Tenant is sub letting, in rent arrears, and out of the country!

Tenant is sub letting, in rent arrears, and out of the country!

15:18 PM, 26th July 2016, About 5 years ago 27

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We have a property on a 12 month AST with 5 months left to run. The tenant has not paid his rent this month and on further inspection we find that the property is being sub let, but with him keeping a bedroom. lodgers

He is out of the Country until September and on speaking with the people that he is sub letting rooms to they have all paid him for their room rental.

Help what is the best course of action?

I have inspected the property and it isn’t in too bad a state, so to make good of a bad situation I was thinking of perhaps adding these people to the tenancy, that is if they pass credit checks etc. However, by doing this am I making a rod for my own back.

The other alternative is to seek court action, but how long will this take, how much will it cost, and what is involved. I believe that I will need to go through the solicitor route for this.

I feel sorry for the people that are sub letting as our tenant has told them that it is his house. Any suggestions ideas, it needs to be dealt with asap and I really don’t know what to do for the best.

Thanks

Billy



Comments

by Mandy Thomson

19:34 PM, 27th July 2016, About 5 years ago

I agree that the people the tenant has moved in are lodgers and not sub tenants, as it's still his main home - or at least it seems. If it ceases to be his main home, but he still keeps the tenancy, that downgrades his tenancy from an AST to a common law tenancy - making him easier to evict as only one month's notice is required, not 2 and this type of tenancy has fewer legal protections (assuming it can be easily proved that he has another main address). An AST can only exist if the property is the tenant's main home - though in this instance, it sounds like the tenant intends to return and doesn't have another home elsewhere.

However, there are all the other considerations - going behind your back, the possible start of rent arrears, and the possibility that a HMO has been created (assuming the lodgers aren't members of the same family). There are two types of licensable HMO - mandatory (three or more storeys and occupied by five or more unrelated people) and additional (your local authority can designate any HMO with more than 2 households as registrable).

Most standard AST agreements will contain a clause to the effect that the tenant must seek permission before allowing anyone else to sublet - either as subtenants or lodgers. If your AST contains this, you can issue your tenant with Section 8, ground 12 (breach of AST) but you would be advised to see a solicitor, as Section 8 for anything but rent arrears is complex.

In order to issue Section 8, ground 8 (rent arrears) the arrears must be at least 2 months, or there is also ground 11, but that is where the tenant persistently misses rent payments, even if 2 months arrears haven't been run up.

As has been suggested, you would also be advised to serve Section 21, as it's more than 4 months into the tenancy, and this might be the easiest way to end the tenancy and if nothing else, your trust in this tenant has been broken.

The lodgers' right to occupy the property will end with the termination of their resident landlord's tenancy.

by Mark Shine

21:02 PM, 27th July 2016, About 5 years ago

I had a similar situation. To cut a long story very short, the tenant lied about literally everything and I don't think had any intention of returning to the property or country. He stopped paying rent for months and hadn't paid council tax for over a year, although I later discovered the 'lodgers' were continuously paying bills-inclusive rent to him (legally their landlord). I think it's a bit of a grey area, but was advised by an eviction specialist I had used on another unpleasant occasion that the best thing to get control of the property is to take the loss from the tenant on the chin and then try and speak with the lodgers to persuade them (with proof) that you are the owner of property and try and get them on individual 6 month tenancy agreements with you as the landlord, which allow them the flexibility to leave early if they wish / find somewhere else.

by Mark Shine

21:19 PM, 27th July 2016, About 5 years ago

Reply to the comment left by "Mandy Thomson" at "27/07/2016 - 19:34":

Mandy

Re your point about licensing, there is also a third type - selective licensing which now applies to some of mine. In simple terms where almost ALL rental properties need to be licensed.

http://www.rla.org.uk/landlord/guides/housing_act/docs/all/what_selective_licensing_is_about.shtml

by Mandy Thomson

21:26 PM, 27th July 2016, About 5 years ago

Reply to the comment left by "terry sullivan" at "27/07/2016 - 09:29":

They aren't squatters because they are there with the tenant's agreement and they're paying him rent, whatever their occupant status.

by Mandy Thomson

21:36 PM, 27th July 2016, About 5 years ago

Reply to the comment left by "Mark Shine" at "27/07/2016 - 21:19":

Yes, unfortunately, I'm only too familiar with selective licensing! However, this applies to properties in single household occupancy, so I expect the property already has such a licence if it falls within an area where this applies.

Billy needs to check with his local authority to see if the property is subject to ADDITIONAL licensing, unless he serves notice on his tenant, so the property would be temporarily exempted pending the evictions of all the occupants.

by Michele Brown

22:09 PM, 27th July 2016, About 5 years ago

Thank you all so much for your comments. On speaking with our letting agency they have stated that if we take court action then a solicitor would need to be involved due to the complexities. The quote for solicitors is £2000 plus vat, which I really don't think is viable. We have decided that we will try and add the 2 people who are sub letting onto the tenancy, that is as long as they pass credit checks etc, then near the end of the AST for the tenant issue a section 21. The letting agents have already issued a section 21 but say that as such it is not valid and was just a way of them being able to get into the property to assess the situation. We have advised our insurance company and the insurance at present is still valid, obviously we will have to re address it if we add the other 2 to the tenancy. The letting agents are telling me that the house does not come under the HMO bracket as it is not 3 stories high or have 5 bedrooms, but I feel that if the sub letters pass credit checks that I should inform the local authority. Thanks once again folks.

by Mark Shine

23:36 PM, 27th July 2016, About 5 years ago

Reply to the comment left by "Michele Brown" at "27/07/2016 - 22:09":

>'The letting agents are telling me that the house does not come under the HMO bracket as it is not 3 stories high or have 5 bedrooms'

7 of my rental properties are (& are required to be under respective local authority rules) licensed under selective or additional HMO licensing. None of them are '3 stories high or have 5 bedrooms'.

I wish you the very best of luck with the situation you are in, but I would double check what any letting agent says if I were you to be sure.

by Mike

0:31 AM, 28th July 2016, About 5 years ago

Even if a house designated for use as a single family home, and a landlord lets it to a single family, later on the tenant allows it to be occupied two or more occupants, the selective license conditions are then breached as any area that comes under selective license scheme automatically comes under additional licensing scheme. One of the conditions of the licensing is that a landlord or the agent has to make frequent visits to the property and log all inspections with date and time, and maintain property in highest standard, sometimes in better state than landlords own home!

I know of one such landlady who was prosecuted by Newham Council for allowing her 3 bedroom house with a selective license to 4 household, totalling 6 occupants, now as far as I am concerned, 6 occupants in 5 rooms is not overcrowding, however the poor landlady perhaps landlord by chance obtained a selective license and when she should have had an Additional HMO license, she was prosecuted and Magistrates Court fined her almost £40,000.00 a figure so ridiculously high, when you compare this poor honest lady who not knowingly committed this offence having been fines such a huge amount, compare this with a gang of criminals posing as tenants, who rented houses off good landlords and started to sub-let, stuffing like 10-15 people in each house they rented, 2 to 3 occupants in each room, and they operated all over London, fetching them an income of well over £1.2Million were caught and prosecuted and were each fined no more than around £13,000.00 each , so how does this compare with this poor lady landlord who became a victim of a council run by people who lack sympathy and abusing the Acts of parliament to their own advantage. We need to stand off against such ruthless councils, and gather a local Brexit against them. They intimidate local residents who are equally stupid by allowing them to stay in power year after year.

by Mandy Thomson

7:34 AM, 28th July 2016, About 5 years ago

Reply to the comment left by "Mike " at "28/07/2016 - 00:31":

"any area that comes under selective license scheme automatically comes under additional licensing scheme." Not strictly true - selective and additional licensing are two separate designations under the Housing Act 2004. However, I do agree that it would be UNLIKELY for a local authority which introduced selective licensing NOT to require additional licensing, but many authorities will have additional licensing but will consider selective licensing as a step too far - therefore, even if the property isn't subject to selective licensing, I would be inclined to check about additional licensing - I wouldn't necessarily rely on the agent's advice, as licensing conditions can change and can be confusing, even for professionals (and letting agents often delegate property management to junior staff who are untrained).

As for the condition of a rental property, in many ways, the standard is always higher than for a residential property, as you're taking money, usually a lot of money, in return for providing housing and a service, and this imposes a duty of care. Licensing schemes insist on high standards of safety, sometimes even higher than the legal requirement (e.g. the recent ruling on Hynburn http://localgovernmentlawyer.co.uk/index.php?option=com_content&view=article&id=24494%3Aimposing-conditions-on-selective-licences&catid=60&Itemid=28), but they will also stipulate that the property is maintained to a reasonable standard too.

by Mandy Thomson

7:57 AM, 28th July 2016, About 5 years ago

Reply to the comment left by "Michele Brown" at "27/07/2016 - 22:09":

@Michelle - you said - "We have decided that we will try and add the 2 people who are sub letting onto the tenancy, that is as long as they pass credit checks etc, then near the end of the AST for the tenant issue a section 21. The letting agents have already issued a section 21 but say that as such it is not valid and was just a way of them being able to get into the property to assess the situation."

I would be inclined to issue a Section 21 on the tenant now (whether you intend to grant the lodgers a tenancy or not). I'm also concerned as to why the agent is saying they already issued a S.21 but it's invalid - WHY is it that? You are still legally entitled to serve S.21 on the tenant at the property while he is out of the country, as any reasonable person would ensure their mail was taken care of during their absence - but I would email or text him as well, as a courtesy and to cover yourself.

However, if you do serve S.21 later, after having done an assignment of tenancy and added the other occupiers (for which you will of course require the current tenant's signature and consent), you would have to serve it on all the tenants, as joint tenants are regarded in law as one tenant (you might then choose to issue a new AST to the tenants you want to keep).


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