The subletting of properties can be a real headache if you are a landlord. You have gone to great lengths to satisfy yourself that your tenants are credit-worthy and reliable. Then you suddenly discover that someone else is living in the property. It is the stuff of nightmares.
And, in the age where cash-strapped tenants are naturally tempted to supplement their earnings by taking in temporary lodgers, subletting is on the increase. Research by Direct Line for Business last year found that one in six tenants had rented out part or all of their property to someone who was not on the lease. Of those who had sub-let their home, 25 per cent had not bothered to check the terms of their lease to see if it was allowed, while more than a third had not informed their landlords.
What can landlords do to combat this increasing problem? Well, in the last resort, they can evict tenants for being in breach of their lease. In the Direct line for Business survey, 11 per cent of the tenants who had sublet their properties without the consent of the landlord suffered this fate. Some of them lost their deposit as well. In other cases, about a fifth of the total, landlords increased the rents.
So, broadly speaking, the law is on the side of the landlord. In standard leasehold contracts, it is spelled out quite clearly that sub-letting is not allowed, and is certainly not allowed without the permission of the landlord. But no sensible landlord wants to be forced to evict tenants for breaking the terms of their contract. Still less do they want to snoop on their tenants and try to work out if the unfamiliar figure seen leaving the property is a paying guest or just a friend of the tenant.
The factor that has seriously muddied the waters in recent years is the rise of the professional sub-letter. “Yes, there are some tenants who do not realise that they are not supposed to sublet rooms in their properties, leading to the rise of the accidental sub-letter” explains Sarah Bikhit, Lettings Manager of Kay & Co. “But there are also, as we have discovered, significant numbers of people who take flats in the full knowledge that they are going to sublet – and who will go to extraordinary lengths to escape detection.”
From fake companies to fake references to fake websites, they will use every trick in the book. “It is quite common, for example, particularly in the summer months, for professional sub-letters to pay students to take out tenancies in their name as a way of evading inquiries and requests for references,” adds Sarah Bikhit.
And one reason why landlords are well advised to use reputable lettings agencies is that they usually recognise the tricks used by part-time landlords, by undertaking referencing checks to help detect the potential sub-letters.
It is important to use an accredited agent, who is a member of the relevant professional bodies (ARLA or NAEA), and you can be confident that you will give yourself the best possible chance against the sharp practices of the serial sub-letters, who may be trying to game the system.
Spotting professional sub-letters trying to cover their tracks is an inexact science. “The warning signs to watch out for include: tenants offering the full asking price straight away; tenants being generous to a fault in paying up front; and tenants producing glowing references at the drop of a hat,” says Sarah Bikhit.
Phrases often used by the professional subletter include: “money in advance no problem” or “references I have them all ready to go, no problem”. Ordinary customers are not as slick as the pros; and it should be possible, just by talking informally to the tenants, about their jobs, family circumstances to weed out the wrong ‘uns.
“Don’t be afraid to ask for information about where they work and why they are moving to the area. Often with sub-letters, the story will change, too,” adds Sarah Bikhit.
In managing tenants generally, the most important thing – and the best way to avoid arguments – is clarity. Make sure that your tenants are fully aware of the clause in their contract forbidding the subletting of the property without permission. Underline the relevant passage and explain its significance to them. But it is also a good idea to cut them some slack.
If you regard subletting in any circumstances as a complete no-no, of course you should spell that out. But if you are relaxed in principle with them taking in the odd short-term paying holiday guest, so long as you are notified, then tell them. That way your relationship with them can proceed on the basis of trust and common sense.
Unauthorised subletting can be a nuisance for landlords. But the best landlords – provided they are alert to the risk of professional sub-letters – can get on top of the problem through a mixture of vigilance, straight talking and firmness.