WARNING! Rent-to-Rent on the increase
There are increasing concerns regarding the new development in the residential lettings market known as ‘Rent-to-Rent’ ; tenants who rent a residential property and then sub-let it for profit.
As tenants find it increasingly difficult to find rental accommodation the problem of subletting property without consent has increased considerably within both the private rental market and the social housing sector.
In most cases it is not in the landlord’s interests to agree to a ‘rent-to-rent’ scheme primarily because there may be difficulties in obtaining possession, as there is no contractual relationship between the landlord and the actual occupier.
In a recent investigation, HJK, a specialist fraud investigations company, found that in 8 % of the social housing tenancies they investigated, the tenant had a mortgage, bank account, active credit or utility bills registered at another residential address.
Illegal subletting can take various forms:
- the tenant who signed the agreement sublets various rooms out as holiday lets,
- letting a property and then renting it out at a higher price,
- sub-letting to criminal gangs, who use the property for illegal activities; e.g. drugs.
Related topic: Increasing number of cannabis farms being detected.
The Prevention of Social Housing Fraud Bill became an Act of Parliament (law) on 31st January 2013, meaning that it is now a criminal offence to ‘rent-to-rent’ social housing. This followed estimates that suggested between 50,000 and 160,000 social homes were unlawfully occupied right across the UK.
But where does this leave private landlords?
In the PRS (private rented sector) subletting private property is a breach of contract, rather than a criminal offence, therefore LRS has created this quick check-list to combat unauthorised subletting of your property :
- Make sure your tenant agreements contain a clause preventing sub-letting.
- Carry out thorough pre-tenancy checks, to be clear who will be living at the property.
- Carry out thorough periodic inspections of the property.
- Take our Rent and Legal expenses insurance. Good quality policies will include cover for legal expenses incurred in gaining possession for breaches of the tenancy agreement.
- If you have (unfortunately) experienced ‘ rent-to-rent fraud ‘ then please upload the relevant tenants onto the Landlord Referencing Services system (free), to warn the rest of our community and prevent it from happening to any of them in the future.
Landlords, Letting Agents and Tenants :
- Would you like to see subletting in the private sector criminalized?
- Have you ever experienced a tenant or neighbour illegally subletting private housing?
Please share your opinions and experiences with the LRS community!
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