How to Avoid the Pitfalls of Subletting

If you decide to rent out your flat, it's important to be aware of some of the pitfalls of subletting.

When you became a leaseholder, you agreed to comply with the terms of the lease and to do things such as keeping it in good repair, paying your service charge and obtaining consent for certain actions. If you don't comply with these rules you are 'in breach' of your lease.

Before subletting you must check that you are permitted to sublet and whether you need to obtain any consent or licence to do so. If your lease requires your freeholder's or the management company's permission to sublet, make sure you apply for such permission in good time. If you have a mortgage you may be required to seek permission from your mortgage company.

You will be liable for the actions of your subtenants in relation to the lease so it's important that you inform them about any covenants relevant to them. For example, if there are restrictions on noise at certain times. If your subtenants behave unreasonably and annoy other residents, action may be taken against you.

In order to minimise the risks, we recommend that you and/or your agent;

are very careful about taking up references for any potential subtenants;
make the subtenants aware of the covenants under the lease that they need to comply with;
take immediate action to investigate and resolve any complaints about your subtenants.

Many leases only allow the occupation of a property by a single family solely for residential purposes. Short term serviced lettings, by the day or week, are regarded as carrying on a business and may not be permitted.

There may also be restrictions on the type of occupiers imposed by the building's insurance policy, for example, student lets are often excluded. You should check this before you agree a let. You may be held liable if you let your property to occupiers excluded under the policy and additional premium is required or the insurer refuses to meet a claim.

There are an increasing number of legal and health & safety obligations required to be met by private landlords. We strongly recommend that you appoint a professional lettings agent to help you with this compliance.

Nearly all leases require you to advise the freeholder or management company of any subletting. They will need to know:

An alternative correspondence address which can be used to write to you with service charge demands, notices of meetings, annual accounts etc.
A contact telephone number and email address which can be used to contact you with any queries or in the case of an emergency.
Contact details for your letting agency and / or your tenant (with their permission) so they can be contacted directly in case of emergency.

We have published advice guides on subletting for potential landlords and their tenants. Please visit our advice and guidance pages for further details.