Weekend Miscellaneous

Various bits and pieces on subletting and homelessness.

What is it about subletting and in particular the current vogue for ‘rent to rent’ that makes people so determinedly stupid? The lure of easy money with no responsibilities? The promise of being ‘in property’ with no outlay? What ever it is, it shows no signs of stopping.

We had a rant about ‘rent to rent’ practices here, and then there were the dimwits of Unlease, who are still apparently trying to make a go of it, despite a disastrous appearance by their director on Radio 4. On top of that, research by RLA suggests that Airbnb subletting is adding to the pressures on housing in London, as landlords use it in place of tenancies (and in breach of planning requirements).

Still, it was disappointing to see one of the landlord websites come up with a completely wrong ‘solution’ to making ‘rent to rent’ work and try to flog documents off the back of the solution. The only real issue it tries to tackle is the restriction imposed by most Buy to Let lenders than any tenancy granted must be an Assured Shorthold Tenancy of not more than 12 months. The cunning solution is:

I agree to sign a comprehensive but easy to understand legal document known as a Deed of Assurance.

Put in very simple terms, the Deed stipulates says that if I serve section 21 notice, despite the Rent-to-Rent operator having acted impeccably and stuck to the terms of the tenancy, then I have to pay an agreed level of compensation.

The Deed does not prevented me in any way from ending the tenancy so I’m not in breach of my mortgage conditions, but I would be liable to pay substantial compensation to the Rent to Rent if he had done nothing wrong.

If the Rent-to-Rent operator hasn’t stuck to the terms of the AST, for example if he fails to pay rent, then the Deed provides conditions to ensure that no compensation would payable for ending the tenancy.

The basis of the tenancy could be a simple six month AST rolling to a statutory periodic tenancy and granting rights to sublet. It is the Deed of Assurance that provides the Rent-to-Rent operator with the assurances he needs.

All very cunning (or not) except for the somewhat important point that a ‘rent to rent’ tenancy cannot be an AST. Not only because – as this article does recognise – a company can’t have an AST, but for the utterly obvious reason that the ‘rent to rent’ tenant, even if an individual, will not be living in the property as his or her only or principle home, or at all.

Section 1 Housing Act 1988:

1 Assured tenancies
(1) A tenancy under which a dwelling-house is let as a separate dwelling is for the purposes of this Act an assured tenancy if and so long as—
(a) the tenant or, as the case may be, each of the joint tenants is an individual; and
(b) the tenant or, as the case may be, at least one of the joint tenants occupies the dwelling-house as his only or principal home; […]

Mark Alexander (for it is he) appears to be blithely unaware of this, thinking he has made it ‘viable’.

No, Mark. You haven’t and it isn’t viable.  I did point this out via twitter, but so far no response.

On more serious  matters, the Commons Communities and Local Government Select Committee has followed up its report on homelessness with a (highly unusual) enquiry into the draft private members ‘Homelessness Reduction’ Bill – the private members bill is brought by Bob Blackman MP, who is on the select committee, and the committee has taken the unusual step of endorsing the Bill.

The draft Bill, due for second reading in October, is here. The committee has heard one evidence session on the Bill and is due to have another on 14 September, at which I’m one of those giving evidence. Broadly, the Bill adopts an amended version of the Welsh model of a prevention and relief duty, with an extended 56 day ‘threatened with homelessness’ period. The whole is well worth reading, though is obviously subject to revisions at this stage.

My written evidence on the Bill on behalf of HLPA is here, though I would also add I am also concerned about the handling of suitability and locality. Other written evidence to the committee is here.