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Posted on March 26th 2015 by admin-movingin

Concerns continue to mount over Budget sub-letting clause

Private tenants being given the legal right to sub-let could result in insurance costs being hiked for landlords right across the board.

The warning has come from Steve Jones, director of Rentguard Insurance, after a small print clause in the Budget said the Government would legislate to allow tenants to sub-let.

Jones said that for landlord insurance, rates are – among other factors – based on tenant type, with insurers attributing higher risk for student tenants than for example professionals.

Jones said: “It will be difficult for a landlord to disclose the details of their tenants, and answer the risk question accurately, if they no longer have the final say on who occupies their property.

“The real problem would come if underwriters decide to charge the higher rate to everyone to factor in the likelihood of damage caused by tenants sub-letting the property.”

Jones said problems may also arise as tenants are unlikely to professionally reference those they sub-let to and may as a result know very little about them, their lifestyle, background and ability to regularly pay the rent.

Further problems would arise if the original tenant left the property, but the tenant who had sub-let it stayed on.

He added that landlords’ legal requirement to check the immigration status of tenants, in the so-called right to rent regime, could be made particularly difficult if landlords are no longer fully in control over who is in their properties.

Jones said: “It remains to be seen if the Government will re-think this move after the backlash it has faced from the private rented sector, as at the moment it is hard to see who this new ruling benefits – other than tenants looking to rip-off hard-working landlords.”