Should I let my HMO tenants choose their new flatmate?

Hi,
Would the tenants choice of flatmate have to pass the same referencing you put in place for them before they signed?

Yes - I would ask their choice to go through the usual credit refs and landlord refs.

I guess what I’m after is any experience or anecdotes about letting the tenants choose. I’m sure there will be unintended/unforeseen consequences no matter how i do it, but I’d be interested from anyone who has a “system” for this situation.

OK, here's the thing.
I have done exactly this for the last eight years without a single night void except for a single month last year in a small room only.
A far more successful landlord than myself advised me what would happen as the years progressed and he was absolutely right.
You start out with carefully selected truly professional tenants with careers who appreciate a good home and have disposable income.
Then a bad one get's in.
No career & a low income but the other tenants say they want to share with the individual.
This is not a disaster as the others keep the new one in check.
The new person does not fit in & moves out after a year.
Otherwise you would have an undesirable tenant for years.
Then a bunch of them move out at the same time & the remaining tenant is not up to the job of replacing them.
Then you end up with a bunch of poor quality tenants who do not respect the place.
So now your only redress is to evict them which is very difficult & very expensive because, apart from anything else, you need to overhaul the property at great expense in order to attract a fresh lot of high quality tenants.
I don't have an answer to this.
Financially this has worked out very well for me overall but with some really bad years more recently as the calibre of tenants has fallen.
They are just rude, dumb & irresponsible now even though I started out with high calibre people who knew each other previously.
The standard has just slipped slowly down hill.
The most likely source that your existing tenants will use to source a new tenant will be something like SpareRoom.com.
Frankly if you do this yourself at about £24, you will, I am sure, immediately reject the majority of the applicants before even doing a tenant reference check.
Additionally if the standard of your tenants falls they will not want to share with the sort of high calibre tenants with disposable income that you start with and which are still available in a minority on SpareRoom.com.
Because I was very fussy, it took me three months to find my first tenants and it was really great for about six years.
Over the last two years I have had an increasing problem and sooner or later I will have to start all over again.
Low calibre tenants neither know or care what they are doing and the normal affairs of day to day life are quite beyond them.
They genuinely do not notice problems such as a bath that leaks or other basic maintenance that needs doing or putting the right vacuum cleaner bag in the right vacuum cleaner (or actually using the thing!).
Indeed rather than be grateful as my early tenants were, they will obstruct you protecting your investment.
We are all different but my own priority has always been quality of life over maximised income.
So you pays your money & you makes your choice as the saying goes.
One last thing to bare in mind is that the only meaning of the term "Professional" on SpareRoom.com is that, for the most part, the person is not actually living on state benefits.
But there are exceptions to even that!
I had one chap who I rapidly discovered was on a prisoner release programme & sponsored by a charity. He never mentioned this to either myself or the other tenants who wanted him on board. It took him over two weeks to partially fill in his tenant reference form in which he claimed to have a gross income of exactly £10K!
If you get two in a row of this time wasting calibre, life starts to get very tedious for everyone involved.
Good luck.

Reply to the comment left by Paul Shears at 04/02/2018 - 19:14
Paul - thank you so much taking the trouble to give me such a helpful and detailed reply. I had half-suspected that the one bad apple begets two, and now your post confirms it!

I’m leaning towards doing it all myself, not least because it doesn’t hurt to implicitly show tenants who’s in charge!

I suspect you may be wise in this.
I had a very easy time of it for years but I am paying the price now.

"implicitly show tenants who’s in charge"

I'm afraid that if you've taken this view you've lost already and will attract tenants who you need to be in charge of (low income, irresponsible)

The best tenants expect a client/service provider relationships where their role as a paying client is respected, and in general they will be the most able to move to competitors who do take this view. Tread carefully.

My tried & tested 'system' is fairly simple -
I let the existing sharers know my basic criteria, and that I will require the new sharer to go through, and pass, the same referencing as they did.
They then do the viewings, sift out the ones they cannot see fitting into the group, and then present me with their 'chosen one'.
I then interview him/her, before making a final decision to go to the referencing stage.
Occasionally I'll reject their choice, and we then discuss the nearest candidate or start again.
So far, touch wood, this 'system' has worked for me.

I don't have any HMOs, but this situation has arisen with my 2-bed flats and 3-bed houses which are all rented out on ASTs. I am quite happy to allow tenants to source replacements as they have to live with them not me but on the strict proviso that I do all the reference checking, we amend the existing AST , I change the tenant names over with MyDeposits and the new tenant pays all costs incurred. At the end of the tenancy, if all is well, then we can draw up a new tenancy but I totally agree that you have to be careful with this one. Works for me

Reply to the comment left by Richard York at 05/02/2018 - 09:46
This was not my comment but I interpret it differently to yourself. The writer and I are is simply clarifying that the protection of the capital investment is far more important that any loss of rent. There has to be an understanding of a professional relationship. I clearly succeeded in this for many years and indeed received presents and expressions of gratitude from most of my tenants. But there is absolutely no combating "dumb & irresponsible". It's as real a force as gravity. I have found painfully, that people are who they are and that is that. You just have to do your best to ensure that the potential tenant is an adult who can cope with the normal affairs of day to day life. There is an enormous number of people out there who simply cannot do this and talking to them may expose this. Talking to them will certainly not change who they are. My only redress it increasingly appears to to take the financial hit and start again.
But to borrow the phrase that I did not personally use but was very well said if you interpret it as I do, landlords are in charge of every aspect of protecting their investments and if you have a tenant that obstructs this because they are just plain dim, you are better off with no tenant at all.
This I believe is why landlords like Mark Alexander wanted to interview tenants in their previous homes to get a feeling of what they are really like.
I've had a tenant obstruct me from fixing things like water leaks because it is "inconvenient". I have had the same tenant demand that I turn out on a very cold dark evening in the rain just to get a garage door open because they wanted access to it the next morning. As is ever the case, I delivered and then paid attention to what actually happened. It was complete rubbish.
So I totally disagree with your interpretation of the statement. I am in charge and if they can't cooperate, then we part company and I am most certainly the better off for it. Better an empty property than a bad tenant.

Reply to the comment left by Jim Fox at 05/02/2018 - 10:35Yes that has worked for me for many years. The problem came when three tenants gave notice at the same time and the remaining tenant sourced three low grade tenants all of whom passed tenant referencing. Within a few weeks the person who found the tenants that she felt she could live with, was coming to me with the view that she could not.
My early high grade tenants were a sociable lot who would spend an evening with a potential new tenant to get to know them. When they could find nobody suitable, they just picked up the tab for the rent on a vacant room. This is easily done if your tenants have disposable income and the financial overhead is shared between them.
I think that the biggest lesson that I have learned in all this is to set a parameter of a minimum income of £25K before they can be considered. I have noted that on occasion, it has come to light that very poorly paid tenants do not live well with highly paid tenants. There was friction because they are not financial peers.
You may feel that this is not my problem but my own view is that I should have stepped in to block the tenant joining.