Can I legally have four tenants on a joint and severally liable AST agreement or is it an HMO?

by Readers Question

9:23 AM, 16th October 2015
About 3 years ago

Can I legally have four tenants on a joint and severally liable AST agreement or is it an HMO?

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Can I legally have four tenants on a joint and severally liable AST agreement or is it an HMO?

Currently I have two unrelated tenants who are friends on a joint and severally liable AST Agreement. This ends in January 2016. One tenant wishes to leave.joint

The other wishes to start a new tenancy with three friends, one of whom is single and the other a couple. Thus in the 3 bed, 3 story mid terrace house two bedroom will have one person each in and one bedroom will have a couple.

At first I just assumed that I could organize a new joint tenancy for all 4 friends who want to share. Now I have seen some references to new regulations about Houses in Multiple Occupation – for example a blog by Tessa Shepperson saying that any 3 unrelated tenants will probably equal an HMO.

If this is the case I will have to tell the current tenant that I cannot accept a new agreement based on four people sharing as I don’t want to deal with an HMO. This would be a pity as she is a good tenant. I have searched for information about definitions of HMOs since Oct 2015 but cannot find anything.

Can anyone help?

Many thanks indeed for any input!

Lucy



Comments

James Fraser

11:02 AM, 16th October 2015
About 3 years ago

If you have 3 unrelated tenants you have an HMO regardless of tenancy document. This does not necessarily make it licensable unless additional and/or selective licensing is in play in your area, but you would be subject to HMO management regulations.

Mark Crampton Smith

11:04 AM, 16th October 2015
About 3 years ago

Yes........ This will become an HMO. However, that will not be a problem to you unless your lender or LL insurers prohibit letting to sharers. It will also not be a problem unless the property is in an area where additional licensing has been introduced.......and that in itself is not an issue (you can always apply for a license) unless the area where the property is subject to a planning restriction by way of an Article four direction. I hope this helps. If you would like to discuss this please feel free to call me...... number is on the website.

Alistair Cooper

12:05 PM, 16th October 2015
About 3 years ago

Many lenders do accept up to 4 unrelated sharers on a single AST, but you will need to check as many also do not (Kent Reliance etc) and will require you to switch to a different product or pay an additional rate. If you only have 4 tenants in a 3 storey you will escape the need to license as an HMO but will need to meet higher fire regs (fire doors, hard wired alarm, etc)

Yvonne Francis

12:34 PM, 16th October 2015
About 3 years ago

Lucy it's best to contact your Council or look on their website. Council's can operate discretion.

In Oxford where I own HMO's it's three or more unrelated and nothing to do with storeys for the status of a property and it's need to be Licensed. The number of stories only relate to the type of fire bell you would require. You even need planning in Oxford within an area which includes most of the city.

Oxford City Council is labour controlled and one of the most extreme examples of Licensing.

I don't know about lenders as I have no borrowings but I do know about Councils so please check from the horses mouth as they say rather than rely on any advice.

Tom Kirkwood

9:22 AM, 19th October 2015
About 3 years ago

Every local authority in England is implementing the HMO regulations differently and at different speeds. They will have guidance for landlords on their website and an officer responsible for HMO regulations. Speak to them. I have always found them very helpful as their objective is to ensure safe high quality housing which is a goal I am sure all good landlords share.

Rob Crawford

11:33 AM, 20th October 2015
About 3 years ago

Hi Lucy, I don't think you have an issue here. Check your councils website for their definition of an HMO and also whether under their mandatory / additional / selective terms licensing applies. There is a difference between letting under a separate and individual AST's in terms of a landlord's responsibility for the shared areas, i.e. if under one AST the tenants will have equal responsibility for cleaning etc of those areas whilst under individual AST's you will have responsibility (and associated access) for these areas, unless stated otherwise in each AST. If you establish that you have an HMO that does not require a license, check that adjacent areas are not subject to additional / elective licensing as this may at some time spread into your area. A licensed property will need to comply with extra HMO fire regs etc that will, I suspect, require some work that could be costly.

Linda Lane

12:36 PM, 1st November 2015
About 3 years ago

On a different point is it alright to issue a joint tenancy agreement to sharers and leave out the joint liability bit? Sometimes sharer's don't like that and i am reckonning having a gaurantor for each is enough. What do people think.

Yvonne Francis

15:33 PM, 1st November 2015
About 3 years ago

Hi Linda
I don't think you can have a joint tenancy without being it being jointly and severally liable. If you have all four signed on to one document, and one disappears along with their guarantor, then who pays? And what could you do about it as you can't introduce a new tenant yourself, under a joint tenancy.

If you wanted tenants to be separate you would need separate leases.

It's always better for you and fairer for the group, if every tenant provides a guarantor in all circumstances.

I remember once, a parent of a tenant applying for one of my houses just couldn't believe the implications of a joint and severally liable lease. However she soon calmed down after I told her to check it out on the internet or go to a solicitor. She ate humble pie after realising she was jeopardising what turned out to be a very happy and successful tenancy. So you see Linda tenants and guarantors do accept it, as I can't think how it would work otherwise.


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