Should tenants have the right to sub-let their properties – or even run a small bed and breakfast business in them?
A lawyer who specialises in landlord and tenant law says she sees some advantages.
The proposal in the Budget – in the name of the “sharing economy” – has sparked a highly critical reaction from Eye readers, who have raised a number of potential concerns, not least the right of the landlord to know who is in their property.
If the proposal goes ahead, clauses in fixed-term tenancy agreements that expressly rule out sub-letting would be made illegal.
One reason for the Government’s enthusiasm is that it wants its own employees to use this type of shared accommodation because it would be cheaper than hotels.
However, as Eye readers have said, there are any number of pitfalls to tenants’ sub-letting – not least rent to rent, the creation of a House in Multiple Occupation, and the matters of tenancy deposits, landlords’ mortgages and insurance.
But housing lawyer Tessa Shepperson says she sees some advantages to allowing tenants to take in lodgers “or run a modest B & B business”.
She says: “Many tenants are finding it hard to make ends meet, and being able to take in a lodger or paying guest (which most landlords forbid out of hand) would help them greatly financially.
“It would be particularly helpful in situations where one or more tenants have lost their job or where one of joint tenants wants to move out.
“Then there is the overall housing crisis. As has been pointed out, we do actually have sufficient capacity to house our population – it is just not being used efficiently.
“Giving tenants the right to rent out their spare room to make a bit of cash would help ease the housing crisis, certainly so far as single people are concerned, by giving them a wider pool of places they could go.”
Shepperson does say that the legislation would have to be carefully drafted and also says that the ‘rent a room’ allowance should be increased – something which would surely encourage tenants to sub-let.
Her blog is here
Ms Shepperson seems to have missed the point entirely – yes I agree that it would assist GENUINE tenants if finances got tough but the elephant in the room that she is definitely missing is the Pandora’s Box of the criminal activity surrounding subletting. There is a huge subletting/money laundering criminal racket that operates in and around W1 and SW1X and currently Landlord’s are able to evict because their actions are illegal, most of the subletters are using fake passports, creating fake companies and fake accounts to work their way around the referencing controls of the legitimate Lettings Agencies. The criminals couldn’t give a damn if they put the Landlords in breach of their Head Leases or inadvertently create HMO’s and the grief the Landlords and Letting agents go through, through no fault of their own, is unbearable. Whilst subletting is illegal then something can be done about it and Landlords can get their properties back, should the legislation be granted then the police are powerless and we will have massive problems in the rental sector. I again shout from the rooftops that our rental sector needs to be strictly regulated and it should be mandatory for everyone operating in the industry to have a licence to operate
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As one of 35 Central London agents who have recently been duped (my first in 33 years in the business) by one of these groups I would wholeheartedly agree with IndProf’s comments above. I also agree with licensing just so long as it isnt ‘policed’ by the likes of ARLA. Self interest organisations like NAEA and ARLA is not the answer.
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How many tenants have a ‘spare room’?
Very few, in my experience. Each extra room pushes up the cost of renting considerably, so naturally most people only rent out the number of rooms they need.
As far as I can see these proposals simply carry no benefit for landlords, only a long list of potential (and likely) problems.
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There is a huge subletting culture in Central London and the majority of cases are not criminal. There is also a HUGE demand for short term properties in central London during the summer season for both business and leisure travellers which needs to supplied.
By relaxing the laws, more professional companies can enter the market which will in return get rid of the rogue trades.
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rogue traders !
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Chelsea I feel you are missing the point – there are plenty of professional short let companies that are given license to specifically operate short lets by Westminster council which we all truly welcome and support in the industry – these companies comply with the legislation and conduct their business professionally so do not need the laws relaxed in order to operate.
The issue with relaxing the laws is that the Landlord loses the right to know who is actually living in their property as the tenant can sublet at any stage. At the moment the Landlord uses third party referencing to help them decide as to whether to allow a potential tenant to rent their property or not – they are provided with the results of a current employment check, credit check, previous landlord check, soon to be immigration check and then make a decision as to whether they feel the applicant is suitable, however they could go through all of this and base their decision on someone who never actually ends up moving into their property at all – simply ludicrous
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Tessa here, the batty lawyer that wrote the blog post! I know landlords are very worried about this and with good reason. However I don’t think that the idea of allowing tenants to take in lodgers should be dismissed out of hand.
There must be a way of drafting legislation which protects landlords but also allows genuine tenants to earn a bit of extra cash by renting out a room (if they have one).
I give a few suggestions in my blog post on this http://www.landlordlawblog.co.uk/2015/03/24/should-tenants-have-the-right-to-sublet-to-lodgers/ but really there would need to be a consultation exercise first and working parties (including people from the landlords associations) to oversee the drafting of legislation.
If something sensible can be devised it could help with the current housing problems. It may of course prove impossible to draft sensible legislation – but I think it should at least be given proper consideration.
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Fair points, Tessa. I guess on the one hand, refer to my post above, and on the other, I have very little confidence in the ability of the government to draft sensible legislation. Tenancy deposits is just one good example – and it’s taken them how many years to sort that out?
Don’t get me wrong though… I definitely don’t want a Labour government 🙂
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Is it me or is the world going mad? God help us if this becomes law as it will turn the letting industry into utter chaos. It is very disappointing to see that Tessa Shepperson can support this in ANY WAY. It will lead to false tenancies and tenants sub letting to any number of people not caring who they let in for profit. It is hard enough to get it right now in this very over complicated industry and Landlords should not have to suffer because the government are very poor suppliers of housing, this ill thought out piece os legislation has obviously been thought up by someone who does not invest in rented property themselves and does not work on the front line of this industry. Why should the Landlord lose more rights to their property. Stupidity or what?
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