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  • Problem Tenants

    AST Tenants turned House into Airbnb hostel

    As a newish landlord (this is not my job), I have just found out I have a possibly major problem, and would be grateful for any salient advice.

    FACTS:

    I own a mortgage-free 3-storey 4-bedroom freehold house in London which I have let out to 3 tenants via an AST (12 months, no Break Clause; each is listed on the contract) for the past 2 years via a local Letting Agent.

    They have been unproblematic (until now); kept the property in good condition (even minorly improved it in some areas); always paid rent on time; never caused problems or nuisance; never even asked for any repairs.

    They renewed their Tenancy a week ago and I intend this to be the last year of rental.

    I hope to get planning permission over the coming year to start major construction works on it in a year’s time. I need the rental income to help fund the future build.

    .

    I have just discovered to my horror (initially online, and then via a visit to the inside of the building) that the tenants have turned the entire building into a series of Airbnb lets - with 6 rooms (including the 2 living rooms) listed at the property.

    Upon further research I found that they are also doing this at almost 40 other listings across 6 other properties – some of which, including mine, they have listed on BookingDOTcom & other sites.

    This is contrary to the terms of my contract with them, which forbids subletting (as well as use of the living rooms as bedrooms).

    .

    Deeply worryingly, their subletting also potentially invalidates my landlords insurance (which I just renewed and paid for in full up-front), which is invalid with change of tenant circumstances, & any loss or damage caused by non-tenants.

    .

    (1) INSURERS:

    I want to tell them immediately and discuss this with them, thought fear that they will regard this as void; refuse to alter the contract; refuse to repay any portion relating to the remaining term.

    --Is there any way in which Insurance Policies in such instances can be honoured, e.g. though amendment? I worry that they may agree to an amendment yet later claim that the Policy was automatically invalidated when the tenants started renting out.

    --Is there any insurer out there who would insure this situation?

    .

    (2) ENDING THE TENANCY:

    (a) My initial instinct is to talk to the tenants and get them to stop, but that might not work – and they clearly have a large number of upcoming bookings which they would probably want to try and honour – motivating their resistance.

    Despite having suffered broken trust, I’d be amenable to them staying if they desist, though I’d clearly need to more actively monitor the property, and would probably be best getting them out ASAP.

    My concern about the Airbnb discovery rests with the invalidation of insurance and any potential illegality, rather than increased wear & tear on a property that I hope to eventually gut.

    The Letting Agent says they cannot amend the contract in any way that will allow subletting.

    (b) From my understanding I cannot serve the Tenants a Section21 notice until 2 months before the end of their AST – almost 10 months away. There is no Break Clause.

    © From my understanding I could theoretically serve them a Section8 notice – on discretionary rather than mandatory grounds (#12) –– but because there are no rent arrears, this would not be likely to succeed, and be a waste of time and money, going to court & hiring a solicitor.

    I have heard and read this depressing (and seemingly illogical) advice from several people, including the National Landlords Association helpline earlier today.

    Everyone seems to be in agreement to avoid Section8 if at all possible

    So, scarily, it seems I am all out of options and cannot get the property insurable – unless we come to a Mutual Agreement of some sort, which I’ve read is usually triggered by Tenant request; best executed by deed; and difficult to achieve.

    The Letting Agent says my only option is a good solicitor.

    --Does anyone have any good advice on how to remedy this situation?

    (3) LICENSING:

    I have been reading around the topic since this arose and discovered another horror fact: that the local council designated a selective licensing zone 18 months ago  – and my house falls just within the zone, and should be licensed, even though my tenant arrangement would not ordinarily be subject to the HMO licensing covered by broader UK legislation.

    There seems no way round this other than to confess my idiocy in not knowing, and hope we can come to some agreement – which could entail large repayment of rent to them, and worse (though I do wonder how I would and could have known without reading the entire council’s website – and why the Letting Agent didn’t know).

    I’m scared (a) of possible punitive measures for something I had no idea about, and (b) that any remedies to the property that the council might require (e.g. it has basic carbon monoxide detector and battery smoke alarms, not interlinked electrical ones; no fire-escape signage or lighting) will be inordinately expensive for the brief period of further time that I hope will lapse before we start building works.

    --Does anyone have any good advice on how to remedy this situation, and pitfalls I should avoid?

    .

    Sorry for such a long post; I’m just trying to provide the detail helpful readers might ask for.

    Any helpful advice would be very gratefully received.

    Thank you.

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    What steps does your tenancy agreement state  you will take in case of breach of the agreement or invalidating your insurance? 

    Depending on your answer you may want to approach them to confirm you have been made aware of what they are doing, and it is a breach of local licensing conditions and is also invalidating your insurance.  In that instance, any repercussions of their actions is directly liable to themselves and they need to stop; ask them to confirm a statement which confirms what you have told them. 

    Check what charges you would incur for not complying with licensing conditions so that you can let them know. 

    With regards to invalidating your insurance the downside could be massive eg. what if an Airbnb guest tripped and hurt themselves whilst visiting, are THEY insured for this? If so their insurance is also invalid as they do not have permission from yourself to be renting in this way.

    I have found that presented with an approach such as this alarms the tenants and aids compliance.  You can then give them a get out clause that they may leave your property now.  Come to an agreement when a suitable cut off date will be. 

    Meanwhile you may want a side agreement that they pay you alot more over the next few weeks before they leave!

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    I don't agree with the advice you have been given. You should serve a section 8 notice. Yes it is a discretionary ground but your prospect of gaining possession is good. This is a serious breach which puts you in considerable difficulty.

    The "avoid section 8" line put out by some people, who should know better, is irresponsible nonsense. The court will give possession on s8 where a proper case is made out. I dont see that you will have many problems doing so.

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    David Smith
    Landlord & Tenant Solicitor
    Anthony Gold Solicitors

    Find me on LinkedIn: uk.linkedin.com/in/dsnsmith

    All opinions are my own and do not reflect those of my firm. No comment made should be taken as legal advice and you should consult a solicitor or other legal professional for advice on your specific situation.

    I'm not an expert on licensing, and have no personal experience of selective licensing but my understanding of selective licensing is that it is bespoke - each licensing scheme has it's own T&C. It's not HMO licensing, it can & often does apply to ALL renting. What makes you think that it wouldn't apply to you if your tenants weren't sub-letting?

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    You have been stitched up a treat by your LA and these tenants

    You are one of the many mug LL that are ripped off by idiot LA and criminal tenants

    You are the VICTIM here

    However the law will see it as your fault.

    For a start and for future reference NEVER allow a LA  to renew an AST

    There is nothing wrong with a rolling tenancy once the fixed term period has expired

    Believe me a tenancy guarantees NOTHING

    If the tenants want to leave before the AST expires they will!!!

    All an AST does is prevent the LL from evicting subject to all the conditions of the AST being complied with.

    Therefore in future offer no more than a year AST with a 6 month break clause.

    Your LA is useless; get rid of them!

    It usually makes eminent sense to commence a tenancy with a fixed term of 6 months.

    Though I can't remember why I believe it can be wise to offer a 7 month AST.

    It was posted on PT that a 7 month AST was beneficial; just can't remember  the context in which that was proven to be an effective strategy.

    Think it might have been for 6 months rent paid up front.

    The S8 route is the only viable legal route open to you.

    Do NOT come to any accommodation with the tenants.

    You will need to retain all deposits and sue them for illegal building works carried out at your property

    Your tenants are criminals and need to be got rid of ASAP

    Suggest they vacate immediately  or you will report their criminal activity to the police.

    They will be subject to the POCA for such criminal activity

    Police can shut down any rental property where criminal activity is occurring.

    Getting rid of these tenants will enable you to start your construction  works which you would have to do anyway.

    You need to be seen as doing the right thing.

    Potentially it might be worth instructing Anthony Gold as your solicitors  to carry out all the legal requirements

    Unfortunately  you need to prove you are the VICTIM

    If you don't you will be the one liable for everything that goes on at your now illegal letting.

    The tenants have forfeited any right to remain tenants.

    They need to go forthwith or they are just continuing to take the p###!!!!

    I'm not sure about the legalities of this for you; but  you may  be able to have the council impose a banning order on the property  which would mean the tenants had to leave with no eviction process required

    As I said the legal position on all this is well above my pay grade which is why using AG as very experienced  solicitors in all things property could be the best money you have ever spent!!!!

    Yours is a complex situation and in such a case I would use experienced  property solicitors

    AG could fit that bill nicely!

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    Hi Alex,

    You need to serve a section 8 notice, under breach of tenancy, its a discretionary ground, where you have to supply the evidence ( the listings on Airbnb) to the court, by way of witness statement and hope the Judge grants a possession order.

    We can assist you 0333 321 9415, option 1, I'm always looking to expose Airbnb stories on my latest series of Nightmare Tenant, Slum Landlords for Channel 5.

    regards


    Paul Shamplina

    Landlord Action


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    Founder of Landlord Action and Brand Ambassador for Hamilton Fraser

    Interesting Paul

    Might the LL in this case if it was shown on NMTSLL receive  some sort of fee from Channel 5!!!??

    Even if such fees just mitigated losses that could occur that is better than nothing and as you suggest would be a realistic case study to act as a warning to others.

    I reckon the programme has done more than any other in recent years to highlight the issues involved in the PRS.

    I always look upon each programme as a bir of a tutorial for me!

    Keep up the good work.

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    While deciding your next move I would contact Airbnb, booking.com and as many other sites as possible and let them know about the insurance and licencing issues. Explain you are reporting the tenants to the police as its criminal activity. Might have to bluff a bit but if you can convince them to take the adverts down your tenants might give up on your property. If they have no income they will have no interest in staying. Might just work. No expense involved just time.

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    It seems this crowd is carrying a mass fraud scam with other properties

    I reckon the police should be involved and the council.

    There are other LL out there that seem to be victims as well

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    There is a clear & serious breach of the tenancy agreement. This allows for a Section 8 eviction.

    Your insurance will become invalid if you fail to act promptly to this issue.

    Do you have legal cover included with your buy to let insurance policy? If so, I would contact them and get them involved from the outset as they will be able deal with it on your behalf.

    This is one of the scenarios that having legal protection, will be invaluable.

    As with every scenario, you will learn from your mistakes on this, as it appears that you have neglected to visit the property and carry out regular inspections. That is a fundamental part of being a landlord, either do it yourself or ensure that the agent does it on your behalf.

    As mentioned by others, get rid of the agent!


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    Dan

    Universal Property Services Ltd

    01473 723366

    07957471717

    http://www.universalpropertyservicesltd.com