Change of student tenant during tenancy

by Readers Question

12:34 PM, 22nd August 2016
About 2 years ago

Change of student tenant during tenancy

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Change of student tenant during tenancy

I have a student (international students) let in a HMO and one of the tenants want to leave (its a month into her tenancy) and go back to her home country as she is unwell. gold fish

I understand that she is liable for the full contract for the term however she can find a replacement tenant and a deed of assignment can be issued to capture this?

What happens to the deposit protected under the original four tenants? Also what about the Inventory? I have never had this before so am rather confused as I don’t want to compromise my legal situation and do everything correctly.

Raji



Comments

Mandy Thomson

17:36 PM, 22nd August 2016
About 2 years ago

Hi Raj

You haven't stated whether all 4 tenants are on a joint AST, but as you refer to the deposit being held on behalf of all 4 of them, am I correct in assuming that is the case?

Where you have joint tenancies, all the tenants on the AST are one and the same in a legal sense. They are all jointly and severally liable for carrying out their obligations under the AST.

It also means that if one tenant serves notice, he/she is serving notice to end the tenancy on behalf of all of them.

You can either assign the tenancy (assuming this is allowed for on the AST) once a new tenant has been found or you can draw up a deed of surrender (just a letter stating as such which you and all four tenants sign) ending the old tenancy and you would then draw up a new AST with the 3 remaining tenants plus the new one. Ensure at least two copies of the AST or deed of assignment are drawn up and signed. You keep one and the lead tenant keeps the other.

If you decide to assign, you can download a form from the RLA or NLA. This must be signed as a deed which means the signatures are witnessed.

Where the deposit is concerned, if you assign the existing tenancy, you would simply need to inform the company and follow their change of tenant procedure. However, you would need to ensure that the prescribed information is served on the new tenant within 30 days of her paying her share of the deposit, and of course ensure the departing tenant is repaid her share (either by the new tenant or yourself). You will also need to serve the new prescribed information (EPC, gas certificate - if property has gas and government "How to Rent" booklet) on the new tenant.

If you draw up a new AST, however, you will need to re-protect the deposit and serve all the prescribed information on all 4 tenants.

As the landlord, because your departing tenant is liable for rent while she is a party to the AST, you are also under a duty of care known as "mitigation of loss" to take all reasonable steps to find a new tenant ASAP. Although you should accept assistance from the existing tenants to find a new one, the legal responsibility lies with you.

Where the inventory is concerned, you would only need to do a partial check out, which takes in the old tenant's room and the common areas.

Mandy Thomson

17:50 PM, 22nd August 2016
About 2 years ago

Reply to the comment left by "Mandy Thomson" at "22/08/2016 - 17:36":

You might also want to ensure the departing tenant receives a signed copy of any assignment too!

Raj Kirpalani

18:00 PM, 22nd August 2016
About 2 years ago

Hi Mandy thanks for the response.

Yes it is a AST with four joint tenants. I was also wondering if the tenants can take in a lodger? I seem to recall seeing this on a landlord website. I can see this might ease the administration but still holds the outgoing tenant liable if the lodger does not pay. I would be worried about the lodger being someone who doesn't meet my own standards in terms of referencing etc.

The funny thing is i called up the RLA and one chap said that once you have signed a deed of assignment you need not do anything with the tenancy deposit or inventory. You have to do the right to rent and referencing as normal however. Another chap at the RLA said you can't do this and you need to do issue a new tenancy along with re protecting the deposit and taking into account an changes on the inventory.

That's where i got confused!

Mandy Thomson

18:25 PM, 22nd August 2016
About 2 years ago

Reply to the comment left by "Raj Kirpalani" at "22/08/2016 - 18:00":

Where the inventory is concerned, this obviously isn't a legal requirement merely a sensible precaution to protect all parties. I am doing my APIP in inventory management and the advice I've given you is ideally how it would be done in that situation.

Some landlords who let student property like to draw up a new AST in this situation, probably because it makes a clean break and the departing tenant is assured of their release from any obligation.

The Deregulation Act 2015 has simplified deposits where a "new" AST is entered into, but has also caused much confusion, even among experts - as you've found out! I have no doubt the people who man the RLA advice line are highly experienced - I've worked with their NLA counterparts recently and some are even barristers!

The reason I advised you to re-protect the deposit and re-serve the prescribed information on all the tenants, if you go down the new AST route, is because the parties will be different (i.e. the new tenant with the old one gone). Had you simply decided, say, to draw up a new AST with the same people once the fixed term had ended, under the Deregulation Act you wouldn't have needed to re-protect the deposit because it's the same parties and same property.

Taking in a lodger instead of another new tenant might be a good option if the remaining tenants aren't 100% sure they want to permanently live with the new person (a lodger can be asked to leave within a month with no court order necessary; much shorter if they misbehave - Google "lodger notice periods"), and you should of course reference them just as thoroughly as a tenant, although your tenants would be her landlord, not you (don't forget the right to rent check, which must still be done for a lodger).

However, I believe if you decide to get a lodger the departing tenant should still be given the option of entering into a deed of assignment to transfer the tenancy out of her name, unless there's any chance she might want to return when she's better.

Michael Barnes

20:58 PM, 22nd August 2016
About 2 years ago

If, as I suspect, the tenancy is in the fixed term, then notice cannot be served until the end of the fixed term (so 'notice served by one ends tenancy for all' is not applicable).
Therefore, in my opinion, a new AST is not an option and an assignment of the tenancy for the one who wants to leave is the way to go.

Mandy Thomson

21:04 PM, 22nd August 2016
About 2 years ago

Reply to the comment left by "Michael Barnes" at "22/08/2016 - 20:58":

That is correct, but a tenancy can be surrendered at any time if both the tenant and landlord are in agreement, so yes, they still have the option of bringing that AST to and end and setting up a new one.

In this case, Raj would be advised not to end the tenancy until another rent payer (another tenant or a lodger) is found, so the notice can be held in abeyance and the departing tenant will remain liable for the rent until that time.

Mandy Thomson

22:18 PM, 22nd August 2016
About 2 years ago

Giles Peaker, housing solicitor with Anthony Gold, has advised that Raj would be best advised to serve all the prescribed information on all the new tenants, and not simply the new one. His argument is that because all the tenants are considered as one entity, you can't "break it up" into separate parts, so all the tenants must therefore be treated as the new tenant.

This would be the case whether the tenancy is assigned or a new AST drawn up.

Romain Garcin

6:48 AM, 23rd August 2016
About 2 years ago

If a tenancy is assigned there is nothing to do regarding the deposit or inventory.

Mandy Thomson

7:12 AM, 23rd August 2016
About 2 years ago

Reply to the comment left by "Romain Garcin" at "23/08/2016 - 06:48":

Where the inventory is concerned, this is not a legally mandated procedure, merely a common sense precaution to safeguard everyone's interests. It therefore makes sense that if one person is moving out (even if they remain on the tenancy) they will not want to be held accountable for any future damage caused by someone else.

Where re-protection of the deposit is concerned, it looks like the different schemes have different rules. In the case of a simple AST renewal, for example, MyDeposits want new deposit protection set up (with a new fee) but TDS state "you may not need to do anything extra to comply with the law. However, depending on your terms of membership, your tenancy deposit scheme's rules may require you to re-protect a deposit on renewal..." "change of material changes to the original agreement, such as rent or tenants named on the agreement." https://www.tenancydepositscheme.com/resources/files/TDS%20%20Deregulation%20Act%202015%20Guidance.pdf

My own deposit scheme, DPS requires me to inform them if a tenant should change, even if that is by assignment and not a new AST.

Romain Garcin

16:20 PM, 23rd August 2016
About 2 years ago

Reply to the comment left by "Mandy Thomson" at "23/08/2016 - 07:12":

"It therefore makes sense that if one person is moving out (even if they remain on the tenancy) they will not want to be held accountable for any future damage caused by someone else."

This does not concern the landlord on assignment, though.

Regarding deposits, the law states when deposit protection is required, though schemes can make their own rules to continue protection. An assignment does not trigger any obligation in law.

Landlords should do their homework and vote with their feet with respect to deposit schemes creating unreasonable rules.

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