Subletting is becoming a big issue for landlords. In fact the National Landlords Association has found that nearly 50% of tenants who sublet do so behind their landlord’s back.

Whether a property is sublet once, or more than once, the act of subletting a property like this, will usually void the insurance policy on the property.

Although many tenants rent a property directly through the landlord who owns it, subletting is when an existing tenant lets all or part of their residence to another individual, known as a subtenant.

Subletting occurs when a tenant fails to obtain permission from the landlord, as required, or violates explicit prohibitions on subletting outlined in their signed rental agreement. In the sublet arrangement, the property owner is the primary landlord, and the existing tenant, leasing the property to a subtenant (referred to as the ‘mesne’ tenant), assumes the role of the landlord.

When a property is sublet, the owner of the building is the head landlord, while the existing tenant renting out the property (also known as the ‘mesne’ tenant) becomes the landlord of the subtenant. Prior to subletting, tenants must attain written permission from their landlord in order to adhere to the Housing Act 1988.

If tenants rent out your home without permission, landlords are within their rights to take action against said tenants and can even evict them due to breaking the tenancy agreement.

The insurance implications of subletting

In many cases, subletting is usually legal if the tenant gets approval from the landlord in advance but insurers don’t like it!

Subletting can increase the risk of damage to a property and, as there is no contractual agreement with the subletting tenant, landlords can’t claim or use the tenancy deposit for any property damage incurred as a result.

Make sure you inform your insurance broker or insurer if someone is subletting your property. Although this could increase the costs of your premiums, failure to make your insurance provider aware could invalidate the cover of your insurance agreement.

In addition many buy-to-let mortgage products specify no subletting within its conditions.

Please contact us if you have any questions relating to landlords insurance, subletting and how this could affect your existing insurance policy.