It did not get much publicity when the Chancellor made his budget speech in Parliament but one piece of small print could bring huge problems for landlords.
That's because the government is going to make it easier for tenants to sublet their properties.
The relevant section is called 'support for the sharing economy' which makes clear that the government will make it easier for tenants on a fixed term tenancy agreement to sublet a room.
There are no further details about this proposal which could enable people to let a spare room via a website such as Airbnb or whether it will give the tenant power to sublet the whole of the property to a third party.
Subletting ‘nightmare’ for landlords
Now the chairman of the Residential Landlords’ Association (RLA), Alan Ward, says the new policy could be a 'nightmare in the making' for landlords everywhere.
He said: “There are key questions which remain unanswered, such as who will be responsible if the subletting tenant leaves a property but the tenant they have sublet to wants to stay.”
Mr Ward also pointed out that there were issues with the government demand that landlords check the immigration status of their tenants as to who would be responsible for carrying this out.
He added: “It's hard to see who benefits from this idea other than those tenants who are looking to rip off landlords.”
Paul Shamplina, the founder of eviction specialist Landlord Action, said that the move could be a catastrophe for the rental industry.
Subletting scams could rise with new rule
He said that he had been warning repeatedly about the growing risk from subletting scams in private rental properties, particularly in London.
Mr Shapley and added: “We have seen problems with tenants taking a tenancy and then without even moving in, putting up partitions and then subletting to as many other people as possible.”
In addition to the problems caused to the landlord's property there are also questions of insurance cover being valid.
London deposits at double national average
The deposit protection service, the DPS, has revealed that renters in London are paying twice the average deposit than in England and Wales.
Deposits given to the DPS for protection average £1,722. The national average is £819.
The news comes after revelations that wealthy tenants in central London have paid more than £100 million up front to secure their rental properties in the first 10 weeks of this year.
The figure has been reached as tenants are opting to pay their entire rent either six months or for a year in full, says agent EJ Harris and Dataloft.
Rents on some of the prime addresses are averaging £3,500 week. This means that some landlords are receiving more than £200,000; this will include the rent of £182,000 for the year and a £21,000 deposit. These figures exclude letting agency fees.
