My tenants have asked about taking in a lodger

by Readers Question

9:06 AM, 3rd September 2013
About 8 years ago

My tenants have asked about taking in a lodger

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My tenants have asked about taking in a lodger

I have rented a 4 bed house to four professional sharers for the last 7 years. Three of the sharers have been in the property from day one, the remaining tenant has been there for two years. My tenants have asked about taking in a lodger

When the new tenant moved in two years ago they were given a new six month AST, they were served a section 21 notice in accordance with my strategy and then given a 5 year Deed of Assurance which assured them that I would pay compensation of £3,000 if I obtained possession within 5 years for reasons other than default.

The tenant who moved in 2 years ago has now decided to buy a flat. The remaining tenants want to stay. They have found a replacement but he has failed financial referencing and now they, like me, are unsure what to do.

The reason the new person has failed referencing is that he has only been in the country for 4 months and his employment contract is temporary.

If the new tenant had passed referencing the plan was to issue a new AST, serve a new section 21 (1) b and grant a new 5 year Deed of Assurance.

Given that such an arrangement would make all tenants jointly and severally liable this concerns the original three tenants. A default on the part of the new tenant would leave them out of pocket and I might have to seek possession in the event of the new tenant defaulting if they don’t pay his rent. They are actually more concerned about this than I am. Apart from that they are very comfortable with the new tenant as he is a long standing friend of one of the existing tenants cousins and they all get on well with him socially. He also works for the same employer as two of the existing tenants.

One solution we have considered is for the three existing tenants to stick with their existing contract which is now a statutory periodic tenancy and with the benefit of their Deed of Assurance for three remaining years. The proposal is that I would give them permission to take in a lodger and they would have a lodger agreement with the incoming tenant.

The benefit of this arrangement is that if the incoming tenant defaults my existing tenants could throw him out within a week and then find another lodger, thus protecting their tenancy and Deed of Assurance.

In principal I am comfortable with this arrangement but I would like to share this concept with the Property118 community to see if you can think of any complications which I might have overlooked.

One question which is bugging me is whether I should get the outgoing tenant to sign a Deed of Surrender and how this might affect the remaining three given that the AST is joint and several.  Would I also need to get the remaining three tenants to sign something to release the outgoing tenant from the joint and several liability and for them to accept the liability is now joint and several between the remaining three? We could just start a new AST and Deed of Assurance with the remaining three tenants, however, this is not preferable to me not them. The reason is they would be tied in for 6 months and I wouldn’t be able to seek possession for 6 months either.

I look forward to reading your comments.

Kind regards

 

Mark Alexander

Comments

Romain Garcin

15:57 PM, 3rd September 2013
About 8 years ago

Reply to the comment left by "Mark Alexander" at "03/09/2013 - 15:29":

Yes, in a periodic joint tenancy any joint tenant may end the tenancy by serving notice to quit.
I suspect this is from Common Law, and this is well documented.

The remaining joint tenants will be trespassing unless you grant them a new tenancy.

Mark Alexander

16:04 PM, 3rd September 2013
About 8 years ago

Reply to the comment left by "Romain " at "03/09/2013 - 15:57":

Hi Romain

Unless Mary is wrong (very rare indeed) and the document on the NLA website is completely pointless (almost unthinkable) I think I will go with Mary's advice and use the NLA documentation in the absence of you being able to quote any specific legislation to support your comment. I do, however, thank you for trying to be helpful.
.

Romain Garcin

16:16 PM, 3rd September 2013
About 8 years ago

The document is not pointless, but it is to be used correctly.
What I said about notices to quit in joint tenancies is very well documented and the very basics of such tenancies, just Google it.

Yes, I'm trying to be helpful.. Your loss.

Mark Alexander

16:23 PM, 3rd September 2013
About 8 years ago

Reply to the comment left by "Romain " at "03/09/2013 - 16:16":

I appreciate that you are trying to be helpful Romain, perhaps I could have worded my last post a bit better. Sorry about that, no offence intended I can assure you.

Does my plan of action make sense to you?

If you think I might still be overlooking something please explain.
.

Puzzler

16:25 PM, 3rd September 2013
About 8 years ago

I have only had this happen once and my agent wrote to the tenants to tell them that one giving notice is in fact giving notice for all of them. The remaining ones then took out a new tenancy. I don't know if this is the law or just their policy.

Mark Alexander

16:46 PM, 3rd September 2013
About 8 years ago

Reply to the comment left by "Puzzler " at "03/09/2013 - 16:25":

Hi Puzzler

As we know, many letting agents grant new tenancy agreement whether or not it is in the interests of landlords and tenants to do so. This is because it earns them fees, sometimes from both sides. In the case it is neither in my interests or the interest of the tenants to grant a new AST although that it what we will all reluctantly agree to do if necessary. If that is the case I will grant a one month AST and a new five year Deed of Assurance just to show good faith. This will mean that I can't obtain possession for at least six months and if I do so I will have to pay compensation if the tenants are not in default. On the flip side, my tenants will be in the same position in that they will still be in a position to leave after 30 days. One could argue that their position could ebven be slighly improved on this basis as no notice would be required if they wanted to move out on the last day of their new one month tenancy.

For these reasons and many others though, including the need to reprotect the deposit at least once and possibly twice if a new tenancy agreement is signed, that's not what I want to do.

From everything I read today and based on the advice from Mary I have seen no evidence so far to suggest that a new tenancy is my only or best option.
.

Sharon Betton

11:29 AM, 4th September 2013
About 8 years ago

Cannot find the specific law, but Diane Astin's Housing Law states "A joint tenant can serve notice to quit to end a periodic tenancy, regardless of the wishes of the other joint tenant" and "Where there is a joint periodic tenancy, one tenant can end the tenancy by serving notice to quit. This is the case even if the other joint tenant does not want the tenancy to end, and even if he or she is unaware of the notice".

Mark Alexander

15:16 PM, 4th September 2013
About 8 years ago

UPDATE

The vacating tenant has already vacated I've just found out. The notice period doesn't end until the 20th of this month but the rent was paid up front. What I had not realised is that the flat she's purchased is in Hungary!

That's not going to make it easy to get a Deed of Assignment signed is it?

Why is life never simple?!!! LOL

Oh well, plan B it is. New AST for the remaining three and permission to sublet to one lodger it will be. All are in agreement - PHEW!

Not the ideal scenario for any of us but we are where we are.

I will now have to re-protect the deposit, which fortunately the four of them sorted out between them before she left *she wasn't the lead tenant fortunately), and I will issue a new deposit protection certificate, prescribed information and section 21 (1) b notice, all in that order.
.

Romain Garcin

15:39 PM, 4th September 2013
About 8 years ago

Well rent is jointly due so you were protected.

Deposit is always an issue: one of the joint tenants is leaving and obviously wants his money back.
If the tenancy continues but is simply assigned, the remaining tenants will have to pay him is share out of their own pocket, and they cannot easily account for any deductions.
Otherwise you should go through the whole procedure of inspecting re-issuing a schedule of condition: For potential deductions on the one hand, and to assert the condition of the property at the start of the new tenancy (you should do that now, IMHO).

Puzzler

9:26 AM, 6th September 2013
About 8 years ago

Reply to the comment left by "Mark Alexander" at "03/09/2013 - 16:46":

Yes but you still issued a new tenancy...

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