One of three tenants is leaving a student HMO?

As a student Landlord I believe this is a problem for her landlord to sort out, not your daughter.

Have the remaining tenants spoken to their landlord? Is the landlord happy to serve a new AST?

The landlord may be very pleased that only 2 unrelated tenants will be in the property and which would/may relieve him/her of the burden of HMO licencing and regulations.

My experience is that the outgoing student finds a replacement that the other 2 are happy with. The new tenant pays the old for their share of the deposit and a new AST is signed. The landlord doesn’t have to agree to this but you’ve got to be pragmatic, even though it involves a little hassle/cost.

If the remaining two are willing to cover the rent and bills of the third then I’d say that’s extremely generous of them. Personally, I’d not let the third completely off the hook though, in case circumstances change (what if one of remaining 2 wants to leave?), I’d just leave the existing AST in place. That’s a risk for the leaver to weigh up.

On the HMO side I don’t see any issues under-occupying the property. My licenses have a maximum number of tenants, not a minimum.

There is no issue at all as far as HMO is concerned so don’t worry about that. The normal procedure when someone wants to drop out is to find a replacement. The paperwork is easy and it is a very normal occurrence in the student world. The usual downside is that your daughter and her colleague will probably not know the replacement and that will be like living with a complete stranger. If your daughter and friend are happy to pay the rent and bills that would normally be the responsibility of the one moving out then that would be the best outcome.

This scenario potentially presents two issues with the local authority for the landlord, especially if it were to persist. First of all, if there is an Article 4 direction in place, then the reduction from 3 to 2 takes the Planning Use Class from C4 to C3 and the landlord will lose the right to switch back to C4 HMO Use. The second issue is if there is an Additional Licencing Scheme running then the LA could cancel the HMO licence. I would say best leave the 3rd person on the tenancy agreement, and work out the financial arrangements privately.

If theyre all on one tenancy agreement then they’re each responsible for 100% of the rent anyway, so if theyre happy to pay the outgoing tenants share then there should be no problem with leaving everything as is. However, the landlord should really be demanding the leaver continues paying. If he’s released her from the contract then he may no longer be able to demand the whole rent.

The other point is that with only 2 people living there, it’s no longer an HMO, but as I assume he already has the licence, I can’t see how that would be a problem if he just leaves it as is.