Subletting:

Total Landlord Insurance is warning landlords to look out for tenants who go away over the Christmas period and sublet their rental properties without the landlord’s consent. Most assured shorthold tenancy (AST) agreements exclude sub-letting, without the landlord’s written consent.

The landlord insurer has reported a 14% increase in the number of malicious and accidental damage claims received this year as a direct result of illegal subletting, mainly through holiday rental sites such as Airbnb.

Airbnb is synonymous with the so called ‘sharing economy’, and has seen rapid growth throughout the UK, particularly in prime London locations. It is reported to have an ever increasing community of users but has courted controversy in many locations, not lease its own home town of San Francisco, for by default encouraging the flouting of rental laws.

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Many travellers will be using such websites to book accommodation for their break over the festive period says Total Landlord. It’s a high season for renting out property, and whilst the majority of holiday rentals will be hosted responsibly, Total Landlord Insurance thinks there will be cases where tenants sublet without the relevant permissions.

Whilst the theory behind a ‘sharing economy’ means it provides expanded access to products and services, thereby helping the environment by more intensively using the world’s produced resources, the letting industry is far different than lending your neighbour a drill or step ladders, or sharing your car to work.

Eddie Hooker, CEO of Total Landlord Insurance, confirms that the popularity of this highly unregulated business (Airbnb) has presented new risks for homeowners and landlords. Mr Hooker says:

“Whilst off on vacation themselves, tenants may consider subletting to earn extra easy income, but according to findings from the National Landlords Association (NLA), almost half of tenants who sublet their property do so without their landlord’s permission. Subletting can breach a landlord’s mortgage terms and also invalidate their existing insurance policy – so it’s vital for them to be aware of the problems it can present. An increasing number of landlords are suffering accidental and malicious damage to their properties, generating a rise in claims, because tenants have sublet to another tenant.”

There are also examples of both landlords and tenants using Airbnb rentals as a complete business model mode of operation, because short term lets offer higher levels of rental income. Airbnb has recently changed its terms and conditions to prevent properties from being offered for more than an aggregate 90 days in any one calendar year, unless relevant council permissions have been obtained.

Buy-to-let insurance policies now insist that tenants are living at the property under an assured shorthold tenancy (AST) in order for genuine claims to be accepted.

Paul Shamplina, Brand Ambassador of Hamilton Fraser, parent company to Total Landlord Insurance, offers his advice to landlords. Mr Shamplina says:

“Unfortunately, anyone can fall victim to a subletting scam, so landlords, make sure you’re on your guard over the next few weeks when tenants are more likely to be vacating your property. Although not entirely preventable, there are steps you can take to help avoid such situations and the risk of having a ‘bad tenant’ staying in the property. Be prepared and carry out property inspections to look out for tell-tale signs of subletting. Speak to the neighbours if you can. They can be on alert for anything suspicious including, a high volume of people coming and going from the property and/or excessive noise.

Landlords who suspect their property has been sublet over the Christmas period should look at popular holiday websites to see if the property has been advertised. Most tenancy agreements include a clause that prevents subletting and, if this is the case, you should notify the original tenant of their breach of contract.”

For more information on this topic, you can listen to a podcast by Paul Shamplina’s on ‘bad tenants’ here

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