Bridges to cross when renting property
As we discussed in this previous article, there are certain consents which a landlord must obtain before they can grant a lease to a tenant. Without these consents, a landlord may be in breach of the agreements they have with other parties, and this may put the tenant in a precarious position. These are more parties which a landlord needs to get consent from before entering into a tenancy agreement.
Has the landlord checked with their Insurer?
Although it is not a legal requirement for a landlord to be insured, taking out an appropriate insurance policy is a key part of being a sensible landlord. Standard home insurance policies will usually not sufficiently cover rental properties, because they do not cover against things like negligent tenant behaviour. This means that before renting out a property, a landlord must seek consent from their insurer in the form of confirmation that they will be covered by the policy when the property is rented out. If a lease is granted without consent from the insurer, a landlord may find themselves personally liable for damages caused by the tenant or any claims brought against them, as well as running the risk of having their standard home insurance invalidated.
Only once the landlord’s insurance company confirms that the landlord will be insured when the property is rented, should the lease be granted. It is likely that the landlord will need to switch from their standard home insurance policy to a more comprehensive special landlord insurance policy. To be valid, landlord insurance will come with certain conditions, such as that the property will not be left unoccupied for a certain number of days, which the tenant will have to agree to uphold.
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Has the landlord checked with any adult living in the property as a partner or spouse?
If the landlord has been living in the property they want to rent out, then they should get consent from any adult who has been living with them as a spouse or partner. This is because this other person may have acquired a legal interest in the property, such as the ones discussed below. If a lease is granted without their consent, they may enforce their occupation rights and jeopardise the tenant’s entitlement to stay in the property.
In Scotland, if a couple is in a marriage or civil partnership, but only one person’s name is in the title deed or tenancy agreement, the other person has the right to occupy the property due to the legal status of their relationship. However, if a couple is unmarried and not in a civil partnership, but they have been living together, and only one person’s name is in the title deed or tenancy agreement, the other person may apply to court for occupancy rights.
In England and Wales, if a couple is in a marriage or civil partnership, but only one person’s name is in the title deed or tenancy agreement, the other person has a right under the Family Law Act 1996 to (a) stay in the home unless a court order excludes it, and (b) ask a court to return home if they have moved out. On the other hand, if a couple is unmarried and not in a civil partnership, but they have been living together, and only one person’s name is in the title deed or tenancy agreement, then the other party has a mere licence to occupy the property. This means that they can only stay insofar as their partner lets them, and have to leave once given reasonable notice to do so, unless they can show a beneficial interest in the property, a contractual or irrevocable license, or estoppel rights.
Does the landlord have a Lender?
If the landlord has taken out a loan from an individual or organisation, and the property in question is somehow relevant to the loan, then they may have to obtain the lender’s consent before renting out the property. The landlord ought to check the loan agreement they have with the lender, and comply with its terms, especially if the proposed rent will amount to a new source of income which may need to be disclosed.
Once the lender grants consent for the landlord to let the property, perhaps under certain conditions such as a certain level of rent must be payable or a lease must under be under a certain period of time, then the landlord can go ahead with renting the property. A significant risk of renting without this consent is that the lease may trigger an enforcement action by the lender if its rules are not being followed. Another risk is that the lease may be void (unenforceable) against the lender. This means that the tenant may be asked to leave the property if the lender decides to sell it to a third party.
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The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.