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    Subletting and the sharing economy: what landlords need to know

    Understanding the legal issues around subletting for landlords

    02 September 2016
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  • As peer-to-peer property rental sites grow ever-more popular, subletting is becoming a big issue for landlords.

    Worryingly, the National Landlords Association has found that nearly 50% of tenants who sublet do so behind their landlord's back.

    So if you're concerned about your tenant renting out your property on Airbnb, here's what you need to know.

    About Airbnb

    If you haven't heard of Airbnb, you're in the minority. It's one of the sharing economy's biggest success stories. People list their spare room (or home) on the website and make money by renting it out to tourists. Experts predict that over the next few years Airbnb will overtake the world's biggest hotel chains in terms of bookings. The website's growth has been massive, especially in London where its bank of properties has grown by 75% year on year. The city is currently the world's third largest market on Airbnb.

    Subletting and the law

    Subletting is perfectly legal in the UK. So much so that in the March 2015 budget, proposals were included to make it illegal for landlords to ban subletting in tenancy contracts. Despite this, tenants do need their landlord's written permission before subletting. It's only legal to sublet part of the property, such as a spare room. Renting the whole property would invalidate their status as a secure tenant, meaning you'd be within your rights to evict them.

    Other legal considerations

    Subletting can invalidate the terms of your mortgage, and can also impact some residential landlord insurance policies. There may also be laws specific to your city or region – for example it's illegal in London to provide temporary sleeping accommodation for paying guests for more than 90 days per calendar year.

    How to approach Airbnb with new tenants

    Be realistic and open. Bring up the topic of Airbnb as soon as your tenant moves in. Let them know that if they're considering subletting, they'll need to ask for your permission first. As a landlord you can offer help and assistance to your tenant so that they don't break any laws and inadvertently get you into trouble. Ask if you can vet the Airbnb guests before your tenant approves them. Make sure they know about legal requirements, such as checking the immigration status of every guest.

    Sitting down with your tenant and talking through the legal aspects will help them to see what a big task they're taking on, and should also increase the chances of the sublet going smoothly. If you really don't want your tenant to sublet, tell them now and give them your reasons why.

    What to do if you suspect your tenants are subletting through Airbnb

    While it could be infuriating if your tenants have gone behind your back, try to stay calm. They might not have realised that they need your written permission. Schedule a time to sit down and chat with them. Tell them about the legal aspects – for example, that renting out the whole property could allow you to evict them. Explain that both of you could get into trouble if immigration checks aren't carried out, and that subletting could invalidate their insurance policies. If you're really angry and feel like they've breached their contract, you could serve a section 146 notice.

    The popularity of sites like Airbnb means that, when it comes to subletting, it’s important to understand your rights and responsibilities as a landlord. Being honest with your tenant and communicating well could solve a lot of headaches in the long term.

 
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