As reported by residential Landlord some landlords are not aware of the risks of rent to rent if their property is not being used to it’s full potential.
A new, swiftly expanding rental movement dubbed ‘rent-to-rent’ could have serious repercussions for landlords, creating a legal ‘fiasco’, as described by David Smith of Anthony Gold Solicitors. The idea of ‘rent to rent’ or ‘multi let’ as it is often called, consists of tenants finding properties
where a landlord has not realised the true potential value that could be extracted from the house, and going on to sublet said property to another tenant.
There are theoretically many ways in which this can legally be done, generally through the use of management agreements, leases, guaranteed rent schemes and commercial or corporate tenancies. Such an arrangement could potentially be attractive to some landlords who may prefer a ‘hands off’ investment. However, Smith is quick to warn against such ideas: “If the landlord lets to a rent-to-renter they are creating a commercial tenancy which is subject to different laws than a residential tenancy,” he explains. “At the end of the tenancy the sub-tenants have the right to demand a new tenancy under a law designed to protect
commercial tenants such as shop owners. Landlords can lose control of their property this way.”
Further dangers for landlords involved in the multi-let craze include the potential for their property to be classed as a ‘House in Multiple Occupation’ by the council, meaning it would require a licence. Should the landlord not possess said licence, strict penalties may befall them.
However, although many landlords are entirely aware of the situation they are involved in, others may fall victim to the scams of unruly tenants with the intention to sublet the properties they rent through illegal action. It is common for middlemen to behave as normal tenants, signing an AST as
is the general practice. However, they then go on to let out the rooms of a house individually, often targeting houses with three bedrooms and two reception rooms, which can then be let out as a further two bedrooms, thus increasing the rental income from the property. Sometimes they pass the agreed rent onto the landlord, but often the original owner of the house will never receive the money they are owed. The tenants are meanwhile illegally occupying properties.
Belvoir Lettings Sheffield is the One Stop Specialists for Lettings including Property Management, Tenant Find, Investment and Wealth Management Advice, Fit-outs and Renovations, Furniture Packs and Investment Property Insurances and Mortgages.
Belvoir Sheffield was the winner of the Belvoir Franchise of the Year Award for 2013.
For more information, please visit www.belvoir.co.uk/sheffield or call 0114 25 25 215. Alternatively, please email us at sheffield@belvoirlettings.com For the most uptodate information
relevant to landlords and buy to let in the UK, and specifically the Sheffield Buy-to-Let Market ensure you follow Belvoir Sheffield on either facebook
at http://www.facebook.com/belvoirsheffield, Twitter at http://www.twitter.com/belvoirsheff, or visit our website at https://www.belvoir.co.uk/landlord-information
News feed taken from: http://www.residentiallandlord.co.uk/news/3247-the-risk-of-rent-to-rent.html
