Santa’s grotto is safe from subletting, but is your property off the hook this Christmas?
Research from Total Landlord Insurance indicates a 14% rise year on year in the number of claims for malicious and accidental damage received as a direct result of short-term subletting.
Following on from our ebulletin in early November, “Short Term Letting, A Breach of Covenant”, we recommend that head landlords are extra vigilant over the festive period and reiterate to any long leaseholders within their properties that sub-letting is not a decision to be taken lightly. Although in many leases there are restrictions on the long leaseholder sub-letting (also called under-letting) the property, the volumes of short sublets tend to rise around Christmas and New Year.
Possible thanks to increased rent costs and tighter purse strings in the lead up to Christmas, long leaseholders can see short term sub-letting as a way to claw back some cash and provide them with a somewhat “easy” income. This can seem even more tempting if they will be out of the property visiting family or staying somewhere new for the holidays. Rather than leaving the property empty and them penniless, short term sub-letting can seem to be the answer to many of their problems.
What can be overlooked during all the arrangements however, is the fact sub-letting can breach a long leaseholders mortgage terms or, even worse, in some cases can invalidate their insurance policy. The alienation provisions may permit sub-letting with consent and in that event all the long leaseholder needs is the head landlord’s permission in order to sub-let. However, according to National Landlords Association research it appears almost half of leaseholders do so without the head landlord’s permission.
It is vital both parties are aware of the provisions of the lease, as a failure to comply could result in a breach of the tenancy agreement and put the long leaseholder at risk of eviction – something no doubt missing from their Christmas wish list. Furthermore, if covenants in the lease are not complied with, any claims for accidental or malicious damage to the property may be refused by the insurance company, leaving the potentially expensive bill with the long leaseholder. We suggest prompting long leaseholders to discuss any potential short term sub-lets with insurance companies and mortgage providers before finalising any arrangements or granting permission to sub-let. Specific insurance for landlords will provide cover for any accidental damage to the property and cover for glass breakages and lock and key replacement should the sub-tenant not be as trustworthy as once thought.
Should you require assistance with the provisions of a lease or have been asked to provide permission to let we would be happy to help. Please contact us on 0333 0300 200.
Merry Christmas to all from SLC Solicitors, and may we wish you a Happy (and sub-let free) New Year.