What is subletting?
Subletting occurs when a property is let to a tenant, who then re-rents the property to a third party (subtenant). This may involve the whole, or parts of the property included in the original tenancy agreement.
Subletting can be used as way to make money; where a property is sublet at a higher rent than is payable to the landlord. It may also occur when the original tenants are unable to afford the rent themselves – as a means to avoid legal action or eviction.
Either way, subletting creates a complicated arrangement between the involved parties, who may or may not be aware of one another’s position.
Below is some of the terminology used, to help identify who’s who in this situation:
Tenant – the person(s) named on the original tenancy agreement
Subtenant – person(s) renting the property directly from the original tenant
Head or Superior landlord – this refers to the original landlord as above (often the property owner)
Immediate landlord – person renting (lawfully or otherwise) to a subtenant
As you can see, subletting changes the structure of the letting relationship, and effectively means the person in the middle becomes both tenant and landlord.
Is subletting allowed?
Most tenancy agreements will expressly forbid subletting, meaning anyone doing so will be in breach of their agreement. However, it is important to establish what constitutes subletting before considering what, if any, action to take.
Tenants are usually free to have visitors to stay, even for extended periods of time. What separates this from subletting are two main criteria:
- If the tenant is receiving rent from a 3rd party residing at the property
- If the 3rd party has exclusive use of all or part of the property
Where a landlord gives permission for the property to be sublet, either in the tenancy terms or on request, then this can be dealt with via a contractual agreement between the parties. If, however, a property is being sublet without the landlord’s consent, this is unlawful and risky to ignore.
For examples of our case studies related to subletting, click here
What are the risks?
Unlawful subletting carries risks for all those involved, not least because it muddies the waters between roles – as described above.
These are some of the specific risks for the parties involved:
Landlords have legal responsibilities towards their tenants and properties, which remain – irrespective of the subletting arrangement. Allowing an existing tenant to sublet means loss of control over how the property is being used, and crucially, in what condition it is being let-out.
Unlawful subletting may also result in the property being to individuals who have not undergone the necessary identity or ‘right to rent’ checks. This can carry serious civil, or even criminal penalties for the landlord.
Where part of a property is sublet, any additional tenants may cause the property to be classed as an HMO (house in multiple occupation), which requires a specific licence.
Tenant / Immediate landlord: For the ‘go-between’ in a subletting arrangement, there is the risk of legal action – both as a tenant and an acting landlord. The head landlord can take immediate steps to evict a tenant found to be unlawfully subletting (and is likely to be successful unless there is a viable defence). An ‘unlawful profit’ Order may also be sought, which stipulates an amount of the subletting profit to be returned to the head landlord.
Subtenants face a lack of security by occupying an unlawfully let property and are at risk of being ‘kept in the dark’ of any action against them or their immediate landlord. They may not be aware that the tenancy is unlawful and may not have access to the head landlord – who is ultimately responsible for the condition of the property.
Taking action
Most landlords and managing agents (where applicable) are extremely vigilant and therefore proactive if they suspect a property is being sublet. Taking immediate action to end the arrangement is the safest route to protect both property and personal interests.
The reality is that there may also be a temptation to overlook evidence of subletting, if rent is reliably received as a result – especially if there are no obvious signs of damage to the property. However, ‘turning a blind eye’ is a risky strategy if it can be proven that a landlord was (or should have been) aware of the situation and chose to take no action.
Expert advice
Deciding on the appropriate course of action will depend on many variables (too numerous to list here). A good start point is to make sure all related documentation and correspondence is logged, as well as any supporting evidence.
The reality is that even when the law clearly makes provision for dealing with such tenancy breaches, there will always be an element of the Judge’s discretion when a claim is put before the Court. It is therefore advisable to seek advice on any issue related to subletting.
