There are increasing concerns over the new development in the residential lettings market often described as Rent-to-Rent, whereby individuals ‘rent’ a residential property on an assured shorthold tenancy agreement but then sub-let and manage it for profit as a business activity.

According to insurance brokers Let Risks many ‘rent-to-renters’ are operating without the landlord’s knowledge or consent. Some tenants have purportedly taken on a tenancy agreement of multiple properties, to then sublet these properties to unsuspecting third parties unaware of the true situation. It may not be in the landlord’s interests to agree to a ‘rent-to-rent’ scheme because there may be difficulties in obtaining possession as there is no contractual relationship between the landlord and the actual occupier.

Most tenancy agreements will contain a clause preventing sub-letting. Traditionally it has been regarded that a person who is sub-letting is a tenant, who for a one-off reason has moved out and granted a sub tenancy. This would be incorrect if the landlord has not been approached and granted permission. The tenant is then in breach of the tenancy agreement and the landlord can issue possession proceedings for breach of tenancy. The landlord however would need to prove that the tenant has illegally sublet. However possession proceedings can become costly, as proceedings are brought using discretionary grounds. The Court may refuse to grant possession if the rent has been paid and no financial loss suffered.

Alexandra Sollohub of PainSmith solicitors comments: “There is nothing unlawful about taking a tenancy and subletting. Indeed, many commercial tenants are landlords to a sub-tenant. But Rent-to-Rent businesses are growing and some are exploiting both tenants and landlords.”

Michael Portman, Managing Director of LetRisks: “We urge landlords to be aware of this and to seek advice if they discover that their property is being sublet without permission, as all sorts of problems can arise. For example the landlord has no control over the occupiers or their actions, but may be pursued if noise or nuisance arises. Many organisations sub-letting include the right to carry out repairs and maintenance and then deduct the cost from the rent, again a situation over which the landlord has no control. And if the sub-letter ‘goes bust’, the landlord has no contract with the occupier and may experience difficulty re-possessing.”