Reigate plans Article 4 controls for small HMOs
3 weeks ago
How a ‘model tenant’ secretly turned a family home into an HMO
by Des Taylor
6:59 AM, 11th August 2026, 2 weeks ago
40
Categories:
A landlord who believed he had found an ideal tenant was later threatened with substantial financial penalties after his property was secretly converted into an unlicensed house in multiple occupation (HMO.
The landlord let a four-bedroom house to a man who said he wanted it for himself and members of his family. He appeared organised, produced convincing documents and gave a plausible explanation for needing a large property.
The tenancy agreement stated that the house was being let to a single household and expressly prohibited subletting. However, once the tenant had possession, reception rooms were turned into bedrooms, locks were fitted to doors, and individual rooms were offered to unrelated occupiers.
The tenant selected the occupiers, agreed their payments, collected the money and dealt with repairs. To those living in the property, he was the landlord. The owner knew nothing about the arrangement.
For several years, the tenancy appeared to be running smoothly. The agreed rent arrived on time, the tenant answered calls immediately and rarely asked the landlord to pay for repairs. He repeatedly said the property was in good order and discouraged unnecessary visits.
Might discover changed locks
The rent paid to the owner was only part of the money collected from the occupiers. Repairs were handled privately because a contractor might have discovered locks, beds and unrelated people throughout the house. Promptly answering calls gave the tenant advance warning of inspections.
The deception came to light after the property attracted attention from the local authority, possibly following a neighbour’s complaint, police visit or another routine incident.
When officers spoke to the occupiers, they learned that several unrelated people were renting separate rooms. They identified the tenant as the person who had granted access, collected their money and managed the house. Some had never met the actual owner.
Messages, payment records, room agreements, photographs and witness accounts showed who lived there, what they paid and who controlled the accommodation. By the time the owner received the first council letter, officers may already have known more about the property than he did.
HMO license breaches
The council began investigating possible offences involving an unlicensed HMO and breaches of the HMO management regulations. Although the tenant had created the arrangement, the owner was also investigated as a possible person managing or having control of the HMO under the Housing Act 2004.
The landlord was bewildered. He had granted one tenancy to a man and his family. Subletting was prohibited, the rent had always been paid, and the tenant had repeatedly said everything was fine.
However, the wording of the tenancy agreement did not prevent the council from investigating what had happened.
Councils can issue statutory requests for information and invite landlords to interview under caution. A landlord who treats those communications as an informal attempt to clear up a misunderstanding can make damaging admissions without appreciating how they may be used.
In this case, the owner obtained professional advice before responding further. The required information was supplied, but the response was limited to the facts and prepared with the criminal allegations in mind.
Fines for an unlicensed HMO
The council later issued notices stating that it intended to impose financial penalties on the property-owning company for allegedly managing or having control of an unlicensed HMO and breaching the HMO management regulations.
The defence focused on the evidence rather than the fact that the company owned the building.
The tenancy agreement showed that the property had been let to one household and that subletting was forbidden. The tenant had secretly created the HMO, chosen the occupiers, granted the room agreements, collected the money and controlled the rooms.
Crucially, the council’s witnesses identified the tenant as their landlord. They did not say that the property-owning company had granted them rooms or managed their occupation.
Representations were made that the company was neither the person managing nor the person having control of the HMO for the purposes of section 263 of the Housing Act 2004. It was also argued that the company had a reasonable excuse because it did not know the tenant had created and operated the HMO.
According to the case account, the council cancelled the proposed penalties rather than reducing or negotiating them.
That outcome did not mean the landlord had managed the property well.
Tenant’s claims not verified
The deception succeeded because the tenant’s claims were not independently verified, inspections were too infrequent and regular payments were treated as evidence that nothing was wrong. A good personal relationship had replaced active management.
After the case, the owner reviewed the portfolio. Occupancy was checked, properties were inspected on proper notice, records were updated and inspections were introduced every three months.
Contractors were asked to report unusual signs rather than limiting their attention to a specific repair. Locks on bedroom doors, excessive numbers of beds, large amounts of post or occupiers who do not know the named tenant can all justify further checks.
Landlords should also verify references and identity documents independently. A tenant offering extra money, discouraging professional referencing or appearing unusually keen to prevent inspections should not automatically be treated as dishonest, but those circumstances justify closer scrutiny.
Inspections must establish more than the condition of the decoration. Landlords need to know who is living at the property, whether its use has changed and whether rooms have been altered.
Silence is not proof of compliance. Rent arriving on time does not show that a property is occupied lawfully, that fire precautions are adequate or that the named tenant is the only person making money from it.
Take council correspondence seriously
The case also shows why council correspondence should be taken seriously. A request for information, an alleged-offence letter or an interview under caution can mark the beginning of a criminal investigation, even where the council is considering a civil financial penalty rather than prosecution.
The owner avoided the penalties because the evidence supported the defence. Another landlord with weaker records, fewer inspections or communications suggesting knowledge of the subletting might face a different result.
The lesson is simple. Trust the tenant, but verify the occupation, inspect the property and keep evidence of what was agreed and what was found.
A landlord who does not know who is living in a property may discover the answer only after the council does.
Des Taylor is a director of Landlord Licensing & Defence who has extensive experience of the Renters’ Rights Act, rescuing landlords and letting agents from council fines and rent repayment orders. Mr Taylor also advises on property compliance, HHSRS, HMO licences, HMO design, fire risk, housing and planning Law and selective licensing.
Tags:
HMO financial penalties, Housing Act 2004, landlord compliance, landlord HMO fraud, landlord inspections, tenant subletting, unlicensed hmo
Comments
Have Your Say
Every day, landlords who want to influence policy and share real-world experience add their voice here. Your perspective helps keep the debate balanced.
Not a member yet? Join In Seconds
Login with
or
Member Since September 2018 - Comments: 3710 - Articles: 5
2:55 PM, 13th August 2026, About 1 week ago
Reply to the comment left by Beaver at 13/08/2026 – 14:44
agree. You can ask for entry to do a property check etc….doesn’t mean its granted. No judge would give possession on the basis the tenant refused the LL access unless there were significant and legal implications and the LL had evidence. Getting into the property to take photos is the best way to do this. What other things could be used as proof exactly?
Member Since May 2018 - Comments: 2436
3:08 PM, 13th August 2026, About 1 week ago
Reply to the comment left by Reluctant Landlord at 13/08/2026 – 14:55
I don’t think that there is anything that could be used as proof because the tenant has no obligation to give it to you and neither does anybody else. You have no powers or leverage beyond what you put into the tenancy agreement and have then agreed with the tenant having received the deposit/one month’s rent before handing over the keys. You need to know how many children will be in the property. You need their names to get some idea of whether they are related to the principle tenants. You need NI details and other details including passport and driving licence for all named tenants. Even if you have all this you cannot necessarily get the tenants out because your grounds for getting the tenants out are essentially: (1 tenant didn’t pay (2) tenant isn’t looking after the PROPERTY (3) you need to develop the property (4) you need to put family members back in. No fault evictions were banned and with them, any real powers that you had.
Because the tenant doesn’t give you an NI number for a non-principal tenant or name of a sub-lessee that isn’t grounds for getting a tenant out. But if you had amended the tenancy agreement to include NI number, passport, driving licence, etc. for all named tenants, added an obligation to provide name and age for anybody under 16 and an obligation to provide name, age and NI number for anybody over 16 at least you would be able to show that you had attempted to do EVERYTHING WITHIN YOUR POWER UNDER THE LAW as part of your due diligence AT THE START OF THE TENANCY.
But if a judge says that you didn’t pick up the HMO because you didn’t carry out checks during the tenancy when in fact you had no powers to do so then that judge at that tribunal was EXTREMELY ignorant indeed.
A lot has been left to tribunals hasn’t it? Like whether you unreasonably refused a pet for example when having a pet is a responsibility, not a right. And labour refused to publish the results of their justice impact test on the courts.
https://www.property118.com/government-refuses-to-reveal-renters-rights-bill-court-impact-assessment/
The problem with Labour refusing this is that the Labour Renters Rights Bill did not get proper public scrutiny: We still have a free press and the papers should still be asking for this, even if the opposition parties have given up.
Member Since April 2018 - Comments: 568
3:48 PM, 13th August 2026, About 1 week ago
Reply to the comment left by Beaver at 13/08/2026 – 15:08
I think most landlords will be caught out. Unless you have a lawyer by your side when you interview tenants and have a legally approved application form something will be missed and even then even a lawyer could make a mistake and the cost of this would be prohibitively expensive.Also if you use a letting agent they will say as they said to me, yes i think we cover all that in our checks, which is not reassuring.
Yes the judge could be ignorant but he/she gets the final say.
Member Since May 2018 - Comments: 2436
3:52 PM, 13th August 2026, About 1 week ago
Reply to the comment left by David at 13/08/2026 – 15:48
Whether the agent ‘covers all that in their checks’ is one issue…..covers all what?
Another issue is whether the agent has an obligation to give tenant details to you (such as a NI number for example) in the event that the tenant doesn’t pay and you need to get a money attachment order via the Money Claims Online service, or you need to take action to recover damages to your property that are way above and beyond what the deposit would cover.
Member Since April 2018 - Comments: 568
4:15 PM, 13th August 2026, About 1 week ago
Reply to the comment left by Beaver at 13/08/2026 – 15:52
Covers all what.Names and ages of children for example which is something I doubt lettings agents have done in the past and wont do now unless landlords specify, which most wont.
A letting agent may not give out a NI number to a client because of data protection.
Member Since May 2018 - Comments: 2436
4:32 PM, 13th August 2026, About 1 week ago
That’s not quite correct. The letting agent may be able to give it to you if your contract with your letting agent specifies it but you may yourself need a data protection registration with the ICO. But the data protection registration with the ICO costs a small amount of money and it is the same amount of money whether you store a small amount of tenant data or a large amount of tenant data.
Whether you need it or not depends upon whether the agent provides a service that would allow them (on your behalf) to collect unpaid debt, put the unpaid debt into a sellable form (i.e. so that you could sell the unpaid debt on), get a money attachment order from the MCO online service or deal with some of your other risks for you under the act.
So what happens with your agent if the tenant doesn’t pay? Does your agent continue to levy fees on you as the landlord whilst the tenant lives in your property paying no rent whilst the agent simultaneously refuses to pass the necessary details onto you, including NI number, in order that you yourself can pursue the unpaid debt? What rights to tenant personal details do you have if something goes badly wrong?
Member Since October 2020 - Comments: 1317
5:14 PM, 13th August 2026, About 1 week ago
Reply to the comment left by Beaver at 16:32
The normal inspection regime with 24 hours prior notice should be adequate for this purpose. If the tenant refuses entry repeatedly, you have another defence, although you may be expected to seek an injunction to force entry or serve notice for breach of tenancy contract.
Member Since May 2018 - Comments: 2436
5:18 PM, 13th August 2026, About 1 week ago
Reply to the comment left by DPT at 13/08/2026 – 17:14
I think that you may mean that if you documented ATTEMPTS at inspection then this would be evidence that you TRIED to inspect and that with a robust tenancy agreement the tribunal should not find against you.
Member Since December 2025 - Comments: 20
3:20 PM, 15th August 2026, About 1 week ago
I am a small time landlord with 5 properties (used to be 11.) Two are small HMOs, Victorian terrace houses in popular parts of London. One has three and the other four double bedrooms which, with two bathrooms, means I have no problem finding groups of professional sharers. I have all the proper paperwork and licenses.
The pattern is pretty consistent. A group of friends who went to school or University together and about to start their first job. As time goes on they get partners who might be staying over regularly. My approach has been to ignore it. I don’t want to know who they are, I don’t receive rent from them and eventually the couple will move out into their own flat and the others will ask if another friend can move in. After about five years they are all ready to move on, give notice, and a new group move in.
Now with licensing and the RRA I assume I could be in trouble if, say, a neighbour decided to report me.
I am a landlord, not their mum. I really don’t want to be in the business of knowing, let along counting, how many days someone stays over. I am content as long as my property is looked after, the rent paid and neighbours are not disturbed, Indeed I have no levers I could use to ensure my tenants are celibate.
Views?
Member Since May 2018 - Comments: 2436
4:01 PM, 16th August 2026, About 6 days ago
Reply to the comment left by Sarah O’Connell at 15/08/2026 – 15:20
The Labour Renters Rights Act is already a piece of extreme left-wing legislation: However if you were to start trying to dictate who your tenants sleep with that would be reminiscent of Chairman Mao wouldn’t it?
I think it comes down to:
(A) Do you have a robust tenancy agreement that prohibits sub-letting (a guest is not a tenant).
(B) Are you, your agent, or possibly some kind of inventory clerk doing regular property inspections.
The law only allows you to inspect the property: It doesn’t allow you to inspect tenants…that’s for communist China. But if you’ve done everything you can within the law then at least you have a defence.