One flat, two AST’s = HMO?

by Readers Question

10:40 AM, 29th June 2015
About 3 years ago

One flat, two AST’s = HMO?

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One flat, two AST’s = HMO?

I have one tenant who has been with me for years and his flat-mates move in and out usually staying for about a year or so, as with most young professionals. Do I really have to put them both on a joint tenancy agreement to avoid this luxury two bedroomed flat becoming a “house in multiple occupancy”? One flat, two AST's = HMO

In Housing Law it has to be three people, but in Council Tax Law (whatever that is) it only need to be two. Recently, the Council got onto the fact that they were not on a joint tenancy agreement and asked me to pay the Council tax as it was an HMO, even though they were up to date. They were going to get a refund. I would be told how much I owed, (presumably the same as the refund) – they would pay me, as per tenancy agreement stating that they were responsible for CT and I would repay the Council. As my one tenant said – don’t they have anything better to do?

We simply changed their tenancy agreement to a joint tenancy agreement – but we still have to transfer this money around for the month that they were on separate agreements (as it happened someone sensible in the office just transferred it directly to the new account – hooray!).

I asked for NLA advice and was told that it was illegal for two people to have a tenancy agreement for one flat, which also came as a bit of a shock, as I have inadvertently been breaking the law for years.

Separate agreements are the easiest to manage for me, but somehow lead to problems with CT, separate television licences, Utility bills and can presumably lead to separate rooms being assessed for Council tax. I got out of larger places to avoid all this nonsense to no avail.

Thanks

Gilly



Comments

Mark Alexander

10:44 AM, 29th June 2015
About 3 years ago

Hi Gilly

I have never come across this Council Tax issue before.

Nevertheless, have you considered having just one tenancy with your long term tenant and giving him permission to take in a lodger?

It empowers him and could be better for you too.

Also consider re-referencing your long term tenant and purchasing Rent Guarantee Insurance if you are going to go down this route.

It may well be worth you handing over the management for the sake of 4% of rent - see >>> http://www.property118.com/letting-supermarket-full-management/68829/
.

Gilly

13:56 PM, 29th June 2015
About 3 years ago

Thanks for those options Mark. I hadn't considered the lodger option before and that may well be a solution, but it still doesn't get over this ridiculous situation where a luxury 2 bed flat can still be considered an HMO. No locks on doors, they share kitchen equipment and socialise - it just seems daft and contrary to the spirit of an HMO.

The Government wants people to share and to give them responsibility (hence universal credit) and then makes the landlord responsible again for the Council tax and Water rates (in Wales and parts of England you are now liable unless you notify Welsh Water). Wish they would make up their minds. I think sharing on all levels is the way forward in this housing shortage, but there are so many obstacles from my point of view and it should be simple for people to just come and go if they want to.

The long-term lodger is a really good friend now, whom I trust 100% - yes I've broken another cardinal rule haha. He wouldn't be bothered to sort it all out I doubt.

4% is too much when I do it so well myself!! - despite never referencing anyone and falling foul of the law inadvertently hmmm....but one of these days maybe.

Romain Garcin

17:06 PM, 29th June 2015
About 3 years ago

I am shocked at NLA's reply!
There is nothing illegal with what you suggest.

The term 'HMO' is indeed confusing because the term appears both in the Housing Act and council tax regulations and has a different definition in each.

For council tax purposes, the property will be a HMO as long as the tenancy does not cover the whole property.
It has the effect of making the landlord liable for council tax.

In addition, the law is that a person not liable for council is entitled to a refund of any she might have paid.
So, I'm thinking that the council wants to deal with this now instead of risking having to refund and try to chase the duly liable party at a later date.

The only to avoid such issue with CT is indeed to have all occupants on a single joint-tenancy.

Gilly

21:31 PM, 29th June 2015
About 3 years ago

Well quite Romain! Thanks for your reply. The analogy was that you can't share a pair of trousers (it doesn't bear thinking about.....lol). I did ask him to repeat it several times but the answer was the same - there has to be a joint tenancy.

I can't quite see what the fuss is about as no one is even in arrears. Why is it all made so complicated?

Gilly

21:33 PM, 29th June 2015
About 3 years ago

....but as you rightly say they are probably covering their backs (why doesn't this edit thing seem to be working?)

Joe Bloggs

23:36 PM, 29th June 2015
About 3 years ago

hi romain,
perhaps the NLA thought there were duplicate AST's on the same property, which i guess is illegal.

Gilly

10:30 AM, 4th July 2015
About 3 years ago

Well I wonder how that is avoided. Is it the wording or what? You are bound to be able to have separate tenancy agreements that are not simply joint and several surely.

Joe Bloggs

10:54 AM, 4th July 2015
About 3 years ago

the AST needs to define what parts are demised and what is communal.


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