All flats and some freehold properties, especially the ones located on managed estates are subject to covenants affecting how the property is to be used and setting rules for when and to whom the property might be let. It is important for Property Owners and their Agents to consider those requirements prior to letting to ensure that all obligations are complied with and to avoid disputes. It is highly important for Block Managers, Developers, Managers and their Managing Agents to be familiar with any restrictions on, and obligations affecting, the letting of units within a development.This is a brief guide as to the matters to be considered when permitting the letting of a residential unit.
How to check
Check your lease or in the case of freehold property, the Transfer.
What to look for
In our experience the covenants placing restrictions on or imposing obligations for Property Owners intent on letting might include all or some of the following:-
A prohibition on letting of part only or taking in lodgers or paying guests
– This will prevent the letting of rooms within, as distinct from the whole, property.
– It will also prevent the letting of the property separately to its garage or parking space where the same is demised under a single Lease or Transfer.
A prohibition on letting of the whole
– A less common provision, but one that does appear from time to time, which will simply mean that the
property cannot be let.
Check the user covenant
– Most Leases/Transfers will restrict the type of use that a property is subjected to. For instance this may include a prohibition on the running of a business from the property or limit the occupiers to the members of a single family as distinct from, say, a group of individuals sharing;
– More recently “user covenants” have been relied upon to prevent Owners or Tenants letting the property on short term lets.
A requirement for licence to sub-let
– Where such a provision exists, you must obtain a licence from the relevant party. This usually means the Landlord or Management Company. The requirement will generally precede the letting. You need to ensure you obtain the licence before the Tenants move in.
– The requirement may also need the prospective Tenant to provide references. Or they may ask that the Landlord’s/Management Company’s costs are paid prior to the grant of the licence.
A requirement for entry into a deed of covenant
– A rare but not unheard of requirement may exist for the Tenant to enter into a direct covenant with the Landlord or Management Company.
– This requirement will generally always include provision for the Property Owner to pay the Landlord’s or Management Company’s costs for producing the deed.
Notice of sub-letting
– Almost all Leases and some Transfers will include a requirement for the Property Owner to serve notice on the Landlord or Development Manager whenever you let the property.
– You must accompany the notice by a copy of the tenancy agreement, a deed of covenant if necessary (see above), and a fee for the registration of the notice you serve.
– Usually the requirement is to do this within 21 or 28 days or one calendar month.
– Many Leases will prohibit the keeping of pets or other animals in the property. We have also seen some Transfers on high end managed estates. In some cases, the prohibition might be qualified by conditions either requiring prior licence to keep the pet.
– It is common, particularly on managed developments, to see strict parking regulations. This often happens in relation to parking spaces allocated to the property itself. But it also impacts other spaces allocated to visitors or general use.
– Also common is a prohibition on certain types of vehicles. Often you cannot enter them or park them on the development. Vans, caravans, motor homes, boats, trailers and various other vehicles that naturally fall outside of what you would describe as the family car or motor bike are often prohibited from a development.
– Another favourite is a prohibition on parking on the roadway of the development.
Whilst you hope that the tenant will not start knocking down walls etc., restrictions on alterations will include matters such as the erection of a satellite, for example.