Tenant Sub-Letting Will Be Catastrophic For Landlords RLA Think Tenant Sub-letting Will Be Catastrophic For Landlords

Following on from last week’s pre-election budget delivered by Chancellor of the Exchequer, George Osborne MP, landlord organisations and their landlord members are expressing grave concerns over the Government’s plans to allow private rented sector tenants to begin sub letting their rental properties.

The Budget document published after Mr Osborne delivered his speech contains a clause about sub letting on page 51, under the title “support for the sharing economy”.The budget small print said the government will:

“make it easier for individuals to sub-let a room through its intention to legislate to prevent the use of clauses in private fixed-term residential tenancy agreements that expressly rule out sub-letting or otherwise sharing space on a short-term basis, and consider extending this prohibition to statutory periodic tenancies.”

The announcement was intended to be lost during the course of the Chancellors speech, but if the sub letting plans go ahead there could be a world of trouble for private rental sector landlords and a magnitude of problems for the buy-to-let industry as a whole.

There have been a number of tenant sub letting cases going to court because of a few unscrupulous tenants who had been trying to illegally profit from rented properties  by sub letting rooms and retaining the income.

By the time landlords find out that their tenants have been sub letting, properties are often damaged due to unfair wear & tear due to over-crowding, leaving landlords with expensive repair bills that can run into thousands of pounds.

The department for Communities and Local Government (DCLG) have yet to release details on the proposals, but there hasn’t been any period of consultation with industry professional or regulatory bodies so far.

The nightmare scenario will give PRS landlords even less control over their own rental property portfolios by preventing them from instilling just and sensible clauses into tenancy agreements that prevent their property from sub-letting by tenants. Changes to this important reasoning could drive some very good landlords out of the private rental sector altogether.

Even the Residential Landlords Association (RLA) describe the 2015 Budget as “a nightmare” after reading new sub letting rules.

The outlined plans to make it illegal for private sector tenancy agreements to include clauses that prevent the tenants sub letting of the property, but the devil is in the detail.

Residential Landlords Association (RLA) Chairman Alan Ward

Residential Landlords Association (RLA) Chairman Alan Ward

RLA chairman Alan Ward commented on the budget announcement stating: “The measures on sub letting are a nightmare in the making and smack of ‘back of the fag packet’ policy making. Key questions remained unanswered such as who will be responsible for a property if the tenant sub-letting leaves the house but the tenant they are sub-letting to stays? Similarly, given the Government wants landlords to check the immigration status of their tenants, who would be responsible for checking the status where sub-letting occurs? Whilst the RLA awaits further detail on this measure, it is difficult to see landlords supporting it.”

 

What do you think about the Government’s sub letting proposals?

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