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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Renting a Leasehold Home? Protect Your Assets

Kellie Jones, Senior Associate in Property Litigation team at Boodle Hatfield, comments

If you want to let out your residential property in England to tenants, the first thing to consider is whether you own the property freehold or leasehold. A quick check of the register of title will tell you this. If you own the property freehold, subject to the terms of any mortgage over the property, you are free to let it out as you wish. Most residential mortgages, however, do not permit subletting. If there is a mortgage over the property, the lender's permission should be sought prior to any subletting, as failure to do so could be a breach of the mortgage terms.

If you own the property on a leasehold basis however, you are not free to do as you wish. You are subject to the terms of the lease, which may restrict a tenant's ability to sublet, alter and use the property, amongst other things. This is the case even if you have a long residential lease that was purchased at a premium, although the terms may be less restrictive. You must read the lease.

Most leasehold residential properties contain covenants on the part of the tenant that restrict a tenant's right to sublet. This can range from an absolute prohibition on subletting, to landlord's permission being required, to the tenant having completely free rein in some circumstances. It is common for a tenant to be permitted to transfer the whole of the property (for example, to sell it it) without permission, but to require permission to sublet the whole or part of it. It is also common to limit any subletting to one person or family, to require it to be used solely for residential purposes and to prohibit certain alterations.

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