Q&A with Eddie Hooker: should rent to rent be regulated?

In this video Q&A with Eddie Hooker, property writer and editor of LandlordZONE, Nigel Lewis, talks to Eddie about rent to rent following the landmark Supreme Court decision that came down in favour of a landlord in a rent repayment order case. The decision in the Rakusen v Jepsen case means that superior landlords who sign rent to rent deals cannot be pursued for rent repayment orders and so only immediate landlords are liable.

The ruling has implications for rent to rent arrangements as it means that tenants cannot go after superior landlords when seeking redress, which is good news for landlords who discover that their property has been sublet unknowingly. For more detail on the Rakusen v Jepsen case read LandlordZONE’s article here.

David Smith, Head of Property Litigation at JMW Solicitors, was asked to intervene in this case for the NRLA. In this interview with Eddie Hooker and Paul Shamplina, he elaborates on the detail of the case and its implications for rent to rent.

While rent to rent is not an unsavoury practice and can be commercially viable, says Eddie, it is important to make sure everybody knows what they are doing as there are a lot of unknowns. This landmark case was triggered by the fact that the property was let out without an HMO licence to three tenants, who applied to a First Tier Property Tribunal for a rent repayment order of £26,140 against the superior landlord. The case highlights the lack of transparency about who was the head or sub landlord.

Eddie argues that we do need to do more about regulating rent to rent – landlords need to understand who they are renting to. While the property portal proposed under the Renters’ Reform Bill could help with this, of course rogue landlords won’t join the portal. Landlords need to be actively involved in their let, by carrying out regular inspections.

In the Supreme Court case, the NRLA had feared that, had the case gone the other way, then this could have had a negative impact on authorised rent to rent arrangements, leading to lower availability of budget accommodation to rent on a room-by-room basis. And Eddie makes the point that while there is a need for greater regulation, this needs to be done without cutting off the good end of the market, and focusing on the part of the market that deals with the rogues who are giving it a bad name.

Watch the video of the full interview for more insights from Eddie, and read our ultimate landlord guide to rent to rent for more information and guidance on rent to rent. You can also watch a continuation of the discussion with David Smith, highlighting some of the potential pitfalls of rent to rent below.