Subletting is one of the most divisive yet common practices in the UK. Some landlords have no issue with subletting, while others will do everything to prevent it from happening in their properties.

Is subletting illegal? There is no cut and dried answer for this as it depends on what kind of tenancy agreement you have with your landlord. Sometimes it's perfectly legal, but it can also land you in prison. Avoid all legal troubles before they come by having a close look at the information below.

1. What is Subletting?
2. Differences Between Subletting and Lodging
3. When is A Tenant Allowed To Sublet?
4. Things To Consider Before Subletting Your Home
5. What Would Happen If You Sublet Your Home Unlawfully?
6. Conclusion

1. What is Subletting?

When a tenant of a property rents out part of (a room, for example) or the entire property to someone else, this practice is known as subletting. The person renting from the existing tenant is called a subtenant¹.

To put it simply, the head landlord lets the property to the intermediate tenant, who in turn lets it, either in whole or in part, to the subtenant. From the subtenant's perspective, the intermediate tenant can be seen as the intermediate landlord.

The subtenant has exclusive use of the part of the property that has been let to them. This is also true when the whole property is sublet. It means if an existing subtenant decides to sublet their home, they will have to give up the right to enter it without the subtenant's permission.

2. Differences Between Subletting and Lodging

A lodger and a subtenant can both rent a room from an existing tenant. The main difference between lodging and subletting is in a sublet tenancy, the subtenant has exclusive use of the room, meaning the intermediate landlord has to ask for their permission before entering it².

This is not the case in lodging, where the landlord can go into the room without the lodger's permission. In practice, they often do so to provide services agreed beforehand with the lodger, such as cleaning.

3. When is A Tenant Allowed To Sublet?

Private Tenants

Most private tenants are in an Assured Shorthold Tenancy agreement with their landlords³. Depending on what this agreement says, the tenant may be able to sublet the property.

If you and your landlord have come with a term about subletting and put it in the tenancy agreement, it will always apply. If the term requires you to have your landlord's permission before subletting, they can't refuse it without a legitimate reason⁴.

If the agreement says nothing about this and you're currently in a fixed-term tenancy, you can sublet without your landlord's consent.

This is different in the case of periodic tenancies. If you rent a property from your landlord on a monthly basis, for example, and the tenancy agreement doesn't include any terms about subletting, you will have to seek your landlord's permission. They can refuse this request for any reason.

Social Tenants

Tenants living in rented accommodation from local councils or housing associations are either in an introductory, secure, flexible or demoted tenancy. Your right to sublet depends on the type of tenancy agreement you're subject to.

Introductory tenants

Social landlords typically offer an introductory tenancy that lasts for one year to new tenants. In this trial period, you're not allowed to sublet the whole property. This is a criminal offence, and you could be prosecuted and evicted as a result⁵.

Introductory tenants can only sublet part of their properties with permission from their landlords, who can refuse without any reason.

Secure and Flexible tenants

After the introductory tenancy ends, it can become a secure or flexible tenancy, depending on what your landlord offers.

Secure and flexible tenants can take in lodgers or sublet part of the property⁶. While you don't need to seek the permission with lodging, you must have consent in writing from your local council or housing association to sublet. This can be given retrospectively, and your landlord can't deny the request without a valid reason.

You're still not allowed to sublet the whole property. This criminal offence can make you lose a secure status and at risk of eviction.

Demoted tenants

As a result of a tenant's antisocial behaviours, the social landlord may put them in a demoted tenancy. This is usually a weekly periodic tenancy and doesn't allow the tenant to sublet any part of the property.

4. Things To Consider Before Subletting Your Home

In addition to the circumstances where you're forbidden to sublet your home, other factors can also play a role and affect your tenancy. They can change your mind about whether you should become an intermediate landlord.

Housing Benefit and Universal Credit

When you're on Housing Benefit, the rent from your subtenant will be counted as income. The first £20 of weekly income from your subtenant will be ignored, however, and won't affect your Housing Benefit⁷. The extra money beyond this will reduce your award.

The rules are different if you're on Universal Credit since such rent won't be treated as income. It means your award won't be reduced no matter how much you charge your subtenant.

Council Tax

When subletting a spare room of your home, you're no longer entitled to the single person discount from your council⁸. You can make up for this by including it in the rent you charge your subtenant.

Income Tax

If you're an intermediate landlord and don't take part in the government's Rent a Room scheme, the rent will be taken into consideration when your Income Tax is calculated⁹. This excludes expenses such as repairs, maintenance, and insurance.

Your Income Tax will be paid differently if you participate in the Rent a Room scheme, which allows you to earn up to £7,500 tax-free per year from renting out furnished accommodation in your home.

Insurance

Your insurer may change your contents insurance policy if you sublet a home in your home to a subtenant. Most providers require you to tell them about this, or your policy may become invalid.

Maintenance and Repairs

When you become an intermediate landlord, you will have the responsibility for keeping your home in good working order. These repair obligations are set out in the Landlord and Tenant Act 1985¹⁰.

You will have to make sure the property is safe and fit to live for your subtenant, including keeping in repair, among other things, its structure and exterior, electrical wiring, radiator, water pipes, sinks, and toilets.

As a tenant yourself, these responsibilities should already belong to your landlord. You can contact them when an issue arises.

Checking immigration status

A landlord must check the tenant's right to rent a residential property in England. This is a legal requirement for private landlords, including intermediate landlords.

If you're subletting the property and your landlord isn't aware of this, you have to carry out the check or risk facing civil penalties¹¹.

5. What Would Happen If You Sublet Your Home Unlawfully?

If you sublet the property when you're not allowed to, your landlord has the right to take legal actions against you, including starting eviction proceedings.

Private tenancies

Sub-tenancies that go against the agreement between you and your private landlord may provide them with valid legal grounds to evict you. For example, if your tenancy agreement explicitly says that you must obtain consent from your landlord for subletting and you fail to do so, it could be considered as a breach of rental terms and conditions.

Your landlord, however, still has to follow strict legal procedures when asking you to leave. This involves either a notice requiring possession (a Section 21 notice) or a notice seeking possession (a Section 8 notice) with a reasonable period¹².

If you think your landlord has some misunderstanding about the subletting, you should get in touch with them and clear things up as soon as possible.

If your landlord insists that they're in the right and want to go ahead with the eviction proceedings, the court will decide whether it's reasonable for them to evict you. Certain tenancy agreements don't require landlords to give a reason when they want to end the tenancy, for example, with a break clause.

Social housing tenancies

Housing laws require all kinds of council and housing association tenants (introductory, secure, and flexible) to live in the rented property as their “only or principal home”. This means you will lose the tenancy status and face the risk of eviction and other legal actions if you sublet your home and have another property as your main home¹³.

The law also forbids those tenants from subletting their entire homes. Doing so will lose your tenancy status, and your social landlords can start the legal process to evict you.

Unlawful subletting is a criminal offence and makes you liable for prosecution. According to the Prevention of Social Housing Fraud Act 2013, you can be tried at either the Crown Court or the magistrates' court for two separate types of offences¹⁴.

The first and lighter offence is when you sublet your home and don't live there anymore as your main home while knowing that this is a violation of your tenancy agreement. The punishment for this “knowledge only” offence is limited to a fine and an unlawful profit order¹⁵.

The “dishonestly” offence, on the other hand, can result in imprisonment in addition to an unlawful profit order and a fine. You can be found guilty of this more serious offence if the subletting was done dishonestly.

The maximum fine of the first offence is £5,000, while the second may result in a two-year jail sentence in addition to a £50,000 fine. The court can also issue an unlawful profit order, which requires you to pay back the profits you have made from it.

Since unlawful subletting is a criminal offence, you should seek legal advice from a solicitor as soon as possible.

6. Conclusion

Subletting isn't always a black-and-white matter. It essentials come down to the contract you have with your landlord, and you never learn too much about legal restrictions regarding subletting.

There are circumstances where you're free to sublet your home, but there might be a risk of a huge penalty and even imprisonment on other occasions. If you're still not sure, seek legal advice before subletting your home.