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How to handle subletting in England

woman packing a suitcase to go travelling and will sublet her room

Subletting is a very complex area for tenants and landlords to navigate. Whilst it can help a tenant who needs to move out for legitimate reasons, it also exposes landlords to a lot of risk. This risk will increase when the Renters Reform Bill will give the First-tier Tribunal the power to make a superior landlord liable to make rent repayment orders in respect of offences committed by their mesne tenants, ie intermediate landlords.

In this post, I draw on my experience as a lawyer and landlord to explain the different types of subletting, both authorised and unauthorised.

What does subletting mean?

A tenant sublets some or all of a property they rent from a landlord (called the superior landlord or the head landlord) to another person (the subtenant).

The tenant (called a mesne tenant, which means intermediate) becomes the landlord of the subtenant, and is also referred to as an intermediate landlord. The mesne tenant still remains responsible for complying with the terms of their tenancy agreement with the superior landlord, including paying the rent and behaving in a tenant-like manner.

Importantly, if the superior landlord authorises the subletting, the subtenant has the exclusive use of the property, which is also their sole or primary residence, they will the right to “quiet enjoyment”. This means that the superior landlord and intermediate landlord will only be able to enter the accommodation with the subtenant’s permission. The subtenant will also have the usual rights of a tenant with an assured shorthold tenancy, even though they are a subtenant.

Here is a diagram that shows how subletting works:

Do tenants have the right to sublet a rental property?

Professionally drafted Assured Shorthold Tenancy agreements will invariably contain a clause which says that the tenant cannot sublet without the landlord’s consent.

However, if there isn’t a clause, the law treats periodic tenancies and fixed term tenancies differently.

During a periodic tenancy

Section 15 of the Housing Act 1988 states that it is an implied term of periodic tenancies that a tenant cannot sublet a property without the consent of the landlord. The landlord doesn’t need to have a good reason for turning down the request. This is because it’s easy for the tenant to terminate the tenancy with one month’s notice,

During a fixed term tenancy

For fixed term tenancies, a tenant does have the right to sublet, unless the tenancy has a clause that says they must obtain the landlord’s consent. The tenant is tied into the tenancy for the fixed term, and doesn’t have the same freedom to terminate if their circumstances change.

The Office of Fair Trading (now the Competition and Markets Authority) published Guidance on unfair terms in
tenancy agreements
in 2005 that states “an absolute ban on both assignment and subletting may be considered unfair” during fixed term tenancies where tenants have committed to pay rent for a certain period. They consider it unfair for tenants to be bound to continue paying rent if “another suitable person is willing and able to do so”. The OFT suggests a fairer balance is for the landlord not to unreasonably withhold consent.

This is just guidance and hasn’t been tested in the courts, but it is prudent for superior landlords to consider a request to sublet from a tenant during a fixed term tenancy, and only turn it down if the applicant is unsuitable or if there are other good grounds.

An alternative approach is for the landlord to allow the tenant to terminate the tenancy, and to enter into a new one with the subtenant. However, if the original tenant wants to move back later, they’ll need to negotiate that with the new tenant and the landlord.

What are the different types of subletting?

Tenant moves out temporarily and lets to subtenant while away

Subletting often happens when the subletter needs to move out for a while, for instance, to go travelling or to relocate temporarily for work. The property usually continues to be their primary residence during their absence, as they intend to come back and their move elsewhere is temporary.

It’s fairly common with student HMOs where a student who rents a room under an assured shorthold tenancy (AST) may have an annual contract, but wants to let their room to another person if they’re going to be away during the summer holidays or need to go on a research trip to another town or country.

Rent-to-rent under commercial lease

Another type of subletting is rent-to-rent, although here, when the subletting is authorised, the subletter rents the property from the landlord under a commercial lease, who then lets it to one or more subtenants under an AST. (Some rent-to-renters let the property as short term lets).

The rent-to-renter needs a commercial lease cannot have an AST because the property isn’t their primary residence. As the rent-to-renter is not a “residential occupier”, they don’t have protection from unlawful eviction under the Protection from Eviction Act 1977.

>> Related Post: A landlord guide to rent-to-rent

>> Related Post: What landlords need to know about short term lets

Unauthorised subletting in breach of contract

Assured shorthold tenancy agreements invariably have a clause that prohibits subletting without the landlord’s consent. However, some tenants let properties with the intention of subletting them to third parties, but without obtaining permission from the landlord, in breach of the terms of the tenancy agreement. The mesne tenant may sublet the property on a short term let basis, or on a room by room basis as an HMO.

Unless the superior landlord or agent do regular, thorough inspections of the property, they may be unware that the mesne tenant is operating an unlicensed and overcrowded HMO. If the property is let as a short term let, wear and tear will be higher.

Sometimes tenants sublet to individuals who set up a cannabis farm or use the property for other criminal activities.

How is subletting different from having a lodger?

renter opens the door to landlord

With a lodger, a “live-in” landlord shares rents a room in their home to another person (a lodger) and they share facilities such as a bathroom, kitchen or living area. The landlord need not be the superior landlord, but can themselves be a tenant.

The crucial point with a lodger, is that the landlord and the lodger share facilities. The landlord needs to be living at the property immediately before the lodger moves in, and also when the lodger leaves. If lodgers have a self-contained space, and only share the hallway and landing with the landlord, they’re a tenant, and not a lodger. 

Lodgers aren’t tenants and don’t have the rights that come with being a tenant. They are mere “licensees” with rights to occupy some of the rooms in the property, but without an exclusive right to occupy. A subtenant on the other hand does have exclusive rights to occupy some or all of a property.

The difference between a subtenant and a lodger is fairly nuanced, and it’s easier to explain with examples:

  • An HMO tenant under an AST moves out to go travelling, and sublets their room and the right to use the shared facilities to a subtenant, who moves into the subletter’s room after the subletter moves out. This is a sublet.
  • A tenant of a two-bedroomed flat lets the second bedroom to another person. The tenant continues to live there, as a resident landlord, and they share a kitchen and bathroom. The tenant is taking on a lodger, and is not subletting.
  • A tenant of a house lets the top floor to another person. The top floor has its own bathroom and the room has a small kitchen area. They are not allowed to use the kitchen and bathroom of the main tenant, and the only shared space is the hallway and stairs. This will usually be subletting.

Tips for landlords about subletting

If a good long-term tenant is going away for a set period of time, it might make sense for a landlord to give consent for the tenant to sublet the property or room to another person. On the other hand, if they’re not planning to come back, it might make more sense to agree to end the tenancy with the existing tenant and begin a new direct tenancy with the new person.

Landlords should carry out referencing of the subtenant, and carry out Right to Rent checks. They should also satisfy themselves as to why the person wants to sublet the property for a limited period. Although the original tenant will still remain liable under the original tenancy agreement while it is sublet, it makes sense for the landlord or agent to visit the property before the subtenant moves in to check the condition of the property. I would also insist on an inspection visit within 4 weeks.of the start of the subtenancy to make sure all is in order.

The written consent to sublet should contain an acknowledgement from the original tenant that they are still liable under the original tenancy agreement, and will continue to pay the rent. The subtenancy should contain the same obligations as the original tenancy agreement.

Who is responsible for the subtenant?

The mesne tenant / intermediate landlord is the landlord of the subtenant and is responsible for complying with landlord obligations. This means the mesne tenant must carry out a Right to Rent check on the subtenant, serve the relevant documents (EPC, EICR, Gas Safety Certificate, How to Rent guide, deposit registration etc), collect the rent and liaise with the superior landlord for repairs.

However, if the superior landlord accepts rent directly from the subtenant, this might be viewed as an assignment and not a subtenancy, which would create a new direct tenancy agreement between the superior landlord and the “subtenant”. In this case, the superior landlord would be responsible for complying with the obligations of a landlord, including the Right to Rent check.

What if the subletter stops paying the landlord?

Mesne tenant (subletter) is a rent-to-renter

If the mesne tenant is a rent-to-renter under a commercial lease, they won’t be a residential occupier. Consequently, the subletter won’t have any statutory rights under the Protection from Eviction Act 1977. Instead, they only have the contractual rights that are set out in the rent-to-rent commercial lease. A well-drafted commercial lease will enable the superior landlord to forfeit the lease with the subletter for non-payment of rent.

However, if the subtenants are residential occupiers under an Assured Shorthold Tenancy, then Section 18 of the Housing Act 1988 will protect their tenancy. The subtenancy will survive, and the superior landlord will become the subtenant’s direct landlord. The superior landlord should do a Right to Rent check of the subtenant if they become the direct landlord.

Mesne tenant (subletter) has an assured shorthold tenancy agreement

If the mesne tenant had an assured shorthold tenancy, but the property is not their sole or primary residence, they will not have protection under the Protection from Eviction Act 1977 or the Housing Act 1988. The superior landlord will be able to forfeit the tenancy, in the same way as it would for a rent-to-renter. However, the underlying subtenancy would remain in force, assuming it is an Assured Shorthold Tenancy.

On the other hand, if the property is still the mesne tenant’s primary residence, and they are subletting during a temporary absence, the superior landlord would need to use the remedies under the Housing Act 1988 to recover possession. This means Section 21 and/or mandatory Ground 8, or discretionary Grounds 10 and 11 under Section 8. The landlord would be able to make a claim on the mesne tenant’s deposit, and pursue them for any additional unpaid rent in the Small Claims Court.

>> Related Post: How to carry out Right to Rent checks

How can a landlord recover possession from an authorised subtenant?

Possession order with court gavel under section 8

The short answer is that it’s not straightforward for a landlord to recover possession from an authorised subtenant.

If a superior landlord terminates a tenancy or lease with the mesne tenant, the subtenancy will survive this termination and continue in force as it is protected by Section 18 of the Housing Act 1988. As a result, the superior landlord will become the direct landlord of the subtenant.

Assuming that the property is the sole or main residence of the subtenant, they have exclusive possession and the subtenant is an individual, it will be an AST, and the subtenant will have all the usual rights afforded to tenants. Consequently, to recover possession, the landlord would need to serve a notice on the subtenant under either Section 21 or Section 8.

As with all Section 21 notices, in order to be valid, the landlord (ie the mesne tenant) must have registered the deposit with a deposit protection scheme and served the prescribed information for the deposit within 30 days, served a How to Rent guide, and a valid EPC and gas safety certificate before the tenancy started. They must also serve the latest gas safety certificate and How to Rent guide if changed since the start of the sub-tenancy.

Additionally, if the subtenancy hasn’t been in existence for long, Section 21(5) Housing Act 1988 requires the superior landlord to wait for six months after the start of the subtenancy for any order for possession to take effect.

If the superior landlord can’t use Section 21, they will need to use a relevant ground under Section 8.

>> Related Post: How to serve a valid Section 21 notice

>> Related Post: How to evict tenants using Section 8

How to spot unauthorised subletting

Signs an applicant might want to sublet instead of living there

Here are the signs to look out for when an applicant is viewing a property that suggests they might not be planning to live there:

  • No good reason to want to live in the area. I always look for applicants with good local connections.
  • Doesn’t ask questions about the local area, for instance, where the shops or schools are, what amenities are nearby.
  • Doesn’t seem interested in the property, eg doesn’t ask about storage or parking, doesn’t look at the kitchen or bathroom.
  • Wants to rent the property without seeing it.
  • The other tenants are too busy to view the property.
  • Offers 6 months’ rent up front.
  • Is cagey about where they are living now.
  • Offers considerably more than the asking rent.
  • Is in a rush to move in, and doesn’t want to go through referencing.
  • Doesn’t want to join a WhatsApp group with a self-managing landlord for tenancy management.

>> Related Post: How to choose good tenants

Spotting unauthorised subletting after the tenancy starts

It’s important for landlords or their agents to carry out regular inspections to check for unauthorised subletting (as well as checking the condition of the property). Leaving it to one inspection a year is not enough. I inspect my rental properties a month after tenants move in, primarily to check if there are any maintenance issues, but also to keep an eye out for signs that someone other than the tenants may have moved in.

When I let to a new tenant, I let the neighbours know who I’m letting the property to (eg family of 3, a couple, and ask them to call my mobile number if they ever have concerns about the property.

Here is a list of things to look for on an inspection that may suggest the tenant may be subletting without authorisation:

  • Locks on bedroom doors and kitchen cabinets when the property is a single let to a single household (a couple or family).
  • A key safe has been installed outside the property without good reason, eg for a dog walker or childcare. These are a sign that the property is being let on Airbnb.
  • The tenant refuses access or inspections.
  • The tenant is hard to contact and is always away.
  • Reports from neighbours of different people arriving and leaving with suitcases, using the key from the key safe.
  • Higher than average wear and tear that is more than you’d expect with the tenants.
  • Signs of more people living / staying at the property than are in the tenancy agreement, eg extra bedding, lots of belongings in suitcases.
  • Cooking equipment (microwave, kettle, fridge) in bedrooms when it’s let to a single household, and not as an HMO.
  • The rent is paid by someone who is not listed in the tenancy agreement.

>> Related Post: How to carry out successful mid-tenancy inspections

What should landlords do about unauthorised subletting?

If a landlord discovers that their tenant has been subletting the property without consent, and the property is no longer the tenant’s sole or primary residence, they will have lost their tenancy status. This means that the superior landlord can terminate by serving at least 4 weeks’ notice to quit, without needing to recover possession under Section 8 or Section 21.

However, if the mesne tenant still lives in the property and has, say, let the spare room, or they have gone travelling for a short period by the property remains their primary home, they will still have protection from eviction under statutory rights under the Protection from Eviction Act 1977 as a residential occupier. This means the landlord will either need to serve two months’ notice under Section 21 to recover possession, or two weeks’ notice relying on discretionary Ground 12 under Section 8, ie breach of the clause in the tenancy agreement not to sublet without the landlord’s consent.

If a tenant sublets the entire home and/or if they sublet the property and move elsewhere, they will lose their tenancy status and the landlord can serve a notice to quit without providing legal grounds or proving to the court it is reasonable to evict them. Notices must be given in writing and include an expiry date – the notice period must be at least 4 weeks.

For assured shorthold tenants, a Section 21 notice can be issued at any time outside of a fixed term subtenancy, but a landlord can’t evict the tenants during the first six months of their tenancy. If the landlord uses Section 21, tenants must be given at least two months’ notice in the usual way, and have served the appropriate documents to ensure the notice is valid.

>> Related post: How to serve a valid Section 21 notice

>> Related post: How to evict tenants under Section 8

Final thoughts

With all the complications inherent in subletting, it is easy to see why landlords often turn down requests for consent to sublet.

Often it’s simpler for the landlord to release the tenant from their tenancy agreement and enter into a direct one with the person who would have been the subtenant. If and when the original tenant wants to move back, they’d need to reach agreement with the landlord and the “subtenant”.

Landlords and agents should always be on the lookout for unauthorised subletting, and take swift action to bring it to an end.

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how to handle subletting in england

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