An issue facing landlords and letting agents in the private rental sector is the increasing number of illegal sub-letting scams. These scams usually involve a person abusing a tenancy to profit from it by unlawfully sub-letting to someone else.
Most commonly, a person takes out a tenancy with a landlord or letting agent in the normal fashion, but never actually moves in. That person then re-lets the property to another subtenant (for more money) or even multiple occupants, without the landlord’s permission, in order to make a profit.
Illegal Sub-Letting Scenario
In early 2018, McCartan Lettings was facing an illegal sub-letting issue when the team discovered a tenant was letting out one of their landlord’s rental properties via Airbnb.
We had originally sourced a single professional person to take the tenancy of a three-bedroom property in Uplands for one of our established landlord. The tenancy started well but six weeks in, the tenant advised us that he was planning a buy a property and so wanted to move out.
We advised the tenant that he had signed and committed to a 12-month contract; but as gesture of goodwill, the landlord agreed he could be released from the tenancy if we were able to find another suitable tenant.
It was just after Christmas and so the most difficult time of year when the rental market is seasonally slow. After two months, we were still unable to find a suitable tenant for the property.
At the same time, we needed a different tenant to vacate a property short term to enable us to deal with dry rot issues and we looked at the Airbnb option for temporary accommodation. This is when we discovered that our Uplands property was being advertised by the tenant on Airbnb and he was taking bookings to sub-let the property.
We immediately advised the landlord of the situation, explaining that as her property was being sub-let by the tenant, then her insurance could be invalid. Her insurance company confirmed this fact.
On behalf of our landlord, we also promptly informed the tenant that he did not have consent to sub-let and that the property was no longer covered by insurance, putting himself, the landlord and his guests at risk. In addition, we advised Airbnb of the situation.
Despite requests from both the landlord and McCartan Lettings, Airbnb did not take the advert for the property down, even though tenant was clearly in breach of Airbnb’s own terms and conditions.
To protect the interests of our landlord, we carried out an emergency inspection even though we knew that the property was being kept in good order due to the Airbnb reviews!
We continually tried to contact the tenant regarding the breach of contract as well requesting evidence of his insurance to cover the property, which is a term of the Airbnb contract. He eventually responded to us, maintaining that the property was his to do what he liked with whilst he paid his rent.
We contacted the local media about the situation and the story was covered by on Wales online; we also reported on the situation in one of our own blogs.
We served notice on the tenant and as a last fit of defiance he refused pay the last two months’ rent even though he was taking Airbnb bookings taken right up to the end of the tenancy.
Protecting our Landlords
At McCartan Lettings we always strive to cover every possible scenario to protect our landlords, their properties and their money.
Unknown to the tenant, we had arranged for the landlord to take out a rent guarantee and legal expenses cover from Homelet. As the tenant didn’t pay two months’ rent, this triggered a claim with Homelet, ensuring the landlord’s rent was covered.
When the lease came to an end, we did not return the tenant’s deposit, and this was used to cover shortfall in the rent.
From the Landlord
The landlord admitted to us that she wouldn’t have the first idea of how to deal with this situation if we hadn’t been managing the property on her behalf and protecting her interests.
Says Mrs K the landlord, “When Hannah informed us that our property was being let out via Airbnb we were initially dismayed and didn’t know what to do next. With Hannah and her team’s guidance we navigated a complex situation, culminating in notice being served on the tenant. With the assistance of Homelet Insurance cover we were able to recoup the first month of rent arrears and did not return the tenant’s deposit to cover the second month of arrears. As the property had not been left in good condition (not cleaned, garden unkept and many items left behind), we are now chasing the tenant for costs whilst Homelet is pursuing him for the unpaid rent. I am extremely grateful to have had McCartans lettings guiding me through this process.”
At McCartan Lettings, we always endeavour to go the extra mile to ensure our tenants’ assets are protected at all times by putting in procedures to achieve this level of protection.
If you are a landlord who has concerns about a tenant’s behaviour or if you are dissatisfied with the service provided by your current letting agent, please call us today on 01792 430100.
Related: McCartan Lettings blog – Airbnb Guests at Risk From Illegal Subletting