The ability to sub-let is often the primary reason for buying a Lease.
When it is the sole objective of the purchase, it is imperative that you inform your Conveyancing Solicitor in advance of purchasing the property so that the lease agreement can be thoroughly checked.
Be aware that Lease provisions can still apply even when you have a share in the freehold.
What if there is no mention of sub-letting in my lease agreement?
There has to be an express provision restricting sub-letting in the agreement and if there is no restriction then the Leaseholder is free to sub-let without any control. Many Leases include a covenant or promise whereby the lessee cannot sub-let without the prior consent of the landlord.
Usually such a restriction will say that the consent cannot be unreasonably withheld. If there is no mention of reasonableness in the covenant then statute implies a test of reasonableness; section 19(1) of the Landlord and Tenant Act 1927 states that this kind of clause must always be read subject to a qualification that consent cannot be unreasonably withheld.
A landlord who receives a written application for permission to sublet must reply formally and within a reasonable time frame. If he refuses permission, he must give reasons.
If consent is made subject to conditions, these conditions must also be reasonable. If the landlord doesn’t reply, or withholds permission on unreasonable grounds, the tenant can sue the landlord for damages.
What if the term of my leasehold is long?
Some people are surprised to find out that their ability to sub-let can be restricted when a long leasehold interest has been purchased.
The main reason often put forward by landlords for prohibiting sub-letting is that other leaseholders in the block may be prejudiced if there is no such restriction. If most of the flats are occupied by people who do not own their property they will not care as much about the standard of the building and as a result the value of the flats in the building could diminish.
Landlords and managing agents will sometimes require that a fee be paid for the work associated with approving a sub-tenant. Sometimes these costs can be quite high (we have seen it as high as £1000).
Additional costs can be incurred because there is likely to be a requirement that the landlord be given notice within a prescribed time frame (often 21 days) of any sub-letting, which means providing a copy of the sub-letting agreement and paying a fee for registration with the landlord’s Conveyancing Solicitor. The registration fee is normally around £40 plus VAT.
Can I sub-let without informing my landlord?
Usually it is because the sub-tenants do something that irritates the neighbouring flats or other people in the building leading to complaints to the landlord or their agents. If you are going to take the gamble and sublet without the landlords consent (and we advise against this) you better ensure that you reduce the risk of you neighbours complaining by ensuring that your home is not used for any illegal activity and that your home is not used for commercial activity.
If your landlord does find out that you are sub-letting, he/she may then demand that the sub-letting ceases and will often take legal action against you. An aggressive landlord could instruct a Conveyancing Solicitor to serve a notice threatening forfeiture of the Lease.
You would then be at risk of losing your property unless the matter is remedied within a prescribed time frame. Forfeiture action can only take place with the permission of the Leasehold Valuation Tribunal or after obtaining a court judgement; however, it is best to avoid this situation entirely by obtaining the necessary consent beforehand.
It is not always clear what your rights and obligations are under a lease and it is advisable to instruct a qualified and experienced Conveyancing Solicitor to review this on your behalf.
For more information about the Conveyancing services offered by Fridaysmove, contact us on 0330 660 0286.