You find your tenants, you do the references, you make the tenancy agreements, you move them in. The rent arrives on time every month, the property’s in good nick. When everything is dandy and nothing seems to be going wrong, subletting is something you might want to push to the back of your mind. My tenant wouldn’t do this to me, surely?!

But sometimes, things really are too good to be true, and subletting could well be happening in your property without your knowledge. And the reality is, this is something you need to be aware of and able to look out for.

So read this short guide to make sure you understand the consequences of illegal activity in you property, and find out how to minimise your risk going forward.

What exactly is subletting?

If your tenant agrees to take rent from anyone who wasn’t included on the original tenancy agreement that you made with them, they’re subletting. It’s illegal and it’s really not cool.

The subtenant might well be contributing towards the rent, but they have no official, legal relationship with the landlord. They’re more like a lodger, so they don’t get the benefit of tenants’ rights. Only people named on the original tenancy agreement get that privilege!

Most often, subletting happens without the landlord’s knowledge. You might think ignorance is bliss. If you’re receiving rent on time and are none the wiser that it’s coming from someone other than your original tenant, what’s the problem?

Thing is, if you do find out about the subletting, there could be serious consequences. And worse so if your mortgage or insurance providers find out before you do. So understand the potential penalties now, so you can advise your tenants against subletting and avoid awkward conversations or costly situations in the future.

What are the consequences of subletting?

Ultimately and somewhat unsurprisingly, tenants subletting could put you in a serious bind with your mortgage lender and insurance providers.

Most lenders don’t allow subletting and would have the right to withdraw your mortgage loan should you be caught doing it. Not good.

Similarly, loads of buy-to-let insurance policies contain clauses against subletting too. Doesn’t sound too bad until you remember it could stop you being able to make a claim should you need to at any point.

Some policies and mortgage agreements do permit it, and it’s something you can ask about when discussing contracts in the first place. But don’t make the mistake of not checking your policies before allowing subletting to go ahead!

How can you prevent subletting happening without your knowledge?

Aside from including a clause forbidding subletting in your tenancy agreements, there are some other simple but smart things you can do to stop it from happening.

• Have an open, friendly conversation about your expectations at the start of the tenancy. The better terms you’re on with your tenant, the less likely they are to do anything behind your back that could put you at risk.
• Do regular inspections. Sure, you have to give notice before conducting an inspection, but it should be simple enough to spot if another person is living in the property. And if your tenant knows to expect regular inspections from the start of the tenancy, it’ll likely act as a deterrent to subletting.
• Check in with the neighbours. Give your contact number to the neighbours and ask them to contact you if they notice anything untoward. Take time to chat to them every time you’re at the property, and reap the benefits of the relationship!
• Ask your tenant! If you’re suspicious, there’s no reason why you shouldn’t pick up the phone and ask your tenant straight out if they’re subletting. Just don’t do it too regularly, or they might find other ways to take out their frustration with you.
• Don’t charge a deposit more than a sixth of the total annual rent. Doing so would give your tenant the right to assign the tenancy to another person without them having to tell you.

As with all things in property, the better your relationship with your tenant, the less likely things are to go wrong.

But if you don’t have enough time to put into the relationship or you haven’t got the headspace to manage every single aspect of your properties right now? Give us a call on 020 3432 3888 to find out how we can help protect your asset!