Subletting – what you need to know!
Generally we see that most leases contain a right for a tenant to sublet (or underlet) their premises. A landlord can limit a tenant’s ability to sublet by requiring that it must first give its prior consent to a proposed subletting, or (unusually) prohibiting subletting entirely.
Another trick we often see is a user clause, which has the effect of preventing subletting.
The interpretation of the subletting clause was highlighted in the recent case of Roundlistic Ltd v Jones and another in which the following clause was interpreted to determine whether it prevented the tenant from granting a sublease (though there was no express prohibition against subletting):
“Not to use the premises hereby demised or permit the same to be used for any purpose whatsoever other than as a single private dwelling house in the occupation of the Lessee and his family.”
The facts of the case were as follows:
- The original lease had been granted in 1978 then subsequently extended in 2012.
- Once the lease was extended the original tenant sold the flat.
- The new tenant contacted the landlord about granting a short term sublease of the lower maisonette.
- The landlord indicated that the proposal would be in breach of the covenant.
- The tenants pointed out that the lease did not contain any express restriction on subletting and proceeded to grant a 12 month assured shorthold tenancy.
Although the First Tier Tribunal (“FTT”) agreed with the landlord, essentially agreeing that the tenant could not sublet because of the user covenant (even though the lease did not expressly prevent subletting), they still found in favour of the tenant.
The reasons given by the FTT were that the landlord was prevented from doing this by an estoppel by convention (where both parties to a transaction act on an assumed state of facts or law), that the covenant would not be enforced, or the landlord had waived its right to enforce the covenant and the covenant amounted to an unfair contract term under the Unfair Terms in Consumer Contract Regulations 1999 (“UTCCR 1999”).
The landlord appealed the decision and the Upper Tribunal (Lands Chamber) allowed the appeal on the basis that the facts did not indicate that there was an estoppel by convention or waiver and that the UTCCR 1999 did not apply to the covenant. This is because the lease had been extended and the terms of the old lease were incorporated under statute, as a result of which UTCCR 1999 did not apply to the lease.
The case highlights the fact that, regardless as to whether the lease allows subletting, if the user clause itself only permits the flat to be used by the tenant and their family, this could prevent the lease being sublet, unless it is argued that this is an unfair term of the lease.
It is fairly common for people to need to move out of their permanent home for a short period (for example due to work commitments) and as such you must ensure that you are permitted under your lease to sublet your home on an assured shorthold tenancy during such a period.
You can also contact one of our other solicitors in the Residential Property team here.