Subletting Daniel Panormo Enforcement Manager Southwark Council www.southwark.gov.uk
Contents Introduction Private Sector Leases Right to Buy / Right to Acquire leases How a landlord manages a property that is sublet / services that can be offered Houses of Multiple Occupation (HMOs) Questions www.southwark.gov.uk
Introduction What is subletting? Part or whole? Is the Freeholder s permission required? Why do Freeholders want to know when a property is sublet? Invoicing Notices Consultation Contact details www.southwark.gov.uk
Right to Buy leases Covenants implied in to leases by Schedule 6 Housing Act 1985 Housing Act 1985 Schedule 6 Para. 17(2): A provision of the lease, or of an agreement collateral to it, is void in so far as it purports to prohibit or restrict the assignment of the lease or the subletting, wholly or in part, of the dwelling-house. www.southwark.gov.uk
Right to Buy leases The lease can not restrict the leaseholder s right to sublet their property. This includes any provision which requires the landlord s consent to sublet or the payment of a fee. The effect of the wording purports to restrict. Any requirement for a forwarding address or managing agent details is also void. www.southwark.gov.uk
House of Multiple Occupation A property is a House in Multiple Occupation (HMO) if both of the following apply: at least 3 tenants live there, forming more than 1 household you share toilet, bathroom or kitchen facilities with other tenants Licence may be required A property is a large HMO if all of the following apply: it s at least 3 storeys high at least 5 tenants live there, forming more than 1 household you share toilet, bathroom or kitchen facilities with other tenants Licence required www.southwark.gov.uk
House of Multiple Occupation HMO Conditions The owner of the property must make sure: the property is suitable for the number of occupants (eg size and facilities) the manager of the property the owner or an agent - is considered to be fit and proper send the council an updated gas safety certificate every year install and maintain smoke alarms provide safety certificates for all electrical appliances when requested The council may add other conditions to a HMO licence but these will vary with each authority Any penalties relating to the HMO licence (or the lack of) will be the responsibility of the owner of the property rather than the freeholder unless they are one and the same. www.southwark.gov.uk
House of Multiple Occupation Impact on the building and residents Noise Waste Wear and tear Insurance If the leaseholder does not correctly licence a property as a HMO then this is a breach of standard insurance conditions Did the extra occupancy impact on the damage? www.southwark.gov.uk
House of Multiple Occupation Fire safety You are six times more likely to die in a fire if you live in any house in multiple occupation (HMO), compared with a single family house. The risk increases to sixteen times more at risk of fatal injury if you live in an HMO which is 3 or more storeys high. Regulatory Reform (Fire Safety) Order 2005 consolidates the fire safety provisions of other legislation under one simplified set of goal based requirements Risk assessment will be used as the basis for compliance and the responsible person on the premises is held liable in the case of any breach. www.southwark.gov.uk
House of Multiple Occupation Gas and Electrical Safety All gas appliances must be tested annually Fixed electrical installations to be inspected and tested at least every five years Gas and Electrical Safety Certificates must be supplied to the Freeholder within seven days of request Alterations Have any conversion works been carried out? Was freeholder s consent required? Has PP / Building Control approval been obtained? www.southwark.gov.uk
Robert Marcantoni Head of Portfolio Management
Introduction Who and How 100% Leasehold and Shared Ownership Enforcement Leases and Permissions Fees Compliance OPPORTUNITY
Who and how? Lease specifies whether you are allowed to sublet your home. Usually OK if bought under the right-to-buy, right-toacquire or outright sales schemes - if home is owned outright. People who have bought under the shared-ownership or home-equity schemes cannot usually sublet unless they meet certain conditions. Should not be able to sublet if rent or service charges are owing.
Checking Permissions If the lease allows subletting they must first get written permission from you. If sublet without permission in writing - could be breaking the conditions of their lease. If they have a mortgage, they will need to check with their mortgage company that they are allowed to sublet best practise to request this permission in writing.
The Subtenant Subtenant must sign an assured shorthold tenancy agreement. This should cover the same clauses as the lease, so that the tenant is required to meet the same conditions as the leaseholder for example concerning noise nuisance. Should include a clause which allows two months' notice of ending the tenancy.
What you should ask for A copy of the shorthold tenancy agreement. The letter from mortgage company giving permission to sublet. Contact details for the subtenant. New leaseholder contact details to contact in an emergency AND details of the letting agent, if applicable.
What they are getting into Leaseholder is responsible for the actions and behaviour of their subtenants. If their subtenant breaks the conditions of the lease, the leaseholder will be held accountable and action could be taken against them. Home contents insurance may be invalid.
Shared Ownership Many mortgage agreements prohibit renting out the property to someone else. If they haven't yet 'staircased' to 100% ownership - must be main residence. In a property with two or more bedrooms may permitted to let one out, as long as still living in the property & mortgage provider agrees. Exceptional Circumstances
Sublet a retirement flat? The terms the lease will determine sublet arrangements. It will likely have conditions attached to it. Most retirement properties will limit the category of persons that can sublet to.
Enforcement? Shared Ownership Unlawful subletting of social housing Not criminal offence. Profit Orders not possible? Lenders. Forfeiture?
Know your leases You need to examine the lease carefully not all leases are the same - even in the same block! Majority of shared ownership leases prevent subletting - but can impact on S106 even after staircasing. Can you charge a fee? Does the landlord have an absolute discretion to allow or to refuse to allow subletting? Freeholder / 3 rd party managing agent.
Freeholder/Landlord Permission Ensure that the lease allows subletting. There may be a pre-condition that they must obtain consent from the landlord or some other party before subletting. Cannot sublet without first obtaining consent not to be unreasonably withheld. Head lease
Fees The reasonableness of a consent fee can be challenged as an administration charge at the First-tier Tribunal (Property Chamber). Policy or Lease Transparency
Compliance Gas Safety Certificate (CP12) Electrical Tests recommended NICEIC (Pat testing) Furniture and Furnishings (Fire) (Safety) Regulations Deposit Protection EPC pre market Client Accounts HMOs? Insurance Breach of S106 Immigration Status
Opportunity Why not let and manage the units Ready pool of landlords Control and compliant Easy sell Alternative options Generate income Citystyle
Things to consider Systems Contracts Financial Controls Compliance Skillset Geography Marketing
Questions Daniel Panormo Enforcement Manager Southwark Council Robert Marcantoni Head of Portfolio Management One Housing Citystyle