenants’ credentials?

9) Will the original tenant be liable to declare their revenues and costs given that such a venture would be similar to a BTL landlord, who then completes a self-assessment tax return? Will the original tenant do the same? Will the original tenant have to register as a landlord or prove that they are a fit and proper person to do so?

So many unanswered questions, and it would require separate Scottish legislation of course. The way it is worded in the budget report suggests that clauses requiring the landlord’s consent for sub-letting could still be allowed and only those that expressly prohibit it would be banned. However the Scottish and UK Governments have both spent years trying to regulate and professionalise the private rented sector, and to us this seems like a huge step backwards – as well as a ‘smoke and mirrors’ policy to cloud the real issue which is the lack of sufficient housebuilding across the UK.

Steve Coyle – Cullen Property’s operations director.

 

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