Subletting: How to avoid the scams

There are many people out there who wish to sublet their council or privately rented property. While in a lot of these cases it can be perfectly legal and above board, we hear all too often from our clients about those who went about it in entirely the wrong way.

According to a study conducted by Direct Line, they estimated that in 2014, 3.3 million people lived as unofficial tenants, which is as many as 1 in every 10 rental homes. This kind of illegal activity is growing in force every day, but what’s surprising is how many are unknowingly breaking the law.

The rental market can be a tricky one to understand, and here at Hylton-Potts, we understand exactly the kinds of pitfalls you’re likely to come across if you want to sublet your property. Hopefully in today’s post, we’ll give you some advice on how to go about subletting your property in a way that avoids the scams, and avoids ending up in court.

What counts as a subletting scam?

For those who wish to rent out their property, understanding where the scam ends and legal subletting begins is crucial. There are several circumstances that can lead to subletting scams, but it basically boils down to a person(s) breaking their tenancy agreement, abusing the trust of their landlord, and profiting unlawfully by subletting all or part of their property to another individual.

For example, the most common offence occurs when a person takes out a tenancy in the same way as any law-abiding tenant, but never actually moves in, re-letting the property immediately to other sub-tenants without obtaining the landlord’s permission. This is often for a higher rental figure, so that they can cover the rental costs whilst making money.

On the other hand, the individual may move into the property for a short time, so that any initial checks, viewings and so forth occur without arousing any suspicion, before arranging for a new person to move in. Scammers will draw up new, multiple tenancy agreements, so as to appear as the real landlord, and let out rooms separately. Some will instead let out rooms on a nightly or even weekend basis, using holiday and room let websites.

One particularly serious example of a scammer was Rose Chimuka, a serial illegal subletting scammer working in south London, who took leases on family homes before changing the locks and dividing the properties into bedsits.

She would sublet her properties to dozens of desperate tenants looking for accommodation in one of the busiest cities in the world, and would always use fake identification to convince unsuspecting landlords she was a reliable tenant. Each time she was discovery, she would disappear and start again elsewhere.

Is tenant subletting a criminal offence and what are the consequences?

I’m sure for most of you reading this article, running such scams has never entered your head, but for far too many people, they unknowingly fall into the “scammer” mix by not following the correct procedure.

In some circumstances it’s perfect legal to sublet a property, but you will always need to obtain the landlord’s permission in writing. Your landlord could take legal action against you if you sublet their property unlawfully, and without written permission, the defence will not stand up in a court of law.

Unlawful subletting includes if a tenant:

1. sublets all or part of the property without written permission
2. is not permitted to sublet all or part of the property, but does so anyway

If these sound like your circumstances, it’s likely that you’ve broken a term in your tenancy agreement, and you could face an eviction from your landlord. In the case of those renting social housing, it may be considered a criminal offence. Not only that, but your actions could also breach the terms and conditions of a landlord’s mortgage and insurance conditions, meaning that if you’re illegally subletting and you get broken into, it’s likely that you will receive nothing when the insurance company comes to perform an assessment and finds you subletting the property.

Your actions could even turn the property into a licensable HMO (House in Multiple Occupation). This is where a property is rented out by at least three people who are not from one ‘household’ (or family), but they share facilities like a bathroom and kitchen. The law states that if a property is rented to five or more people, is at least three stories high, and tenants do share such facilities, the landlord must have an HMO license. HMO landlords have additional responsibilities under the fire safety regulations, and penalties for renting out an unlicensed HMO are up to £20,000.

What is ‘Rent to Rent’?

You may have come across the “Rent to Rent” concept if you’ve been researching subletting, but it’s very much an idea that is too good to be true. The idea behind it is that someone who rents a property and sublets the rooms to subtenants can make a profit, but rather than being unlawful, they form part of a scheme with the landlord.

Put simply, the tenant offers a landlord a guaranteed amount of rent for a set period, and while that amount is likely to be less than its market value, the landlord benefits from the guaranteed rent, no void periods and no tenant issues. The tenant then agrees to look after the property, take care of maintenance issues and in some cases, even carry out a refurbishment on the property, in place of the legal landlord. Then, the tenant can legally sub-let individual rooms to subtenants willing to be part of a house share.

So, what’s the problem with it? Well, firstly, with the demand for rental properties pushing rental inflation above wages, there’s a concern that this scheme encourages over-crowding and unethical practice. It also leaves the way clear for those who wish to cut corners, leaving the landlord at risk of losing control of their property.

How can I ensure my subletting is legal?

If you are found to have sublet your privately rented property without obtaining permission, it’s likely that your landlord could report you. However, one of the long-term issues you could face is if your landlord chooses to pass on your details to their letting agent, or if they are self-managing, they could potentially inform the independent tenant referencing service. This could make it incredibly difficult for you to ever find other rented accommodation, as many landlords use a professional tenant referencing service.

In order to avoid any repercussions in future, the first thing you must always do is to speak to your landlord directly and obtain permission for subletting. They could be perfectly reasonable about it, but if they say no, it is their right to do so and you must not try to push them. You can find plenty of information on this right here.

If you would like some face-to-face advice on the subject though, then you’ll find no better experts than our legal consultants. The most important thing is to contact as soon as possible so we can assess your case, so don’t hesitate to get in touch. You can call us on 020 7381 8111, or email us at [email protected].

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