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July 2012

Evicting Tenants who Sublet Rental Property – A Growing Concern for Landlords and Lettings.

The current property shortage has placed enormous pressure on an already strained rental market. As tenants seek to find accommodation unscrupulous individuals have been exploiting this shortage by subletting property without consent, both within the private rental market and particularly the social housing sector. This can take various forms, from a tenant signing for a property on the pretence that they want to live there and then subletting rooms out to various other tenants and sometimes using it as holiday lets. It can also involve a tenant letting a property and then renting it on at a higher price or tenants renting a property and sub-letting it into criminal gangs, who use the property for illegal activities, perhaps drugs.

Private Residential Landlords and Letting Agents are encouraged to seek help early to minimise losses, a specialist legal eviction company such as Evictions South East. www.evictions-southeast.co.uk

Not only do such activities place a greater burden on a housing market that is already swamped with potential tenants but it is also illegal unless, of course, it is clearly permitted in the tenancy agreement. In the first example, the signing of a property and subsequent subletting of individual rooms, the fraud encompasses two main elements; firstly by subletting the property; secondly by masquerading as a landlord to the people who rent the individual rooms. Recent punishments for successful prosecutions include loss of tenancy, fines, community service and even custodial sentences. Figures suggest that the problem is rife and research from HJK, the housing fraud specialist, suggests that up to a fifth of all council properties could be affected, the previous estimate of 160,000 national sublets is now thought to be more applicable only to London. Estimates of the cost of this to the UK taxpayer range from £2 million to £5 million a year. Given the gravity of the problem in the social housing sector, Grant Shapps, Housing Minister, recently announced plans to impose custodial sentences of up to two years, along with fines of up to £50,000.

This development is great news for landlords who, unlike councils, are often faced with the greatest problems when dealing with tenants who sublet. The problems for landlords are that the person in the property is not who they believed, leading to potential issues around debt, accountability and maintenance of the property. Landlords are often unsure of where to turn if they find that their seemingly trustworthy tenant has committed a fraudulent offence. They are often overwhelmed by the potential cost of evicting unscrupulous tenants, not to mention the complexities of the process itself. However the solution is often easier than imagined and can be resolved by having a Section 8 notice served, for breach of contract, and can then pursue eviction proceedings through the courts.

The growing awareness of the issue means that eviction is one of the main solutions to those found to be subletting a property that they have rented. In addition, under future plans, any monies recovered as a result of pursuing action against tenants who have sublet a property would be returned to the landlord, not into the coffers of the Council or Government. As subletting would be a criminal offence it would mean that the profits would become proceeds of crime and so would be available for confiscation upon conviction. By instructing solicitors at the earliest opportunity landlords can ensure that they stand the best chance of removing the tenants from their property and recouping some of their financial losses. The subletting of a property is relatively easy to prove, ranging from surveillance of the property, to unannounced visits, interviews and telephone hotlines where people can report subletting, sometimes with a cash incentive. This means that, with legal support, landlords and councils have a strong chance of recouping their properties.

With the growing awareness of the issue, the increase in sanctions for those found guilty and increasing pressure on rented housing, if you are a landlord or a council who suspects that your tenants are subletting the property what is the best course of action to take? Due to the complexities of housing law a prudent piece of advice would be to consult a solicitor who can, in the first instance, set about the process of eviction if it is proven that the property is being sublet. Given the increasing range of criminal recourse, a solicitor can also help to protect against financial losses. By adopting an offensive approach to tenancy fraud, it is hoped that the vast figures associated with the issue will rapidly become extinct.