Landlords are being warned that even a single unauthorised sub-let can expose them to prosecution under housing law, with severe financial and criminal penalties.

The warning comes after research from Direct Line business insurance revealed that two-thirds of landlords have uncovered tenants secretly sub-letting their properties.

What many landlords may not realise is that subletting even one bedroom can turn a standard single-let into a House in Multiple Occupation (HMO) under the Housing Act 2004.

Once a property becomes an HMO, landlords are legally bound by the Management of Houses in Multiple Occupation (England) Regulations 2006, which carry strict liability criminal offences.

Phil Turtle, a landlord law expert at Landlord Licensing & Defence, explains: “I can guarantee that unless your property has been designed as an HMO, yet your tenants turn it into one by subletting, the landlord will become criminally guilty of having inadequate fire alarms, inadequate fire doors and in many cases illegally operating an HMO without the necessary licence.

“All of that can lead to either a criminal prosecution and fines of at least £20,000 up to sometimes £50,000 to £80,000.”

While in theory councils could prosecute tenants who carry out unauthorised sublets, Turtle says this is rare and states: “On the odd occasion this happens, it is always in addition  to prosecuting or fining the landlord.”

The risks extend beyond prosecution.

If the sub-let creates an HMO that should have been licensed but was not, tenants can also bring a Rent Repayment Order (RRO) against the landlord for up to 12 months’ rent – set to rise to two years rent when the Renters Rights Bill comes into force.

In areas covered by Article 4 directions, landlords also risk planning enforcement action.

Where planning permission for an HMO has not been granted, breaches can lead to heavy fines under the Proceeds of Crime Act.

Turtle adds: “If any of this happens to you as a landlord, you frankly do not have the skills to get yourself out of this mess. Rule 1 is DO NOT speak to the council, you will only give them evidence for your prosecution.”