In recent years, the private rented sector has been hit by an ever-growing list of regulations, penalties and compliance obligations. One area where the double standards are particularly stark is unauthorised subletting. When a council or social housing tenant sublets without permission, the system largely targets the tenant. But when the same thing happens in the private rented sector, it is often the landlord who ends up in the firing line — even when they had no knowledge of the subletting taking place.
This imbalance helps explain why so many landlords are deciding enough is enough and exiting the market.
When Council or Social Tenants Sublet
Social housing tenants who sublet without permission are in clear breach of their tenancy agreement. Councils and housing associations can take legal action to evict the tenant, and in cases of “unlawful subletting” (such as where a tenant moves out entirely and rents the whole property to someone else), criminal sanctions can apply.
According to Shelter, local authorities can prosecute tenants who unlawfully sublet their homes under the Prevention of Social Housing Fraud Act 2013. Convictions can lead to fines, imprisonment, and recovery of any profits made.
Importantly, the council or social landlord itself does not face financial penalties for the unauthorised subletting. The wrongdoing is attributed squarely to the tenant, and the remedy is eviction and/or prosecution of the tenant — not punishment of the landlord.
When Private Tenants Sublet
The situation for private landlords is entirely different. If a tenant sublets a property without permission, it can unwittingly turn the property into an unlicensed HMO (House in Multiple Occupation).
Under HMO licensing rules, if additional people move in and the property meets HMO criteria (e.g. three or more people from different households sharing facilities), the property may require a licence. If the landlord doesn’t have the appropriate licence — even if they had no knowledge that the tenant was subletting — they can face heavy financial penalties from the local authority, often running into tens of thousands of pounds.
As Citizens Advice notes, tenants may not have the legal right to sublet without the landlord’s permission. But if they do so and the landlord is unaware, enforcement action still tends to fall on the landlord.
Even more galling is the fact that the tenant who caused the breach can potentially claim compensation from the landlord through a Rent Repayment Order, arguing that the property was operating as an unlicensed HMO. Councils and tribunals have been known to accept this argument, resulting in landlords having to repay rent to the tenant who illegally sublet, on top of fines from the council.
Why the Double Standard?
The contrast is hard to ignore:
- Council/social housing: Tenant sublets → Tenant evicted or prosecuted. Landlord (council/housing association) faces no fines.
- Private rental: Tenant sublets → Landlord fined and potentially prosecuted. Tenant can sometimes claim compensation.
This double standard reflects a broader pattern where private landlords are treated as the default party to blame for any regulatory breach, regardless of the facts. Meanwhile, public landlords are rarely held to the same standard — whether in subletting cases, repairs, or compliance with EPC and safety requirements.
No Wonder So Many Landlords Are Leaving
When landlords are held responsible for the unlawful actions of their tenants — even when they had no knowledge or control — it’s no surprise that increasing numbers are choosing to exit the sector. Faced with regulatory risk, financial penalties, and legal grey areas that seem to favour tenants over landlords, many are deciding it’s simply not worth it.
Every Landlord Needs an Exit Strategy
Even if you’re not planning to sell now, every landlord should have a clear exit strategy in place. Regulatory changes can happen quickly, and enforcement action can be financially devastating. Knowing your options gives you control, whether you choose to keep your properties or sell them on your own terms.
Start the conversation with Landlord Sales Agency today to find out what we can do for you. We can help you plan ahead, sell quickly if needed, and ensure you stay one step ahead in an increasingly challenging market.