Sublet in contravention of lease

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  • Sublet in contravention of lease

    We have a small block of flats with an enfranchised freehold (10 of 16 lessees participating, each owning a single share in the freehold company). Recently, one of the flats, with a non-participating lease, was discovered very recently to have been sublet in direct contravention of the lease and we have been trying to resolve the situation. There is no provision in the lease for permission to be given by the lessor, us. A significant complication is that the lessee has arranged the sublet with a contract with our local council's housing department. Our managing agent has been instructed by us to obtain some basic legal advice on the situation, which we are still awaiting.

    I would appreciate any advice from anyone, especially anyone who has been able to resolve a similar situation.

  • #2
    What EXACTLY does the lease say (the words).

    What exactly do you mean by "is subletting"?

    Of 16 flats only one is being rented out or is occupied by anyone other than a legal owner as stated on the land registry??

    Anyway - I feel for you -- having local Councils mess up the quality of life for everyone is not nice. But that is what they do.

    Comment


    • #3
      Leases need to specifically restrict sub-letting, otherwise it is legal for any period up to the balance of superior lease. Does your lease absolutely forbid sub-letting?

      Typical restrictions are:
      • not without permission (not to be unreasonably withheld);
      • not without permission (....) during the last seven years;
      • not to sub-let only a part (may say "part" or "any part");
      • and in more recent leases, apparently, not to sub-let except using an AST.

      Also, what is the nature of the let? Some councils basically act as a letting agent, but others take the sub-let themselves, and then do a lower level sub-let to their tenants. This last type is the least desirable for others and probably falls foul of any condition that requires an AST.

      If the lease specifically says may not be sub-let (without saying "in part"), or if it says AST's only, you should inform the council, as they probably do not want to participate in an illegal sub-let.

      Also, you seem to be in a strange part of the country if you only have 6% of the flats sub-let. In London you would expect upwards of 50%. Even before BtL, a blanket ban on sub-letting would probably reduce the value of the flat, as people often needed to work away from home for extended periods.

      Comment


      • #4
        Hello Andrew,

        Our interpretation of sublet is that a flat is let and the tenant lets onwards to another person. Typically here at our flats, half the flats are lease owner occupied and half are let by the lessees to tenants, either directly or via letting agent. Up to this point, non had been let onwards by tenants. In this case, the tenant is the council with which the lessee has a contract. The council (sub)lets on the flat.

        Under the lease section, Assignment and Underletting (7)(a) - Not at any time to assign sublet charge or part with possession of part only of the Demised Premises or to permit or suffer the same to be done
        (b) Not at any time to assign or sublet for a period exceeding twelve months or part with possession of the whole of the Demised Premises or permit or suffer the same to be done unless

        The next subsection (i) describes in quite a bit of detail provisions for covenanting between the lessor and lessee covering subletting. No such covenenting has been entered into. I can type up this section for you, but it may take a while.

        We agree with you on the risks and consequences of subletting, legitamtely or otherwise.

        Comment


        • #5
          Originally posted by meridianG61 View Post
          Our interpretation of sublet is that a flat is let and the tenant lets onwards to another person. Typically here at our flats, half the flats are lease owner occupied and half are let by the lessees to tenants, either directly or via letting agent. Up to this point, non had been let onwards by tenants. In this case, the tenant is the council with which the lessee has a contract. The council (sub)lets on the flat.
          The flats are not owned by the "owner occupiers". They are let on a long lease to them. That moves the first let up one level and means that half of your flats are already sub-let. The council is sub-sub-letting.

          At the moment, as long as the contract is for no more than 12 months, and the council doesn't use ASTs of more than 12 months, it would seem you have no case. One needs to know both the nature of the contract with the council and details of the covenants that you removed.

          Comment


          • #6
            If you are talking about a scheme something like this one (picked by a Google search on its properties - I have no experience of them or their tenants) http://www.genesisha.org.uk/landlords.aspx the lease is likely to be more than one year (three or five in their case). In that case, the parts of the lease that you haven't yet provided come into play.

            On the other hand, there is an arrangement where councils basically act as letting and managing agents, and are not an intermediate landlord. In that case, the sub-let is likely to be less then 12 months.

            I'm guessing that the spirit of the lease is that for shorter lets, if the sub-tenant breaches the head lease, they can be got out within a reasonable time, by threatening their landlord with forfeiture, but for longer lets, one needs to be able to enforce the covenants directly against them. I'm in a position where no permission is required, but, with hindsight, you really want the covenants in the head lease imposed on the sub-tenant, even for shorter lets.

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            • #7
              If half the flats are already sub let, it is going to be difficult to enforce any terms that relate to subletting without enforcing them for everyone.

              The landlord of the tenant who has subsequently sublet may be able to enforce a specific term in their own agreement with the subletting tenant.
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


              • #8
                Thanks everyone,

                I had a bad feeling that we would have a problem, especially regarding the pre-existing lets here being regarded in reality as sublets. We will see what we can find out about the contract between the lessee and the council and whether the council is acting as a virtual letting/managing agent. We do not yet know the length of the let or whether it is an AST.

                To leaseholder54: we have not removed any covenants, unless you mean that, by sub lets having been allowed over the years, covenants have been removed in effect. I was a little sloppy with my term of owner occupiers instead of lessees and understand the distinction you make.

                Just an additional detail that probably changes nothing, we enfranchised the property in 2008 and inherited the situation of flats being let out at the time. The previous lessor would probably have been aware of the lets but did nothing to change things.

                I will pass on this info', above, to our managing agents.

                Comment


                • #9
                  What I meant by removed covenants is that you said that the lease says that if the sub-let is more than a year some extra clauses apply, and you have not provided those clauses.

                  I think a normal AST would be passed as being under a year.

                  Comment


                  • #10
                    Originally posted by jpkeates View Post
                    If half the flats are already sub let, it is going to be difficult to enforce any terms that relate to subletting without enforcing them for everyone.

                    The landlord of the tenant who has subsequently sublet may be able to enforce a specific term in their own agreement with the subletting tenant.
                    Agree with this one post.

                    The other arguments that a lease is a 'letting one level up from a sub let' is both nonsense and irrelevant. Tenants or sub tenants do not have a registered title. A leasehold is a registered title. Yes it is a 'tenancy', but lumping it in with 'levels of subletting' is like describing an articulated lorry as one level up from a Morris Minor because they are both vehicles. This does not help those who seek answers but I notice this forum often makes the point for no reason I can see. Leasehold is leasehold 'ownership', get over it. Or stand for parliament and scratch your obsession with parsing language because even governments describe it as home ownership. You cannot mortgage a letting, let alone a sub letting. You can mortgage a leasehold.

                    As for the poor OP hoping for a useful answer, the OP seems to say that they have a freehold company with a lease that requires consent for LEASEHOLDERS to sublet their demise. But says....

                    OP: "There is no provision in the lease for permission to be given by the lessor, us."

                    Surely, this factually contradicts post #4: "The next subsection (i) describes in quite a bit of detail provisions for covenanting between the lessor and lessee covering subletting."

                    Post #4 also : "Typically here ... half the flats are lease owner occupied and half are let by the lessees to tenants, either directly or via letting agent."

                    and as for the lease...

                    "(b) Not at any time to assign or sublet for a period exceeding twelve months or part with possession of the whole of the Demised Premises or permit or suffer the same to be done unless...???"

                    Assuming the 'unless' then mentions consent being required not to be unreasonably withheld, blah blah, on face value (b) allows LESSEES to sublet for under 1 year - is that factual?


                    OP: "The LESSEE has arranged a sublet with the council."

                    So... we seem to have half the LESSEES already subletting their demise ( a 'letting' is not a demise funny enough) and either THEY had consent or THEY are all in breach already.

                    What the OP seems to have a grievance about is one LESSEE who sublet to the council so that they in turn could sublet?

                    I would say that a half decent lawyer could sort this out. The Freeholder company has done the sensible thing to get legal advice. Hopefully the lawyer approached will not go off on pointless tangents about the nature of leasehold tenure.

                    The issue would seem to be as jpkeates said, whether the freeholder has waved any right to impose the need for consent to sublet. And if not, (i.e. the level of difficulty) what conditions can be applied to the sublet so that a chain does not arise. I suspect nobody here, including myself, has a legal clue on the true answer to that.

                    The rest is theology.
                    Do not read my offerings, based purely on my research or experience as a lessee, as legal advice. If you need legal advice please see a solicitor.

                    Comment


                    • #11
                      Perhaps I am making assumptions here, but it appears that many of the flats in your development are sublet but it is this particular leaseholder's sublet that is cause for concern. Is this because the occupants of this leaseholder's flat (the council's tenants) are displaying anti-social behaviour? If so, then instead of using the subletting clauses to tackle the leaseholder whose flat has been sublet to the council, you might be able to use the user or even the nuisance clauses. It depends what your user and nuisance clauses say, of course.

                      I have come across a First Tier Tribunal case with similar issues to this. Of specific relevance to your case is Paragraph 20 of the decision report although the whole report makes relevant reading for you. The link is here:

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