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In order to obtain possession of a property in these cases the landlord has to serve a Section 8 Notice, citing the discretionary Ground 12 of the Housing Act 1988 as amended by the Housing Act 1996.
Tenants in local authority or housing association properties are likely to be either secure or flexible tenants and both have a legal right to sublet part of their home with their landlord's written permission. If they sublet without permission, they will be in breach of the tenancy agreement.
For private landlords with an Assured Shorthold Tenancy (AST) agreement it’s vital that the document covers the issues of subletting. Assured shorthold tenants may be able to sublet depending on what it says in the tenancy agreement form. If it contains a term about subletting, then this will always apply. If Assured shorthold tenants need your consent as landlord to sublet, you cannot unreasonably withhold it during the period of the AST (usually six months).
However, if a tenancy agreement says nothing about subletting, it's possible for the tenant to sublet without the landlord's consent.
Getting a licence for a House in Multiple Occupation
The property you let will be considered to be a House in Multiple Occupation (HMO) if three or more unrelated people live there as at least two separate households (e.g. three single people with their own rooms, or two couples each sharing a room). Your tenants would also need to share basic amenities such as a kitchen and/or bathroom.
You must have a licence if you’re renting out a large HMO. A licence is valid for a maximum of five years and you need a separate licence for each HMO you run. Your property is defined as a large HMO if it’s rented to five or more people who form more than one household, is at least three storeys high and your tenants share toilet, bathroom or kitchen facilities. Even if your property is smaller and rented to fewer people, you may still need a licence depending on the area.
In HMO tenancies commencing from 01 October 2015 (including renewals), the landlord or agent must now comply with section 6(5) of the Energy Performance of Buildings (England and Wales) Regulations 2012 by ensuring that a valid energy performance certificate is included free of charge in the prescribed information given to each tenant.
You should contact your local council to request an HMO licence in person, but if you use a managing agent they can apply for you. More details about how to apply for a licence in England can be found on the GOV.UK website.
Houses in Multiple Occupation
All houses let in multiple occupation must be licenced and properly managed in accordance with The Management of Houses in Multiple Occupation (England) Regulations 2006 SI 2006/372 and comply with local authority conditions.
From April 2006 it became mandatory to licence properties of three or more storeys containing five persons or more, comprising of more than one household.
The local council inspects HMOs and if conditions in the properties are not up to standard, the licence could be revoked. HMO landlords in England who fail to apply for a licence may face fines of up to £20,000, a criminal record and potentially rent repayment orders and a management order where the council takes control of their property.
More about subletting
Subletting happens when an existing tenant lets all or part of the property they have rented to someone else who is known as the subtenant, usually with the knowledge and permission of the property owner. The subtenant has a tenancy for all or part of the property which is let to them and they have exclusive use of that accommodation.
In this situation, the property owner is known as the head landlord. The tenant who rents to the subtenant creates a sub tenancy.
In some circumstances it's acceptable to sublet but if a tenant does so without obtaining your permission, or is not allowed to sublet all or part of your property under the terms of the lease, they will have done so unlawfully. In these cases a Section 8 Notice may be served citing the tenant’s breach of the lease agreement or a Section 21 Notice can be served without giving any reasons.
Before considering such legal action for repossession, it’s important to confirm that the tenant has indeed unlawfully sublet your property. If a friend or relative of the tenant has moved in temporarily and your tenant is not charging them rent, then that is not subletting.
Taking in a lodger under a licence agreement may not be considered to be subletting either because the lodger only has permission to occupy a room and does not have exclusive possession of the whole property.
What action can I take as a landlord for subletting?
Subletting may not be an issue if it is done with your permission. It may well be that your rental income is even more secure by your tenant subletting, provided it’s safe to do so. The implication may be that you could have charged more rent for the property, but some landlords could be prepared to trade that off against the fact that rent arrears will be unlikely.
Subletting even with your permission can become a problem if the subtenant causes a nuisance or disturbance. In law, there is rarely a compulsion on a landlord to do anything about an anti-social tenant and the occasions when landlords have to take action are quite limited.
However, the introduction of landlord licensing schemes now forces registered landlords to take legal action against anti-social tenants as a matter of course. A Section 8 Notice can be used if the tenant has breached any term of the tenancy agreement (other than one relating to the payment of rent) or the tenant or someone living with the tenant has caused a persistent nuisance to neighbours.
Both these grounds are discretionary and the court does not automatically have to make an order. Landlords registered with local authority schemes however are compelled to deal with nuisance tenants. Avoiding the penalties and fines that accompany non-compliance with the terms of their licence therefore means landlords need to take legal advice and action against anti-social tenants quickly.
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