Is this a Cunning Plan?

by Readers Question

13:27 PM, 2nd July 2020
About 3 months ago

Is this a Cunning Plan?

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Is this a Cunning Plan?

I own a leasehold flat on a long lease. I have rented to the same tenant for 17 years. She wants to either let two bedrooms or grant licenses to two individuals to occupy those bedrooms. She resides in the third bedroom. She manages the property. If the flat would otherwise be an HMO is she a resident landlord exempted from having to apply for a license because she only has 2 sharers?

Her own status is tenant under an AST currently holding over. If the answer to my question above is that I, as her Landlord would be required to apply for an HMO license, would the situation be different if I granted her a long -term AST, say 5 or even 10 years with a break clause?

The main question  we have is whether, if we give our tenant a rent to rent agreement, will this mean we can avoid having to apply for an HMO licence?! Or is there some other way that our long-standing tenant can continue to sublet to two other people without us needing to go to the expense and hassle of  HMO scenario?

Thanks

Juliet


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Comments

Neil Patterson

13:31 PM, 2nd July 2020
About 3 months ago

Hi Juliet,

Even with a Rent to Rent agreement you are still the Landlord and legally responsible.
Therefore I would assume you are not able to shelter from HMO regulations by layering the tenancy agreement.
Certainly get this checked and OKed with the council first in writing, but I can't see them being willing to do that.

Ivan Ratnayake

10:00 AM, 3rd July 2020
About 3 months ago

Why would an HMO licence be needed here? There are only 3 people aren't there?

WP

10:13 AM, 3rd July 2020
About 3 months ago

As far as I am aware you will be liable no matter what. If she is still a tenant you can't skip the responsibility if she lets two rooms herself. You are the owner and ultimate landlord and you will have three people renting it end of. It becomes an HMO. Even if she applies for a licence the buck stops with you.
TBH I'd seek proper legal advice or just say no she can't.
If she is desperate for the income and its more of a case that she can;t pay he rent for the whole property herself then perhaps you consider taking on another person to share with her? Then there is a bit more income but a lot let issues? Or you could say no and suggest she moves if she can't afford it then you rent out to a family or someone else who can pay all the rent? Just my thoughts.

Phil Turtle, Landlord Licensing & Defence

10:16 AM, 3rd July 2020
About 3 months ago

Hi Juliet
Unfortunately the “lodger” situation only applies to owner occupiers (be that Freehold or Leasehold.)

Therefore with three occupiers who are not all one related family it will deaf to be an HMO and must comply with the Management of Houses in Multiple Occupation Regulations (England) 2006 and you face massive fines if you allow the flat to be occupied as an HMO but do not comply with these.

It would not require a Mandatory HMO licence since that starts at 5 persons. If your council has enacted Additional Licensing then it probably will require a licence (but every scheme is differ t so you’d need to check the terms of the additional licence scheme on your council website.

You could allow her to have one sharer without all this aggro, but not two.

If you need any help get in touch

MasterG

10:16 AM, 3rd July 2020
About 3 months ago

As i understand it, i may be wrong, it becomes a HMO if at least 3 tenants live there, forming more than 1 household and you share toilet, bathroom or kitchen facilities with other tenants. However, you only require a licence if it is a 'large' HMO. That is at least 5 tenants live there, forming more than 1 household and you share toilet, bathroom or kitchen facilities with other tenants,

Phil Turtle, Landlord Licensing & Defence

10:17 AM, 3rd July 2020
About 3 months ago

Reply to the comment left by Ivan Ratnayake at 03/07/2020 - 10:00
Ivan
If the specific council has enacted Additional Licensing or Selective Licensing then it would need Licensing.

Rmd

10:20 AM, 3rd July 2020
About 3 months ago

I let my flat to a company. The company utilised the break clause and gave me notice after six months.
The occupant wants to rent on a private let basis.
I paid the agents a full year's commission.
I have requested they draw up a new rental agreement for a year for the occupant.
What is the agency commission situation here.
Thank you

Dylan Morris

10:35 AM, 3rd July 2020
About 3 months ago

It becomes a HMO if there or more than two persons occupying the property who are classed as two or more households. So three persons would be a HMO. However check with your Local Authority because up to 5 persons they could class it as a “low risk” or “non licenseable” HMO whereby their requirements are fairly minimal. I have a two flat occupied by tenant and her boyfriend (one household) but also her friend which turns the flat into two households. Council were happy with it just asked me to ensure an electrical report had been done and there was a fire alarm. No licence or fee required.
Most importantly though you need to check your lease as most will have a clause stimulating you can only let to “one household” ruling out the ability to create a HMO.

Bernadette Lloyd

10:52 AM, 3rd July 2020
About 3 months ago

If the property is in an article 4 area then you would need planning permission as an HMO.

This is separate from licensing and others have responded about the license requirements.

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