Landlord Knowledge - The Home of Savvy Buy to Let Property Investors

The Budget – ‘A nightmare in the making’

So says Alan Ward, Chairman of the RLA. Strong words, written in response to the Governments’ plans to out-law from tenancy agreements clauses prohibiting sub-letting and to form a ‘sharing economy’. Whilst I could understand the ethos of much of what the Government is trying to do, it is impossible to see what, if any, thought this has had, which makes it very difficult to provide any defence of the logic behind such a move.

The Budget - 'A nightmare in the making' Landlord Knowledge
Landlords have genuine reasons for not wanting tenants to sub-let. Their tenants may not undertake the rigorous checks that landlords are expected to, by Accreditation and Licensing schemes. His insurance may require that he lets to working people only; if he has purchased the property on a buy-to-let mortgage, there may again be a stipulation that it is let to working people. Sub- letting could very easily lead to over-crowding and therefore excessive wear and tear of the property. Will the tenant expect a deposit and if so, will it be properly protected? So this is not landlords being difficult with tenants and averse to them sub-letting rooms they don’t need. It is landlords following what has been the standard advice for many years – interview prospective tenants, undertake credit referencing, ask for references and build a good landlord-tenant relationship. How is this possible if sub-letting is not prohibited?

What if the sub-tenant has perhaps come from abroad? Landlords are expected to check the immigration status of their tenants. This has caused great stress to landlords who feel they are not Immigration Officers; will their tenants, in their eagerness to ‘help’ a friend or family member, or even just to gain an extra income, be as vigilant as the prime landlord must be? If a room is taken by someone without the legal right to be in this country, will the prime landlord be held responsible and face a hefty fine, or the sub-landlord, possibly without the resources to pay the penalty.

It becomes a minefield when the tenant leaves the property, leaving the sub-tenant in situ and without giving the landlord any notice. Given that the landlord may not know there was a sub-let, he arrives at the property to discuss why there are several weeks arrears and finds someone he does not know, who he may not have taken as a tenant, living in his property and telling him he has paid rent. The landlord cannot accept rent from him because to do so would establish a new tenancy; to recover his property, he must therefore issue notice and go to court to evict. A costly and stressful situation with no recompense to him for the loss of rent he has suffered.

If sharing is seen as a positive, then it must be that though the clause to say ‘no sub-letting’ is removed, it should be replaced with a clause that says ‘If the tenant wishes to sub-let, he should seek permission from the landlord, which will not be reasonably refused’. ‘Reasonably refused’ could, if appropriate, include insurance and mortgage issues. The landlord could also ask that he be party to the interviewing, the referencing etc.

My son has a very old house with cellars. The 1811 census shows that a family lived in the cellar (there is quite a nice cast iron fireplace and an alcove that almost certainly housed a range); over-crowded and quite dire living conditions for the family in the cellar. A sharing economy may be a good thing, in the light of high property prices and insecure working conditions. But not all properties to share will have en-suite bathrooms, one lodger per tenancy. Perhaps people won’t be living in cellars, but where there is no control and no independent third party (i.e. the landlord), then the situation could deteriorate into a pre-1930’s situation. That will not raise living standards but exaggerate the chasm between the property-owning majority and the have nots.

Sharon Betton is a landlord advisor with the Bolton Bond Board and author of The Landlord Good Management and Practice Guide.

For advice on buy to let – General Knowledge