Is this a Cunning Plan?

by Readers Question

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

Is this a Cunning Plan?

Make Text Bigger
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


Share this article

Twitter Facebook LinkedIn

Comments

Robert Mellors

12:51 PM, 3rd July 2020
About 3 months ago

It would be a HMO, but not licensable unless there is selective or additional licencing in place for that location.

You would remain responsible as the landlord.

You would still be required to comply with all the HMO Regulations which relate to both the property conditions and also the management of the property. The duties on you would be quite onerous, and you would have to "convert" the property to meet the HMO standards, e.g. interlinked fire alarm system, fire doors to bedrooms and fire risk rooms, thumb-turn locks, maintenance and cleaning of communal areas, etc, etc.

Then of course there is the issue of gaining consent from superior landlords (the freeholder of the block of flats), and the mortgage lender.

Then there is the issue of changing the insurance to ensure it is suitable for HMO, and expect a large increase in premiums for this.

Also expect far more attention from the Local Authority who will wish to impose civil penalties on you for any breaches of the assorted HMO regs.

These are just a few of the issues I can think of off the top of my head, but I'm sure Phil Turtle, or Des Taylor, or other HMO specialists, will be able to advise you further.

juliet bonnet

12:57 PM, 3rd July 2020
About 3 months ago

Thanks folks for your comments...thought it would probably be a thumbs down 🙁

BernieW

14:57 PM, 3rd July 2020
About 3 months ago

I must comment on the first sentence ... "I own a leasehold flat on a long lease".

You do not "own" the flat. You rent it - albeit for a very long time. As such you are bound by the rules detailed in the long lease. One of those, I think you'll find, says you cannot part with possession of part only of the flat. As you are responsible for the actions of your tenant - if she sublets individual rooms YOU will be in breach of the terms of your long lease - and your landlord may well commence forfeiture proceedings.

Also, a breach of the terms of your lease is more than likely to be a breach of the terms of your mortgage (if you have one) and thus the mortgage company may foreclose.

I suggest you read your long lease very carefully. And get specialist legal advice.

Bernie Wales

Puzzler

7:21 AM, 4th July 2020
About 3 months ago

Reply to the comment left by Ivan Ratnayake at 03/07/2020 - 10:00
Depends on the area, in Newham and Waltham Forest three is a crowd (or HMO) unless they are all the same family

Puzzler

7:26 AM, 4th July 2020
About 3 months ago

You need to check your lease as regards to subletting part of the property. You will probably find it is not permitted. You can have the three people there (subject to HMO rules) but they are your tenants and should all be on your tenancy. She is not a resident landlord as she is not the landlord and sub-subletting doesn't make her one. If she does sublet, you could be in for problems with future status as the subtenants might have rights you cannot overturn

1 2

Leave Comments

Please Log-In OR Become a member to reply to comments or subscribe to new comment notifications.

Forgotten your password?

OR

BECOME A MEMBER

Winter Economy Plan leaves landlords out in the cold

The Landlords Union

Become a Member, it's FREE

Our mission is to facilitate the sharing of best practice amongst UK landlords, tenants and letting agents

Learn More