Landlords beware: Sub-letting on the rise

Landlords beware: Sub-letting on the rise

New research by landlord insurance provider Direct Line for Business reveals that one in six (17%) tenants in the UK admits to having rented out part or all of their property to someone who isn't on the lease agreement.

A quarter of tenants who sub-let their property didn't check the terms of their lease to see if it was permitted, while 34% had not informed their landlord of the decision.

Of the sub-letters who did not inform their landlord, 23% got found out in the end anyway.  The consequences when landlords catch tenants sub-letting can be severe. In 11% of cases the tenants named on the lease were evicted with 6% losing their deposit in the process. Other repercussions include landlords increasing rental charges (22%), issuing a fine (14%) or issuing a formal warning (8%).

In spite of this, Direct Line for Business's research reveals that 2016 could see an increase in the number of people sub-letting their properties. One in six renters (15%) claim they are thinking about sub-letting part or all of their rented property by advertising on property letting websites such as Airbnb.

Nick Breton, Head of Direct Line for Business said: “The average monthly rent across  the UK currently stands at £7392. This means on average, approximately a third of people's income goes towards accommodation. With the market having seen a five per cent increase in average rents in the last year, it seems that a larger number of renters are tempted to offset this expense by sub-letting their properties.”

Over the last two years, Landlord Action have seen an 18% increase in the number of instructions from from landlords with sub-letting cases.

Paul Shamplina, Founder of Landlord Action commented, “Sub-letting is fast becoming one of the leading grounds for eviction, alongside rent arrears and Section 21 for possession only. This has been fuelled by sky high rents preventing some tenants from being able to afford even single-unit accommodation, forcing many to resort to bedsits or shared accommodation.

Organised sub-letting scams are also becoming more prevalent, where tenants, or sometimes even fake tenants, advertise properties and rooms on holiday/accommodation websites in order to cream a profit without the landlords' consent.”

When looking at who the properties are sub-let to, friends or recommendations (28%) are the two most common types of sub-lets. Family members account for just over a fifth (21%), while 19% of renters have sub-let to strangers responding to an advert.

Sub-letting is most common in the North West and West Midlands, where more than a quarter (27%) of private tenants say that have sub-let their properties. London (23%) is third, while renters in the South East (9%) and Northern Ireland (7%) are least likely to sub-let their properties.

Nick Breton continued: “There could be some serious consequences for tenants who sub-let, but landlords need to be aware that in these circumstances there could also be insurance implications. Sub-letting is not covered under most insurance policies, so it's really important that landlords make their tenants fully aware of the restrictions on the lease and maintain that communication that can help prevent any future breaches”.

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