Should I let friend sublet my HMO or have 5 indivual tenancies?

Should I let friend sublet my HMO or have 5 indivual tenancies?

11:48 AM, 10th February 2015, About 7 years ago 18

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I am about to purchase a house which would allow me to rent out 5 rooms separately, with a shared kitchen, bathroom and communal/dining area.

One of the tenants living there would be a close friend.

I am considering one of these two options…

1) Rent out each room separately, give them all separate tenancy agreements, and they each pay me a deposit. Standard HMO.

2) Rent the house to my friend, and allow him to SUBLET the rest of the rooms. So he pays me the full rent, and collects the rent per room from the rest of the tenants.

Would love to hear your thoughts on which of these options you would do and why. Also would I need a HMO licence for both, or would that depend on my local council?

Thanks in advance

Adamfive



Comments

by Mandy Thomson

10:10 AM, 11th February 2015, About 7 years ago

Mandatory licensing affects ALL larger HMOs regardless of which local authority they come under. A larger HMO is defined as follows:

- it’s rented to 5 or more people who form more than 1 household
- it’s at least 3 storeys high
- tenants share toilet, bathroom or kitchen facilities
Taken from: https://www.gov.uk/house-in-multiple-occupation-licence

Where 3 people or more share as 2 or more separate households (a household is defined as people related by blood, marriage, adoption or unmarried but living together as a couple), is classed as a smaller HMO by many local authorities.

by Ian Ringrose

11:01 AM, 11th February 2015, About 7 years ago

Reply to the comment left by "Mandy Thomson" at "11/02/2015 - 10:10":

I will just add read the "-" in Mandy's posing as "AND",

So even with 10 people if you are only 2 storeys high you don't get hit by mandatory licensing. (But you need planning permission if more then 6 people.)

Mandatory licensing is licensing the local authority MUST do, they can choose to do others licensing if they so wish, so best to check with your own local authority.

by Mandy Thomson

12:11 PM, 11th February 2015, About 7 years ago

Reply to the comment left by "Ian Ringrose" at "11/02/2015 - 11:01":

Thank you for clarifying my post.

by Adam Davies

19:06 PM, 12th February 2015, About 7 years ago

That's great. It is a 3 storey house, so if I only let to 4 tenants then I don't need a license. I imagine though the fire regulations will still apply?

by Puzzler

14:54 PM, 14th February 2015, About 7 years ago

I agree with the first poster, friendship and business don't mix. You only need one small thing to go wrong and you will have lost a close friend. Since this deal is quite favourable to your friend and quite complicated, even more so. If you're trying to help your friend in some way, I would recommend a simpler arrangement that doesn't involve so many relationships that can go wrong. If you can do this deal without your friend's involvement fine, do. Otherwise there is disaster looming.

Also one bathroom between 5 unrelated people? I hope you plan additional facilities...

by Dr Rosalind Beck

15:35 PM, 14th February 2015, About 7 years ago

Yes, Puzzler. We have never let a 5-bed house without two bathrooms. Also, I have come a cropper several times mixing friendship and business and you do lose the friend. I have however, never let a house to a friend or family member as I think that is one of the worst types of mixing friendship and business. What if you want to up the rent or you want them to leave or they start not paying? I think the friend would start getting resentful as well at the unequal balance of power.

The things I've done which have gone wrong included eg. employing the husband of my best friend (at the time) to do building work on a house on a daily rate, he turns out to be crap and lazy and out of his depth so we have to let him go and I end up without my best friend.

by Mandy Thomson

15:41 PM, 14th February 2015, About 7 years ago

Reply to the comment left by "Puzzler " at "14/02/2015 - 14:54":

Yes, too right, most especially where you've got a friend as live in landlord! Being a live in landlord can be tough, and so can being a lodger. House sharing in general can be very trying, but with a live in landlord/lodger situation, the landlord has the overwhelming balance of the law in their favour, whereas the lodger is only entitled to "reasonable" notice (usually a month, but can be as little as a week or even none at all in extremis), his contractual rights and some quiet enjoyment of a reasonably safe living environment.

It's easy for the landlord to get fed up with the lodger being in their space and pull rank as landlord, then for the lodger to become extremely resentful... Couple that with the complication of feelings being hurt in a friendship, and you've got a disastrous mix!

Puzzler is absolutely right that it only takes one small thing to do it - I personally lost a good life long friend, fell out with another friend from work and was witness to yet another friend falling out big time with their friend from university all because in each single case we tried room renting as lodger and live in landlord.

The ages of all the parties involved ranged from early 30s to late 50s, and we were all reasonably well educated professionals; some of these people were parents, so it's not only young or uneducated people who can be very immature when it comes to shared living space!

by Mandy Thomson

15:51 PM, 14th February 2015, About 7 years ago

Reply to the comment left by "Mandy Thomson" at "14/02/2015 - 15:41":

I'm not saying absolutely don't do it, but I am saying that very clear boundaries and expectations need to be agreed upon and set beforehand, and formal tenancy and lodger agreements drawn up.

It will work much better if the people living in the house have house shared in the recent past, and even better still if they've shared with each other. However, I'd be very wary of introducing another tenant, or worse, a lodger, as an outsider to live with this group.


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