Subletting: Why short-term lets can land a tenant in long-term trouble

Landlords and tenants should be aware of the risks

The ease of booking accommodation online has led to a significant increase in recent years in the number of short-term lettings of private dwellings. Particularly popular with young people, websites such as ‘AirBnB’ make widely accessible the availability of houses and apartments for shorter periods. It’s a great way for a tenant to supplement their income but both landlords and tenants should be aware of the risks of this type of subletting.

Lease provisions

As a tenant of a leasehold property, it is likely that permission from your landlord must be obtained to any subletting; your lease may even exclude altogether your right to sublet the property, even for a short period.

Tenants of apartments and shared occupation properties should be particularly wary as most of these properties are occupied on a leasehold basis under restrictive covenants; however, all tenants occupying any leasehold property are advised to check carefully the terms of their leases before offering their premises for sublet.

Landlords should be rightly concerned about the control of possession of a property. Does your tenant have a right to sublet contained within its lease? Has your tenant sought permission to sublet if it is using AirBnB or similar websites? If not, has it sublet without permission and is it doing so on a regular basis?

Subletting on this short-term basis is likely in many cases to constitute a breach of covenant, and landlords are rightly taking a firm stance and pursuing enforcement proceedings.

Enforcement

Tenants who sublet without consent of their landlords or, in some cases, mortgage lenders, face a very real risk of losing their property. Landlords can enforce covenants within long leases of properties as they commonly regulate alienation, including the sale and sublet of premises.

A breach of such covenants, once determined by a Court or Tribunal, allows for service of a s.146 Notice by a landlord who can then commence forfeiture proceedings. A successful claim could see the tenant losing their interest in the property. Even if the lease is not forfeited, an expensive claim can be avoided through obtaining the consent both of a landlord and, where applicable, a mortgage lender.

JB Leitch’s Phil Parkinson comments on the issue:

“It is becoming increasingly common for landlords to pursue a forfeiture claim on the basis of subletting without consent. Multiple news stories have alerted landlords to the fact that premises may be occupied and used by persons they have not vetted or licenced, resulting in damage to the property and reputational impact. Tenants must be careful to factor in these issues before advertising a property, ensuring that they comply with both the terms of their leases and the statutory provisions affecting all residential lettings. Landlords are advised to regularly monitor their properties to ensure lease terms are met.”