Subletting - A Guide for Leaseholders

Are you thinking about subletting your property?

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Do you know whether you have permission to do this, and to make sure you go about subletting in the right way? This article will provide information and advice on housing issues if you are thinking about subletting your home and what could happen if you don't go about it correctly.

What is subletting?

Subletting exists when a leaseholder lets all or part of their leasehold property to someone else (called a subtenant).  The subtenant will have a tenancy agreement which requires them to pay rent to the leaseholder and allows them exclusive use to either all or part of the property.

What does your lease say about subletting?

Before considering any subletting it is vitally important that you check your lease to see what obligations are imposed upon you as a leaseholder, in regard to subletting.

The vast majority of leases prohibit subletting in order to protect the interests of other leaseholders who may occupy their properties.  It can be argued that too many tenant occupiers diminish the value of the apartments.

Your lease may also contain a prohibition on subletting part of the property (for example renting a room to a subtenant or renting rooms to individual tenants). 

However, most leases contain a clause that will require you to seek consent if you wish to sublet.  It is usual for this clause to be accompanied by a statement which says that consent cannot be unreasonably withheld.  It is common for a freeholder or their agent to charge for a letter of consent and the Upper Tribunal has ruled that the fee to provide consent cannot be more than £40 + VAT.

Any consent given by the freeholder should always be in writing. This will usually include a condition making it clear that any breach of lease by the subtenant will be treated as a breach of lease by the leaseholder.

In addition to consent, your lease may also contain a clause which requires you to notify the landlord of any subletting and to pay a registration fee.  The registration fee may be stipulated in your lease.  You will need to register the subletting and send details along with any registration fee, if required, within the timescale stated in your lease.

Check your lease – your lease may require either consent and registration, registration only or consent only.  It is up to you to ensure that you comply with the obligations in your lease.

If there is no clause in your lease in regard to subletting, then your lease is considered to be silent on this issue and therefore there is no restriction and you will be free to sublet.

What action can a freeholder take in regard to unlawful subletting?

If you need permission and/or to register the sublet and you do so without this then the freeholder is likely to take legal action against you in regard to unlawful subletting.  This is because you will be in breach of your lease because you have broken the terms of your lease agreement. 

Possession proceedings to evict you

Subletting without the freeholder’s consent gives grounds to start possession (forfeiture) proceedings against you. 

If you have sublet without consent and without registering the sublet then you should remedy the matter with immediate effect to prevent legal action. 

Next steps

If you intend to sublet then you should check your lease prior to any subletting to ensure you do not fall foul of your obligations. 

If you have sublet without meeting your obligations, then you should remedy the matter immediately. 

If you are considering buying a flat as a buy-to-let then you should advise your solicitor during the conveyancing process so that the lease can be checked.  Your solicitor may enquire on your behalf to see if the freeholder would agree to allow the lease to be varied.  If the freeholder is agreeable there would be a cost for this and you would be expected to cover their legal costs as well. 

Check if you require permission from your lender

In addition to checking your lease, it is important to get your lender’s consent for subletting.  If you require your lender’s consent and you sublet without first seeking their consent you could be in breach of your mortgage conditions.