Subletting can lead to unlicensed HMO

by Readers Question

10:30 AM, 24th August 2015
About 3 years ago

Subletting can lead to unlicensed HMO

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Subletting can lead to unlicensed HMO

Imagine a 3 bedroom family house is let to a small family – a couple and a new born child for a very nominal rent of £900 per calendar month, excluding bills and CT. Later on they move downstairs into a large living room and make that as their bedroom, they then sub- let each of the three rooms upstairs, two double rooms and one single room, double rooms pocketing them £500 pcm each, and a single room pocketing them £300 pcm, so total rent collected from sub-tenants amounts to £1300 pcm, and the rent paid to landlord £900.subletting

Hence the couple not only are now living for free, but also making a profit of £400, admittedly some of this will go towards furnishing and bills, but the landlord doesn’t know that his property is being sublet to such an extent that he may face stiff penalties from the local council for allowing his house to become unlicensed HMO. Not only that, but his property does not meet strict fire and safety regulations and 30min self closing fire doors, should this be found out by the council, where do you think the landlord stands?

Could the council say that it is the landlord’s responsibility to keep an eye on his property and not to allow it to become an unlicensed HMO, but then you stumble across privacy law, where a landlord cannot just butt in any time without giving his tenant a notice, and if he gives a notice, his tenant could well cover up his tracks and possibly claim that additional occupiers are his relatives on a short stay!

Where do you stand? In the middle I guess and get caught both by the Authorities and by the tenant, and suffer extra wear and tear on your property and face overcrowding charges too!

If one was to face this should one ask his tenant to sign a special declaration that he will not allow a 3 bedroom family house to become an unlicensed HMO as it is against the local council rules, and upon being found a house is being sub-let and more than one household occupies a dwelling, the council could bring up charges against any private landlord, for allowing sub-letting, so can a landlord serve a section 8 Notice if a tenant is sub-letting?

Mike



Comments

Mandy Thomson

12:57 PM, 24th August 2015
About 3 years ago

I'm assuming that none of the lodgers in this scenario are related to the lodger landlords (i.e. the tenants) as local authorities count family (even distant relatives like cousins) as forming just one household, and if they were related the property wouldn't be classified an HMO.

However, if the property were subject to selective licensing, the (head) landlord would still fall foul of over crowding rules, and in any case he would also be in violation of his mortgage and insurance agreements.

If he didn't know the people were living there because he had been denied access, in his shoes I would serve notice for the tenants to move out, or failing that, get a Court Order to obtain access. Tessa Shepperson has written a really informative article about the issue of access here: http://www.landlordlawblog.co.uk/2014/09/09/all-about-landlords-rights-to-go-into-their-tenants-property/

Mike

14:12 PM, 24th August 2015
About 3 years ago

Thanks Mandy, how do you prove that everyone on board are related to each other or the head tenant ? do you just accept the tenant 's words?

Is there a specific term on the tenancy agreement where all those who are going to occupy must be named before the keys are handed over, and anyone else who joins later on is occupying illegally, even if the tenant claims they are his relatives, can you take an action against a tenant who puts more people into a house and causes it to become overcrowded or become an unlicensed HMO. Should this not be dealt by the local authority directly with the head tenant and not the landlord?

John Walker

14:21 PM, 24th August 2015
About 3 years ago

All my tenancies have a clause that no sub-letting is permitted. Where that would leave me in such a scenario described in the readers' question I'm not sure, I shall have to investigate.

John

Mandy Thomson

15:01 PM, 24th August 2015
About 3 years ago

Hi Mike

In response to your first question, with first degree relatives - i.e. husband, wife, son, daughter - it should normally be easy to prove relationship. With a co-habiting couple, this is a little more difficult but having worked in a job centre, I know that in cases of benefit fraud this is done by interviews, checking living arrangement at their home, checking with neighbours and checking bank accounts etc, (not necessarily all of these - depends on seriousness and credibility of interview statements) but these are very different circumstances to those you describe. With cousins, this is even more difficult - I would suspect that housing officers would simply ask the occupants some informal questions about their lifestyle - e.g. do they watch TV together, cook and eat meals together but basically take the occupants' word for it but I've no experience of this, either direct or indirect - someone like Ben Reeves-Lewis would be the person to ask. However, under Right to Rent, checking passports etc would lend some weight as to whether people were related, but wouldn't prove outright.

As for the tenancy agreement, such a clause as you suggest against subletting without permission would be sensible, and I should think pretty much standard (at least at present), and whether or not such a clause exists, the landlord would be in violation of his mortgage agreement and is likely to be invalidating his insurance by not informing both providers. The situation you describe sounds over crowded - there is a legal definition here: http://england.shelter.org.uk/get_advice/repairs_and_bad_conditions/common_problems/overcrowding

If I had tenants who did this, I would do everything within my powers to evict them, and would pursue them for any damage to my property, as would any other good landlord. See https://en.wikipedia.org/wiki/Section_8_Notice for grounds for eviction under Section 8. The landlord might also use Section 21, assuming the fixed term has ended or is coming to end shortly (from 1st October this can only be issued 2 months before fixed term ends).

Puzzler

2:47 AM, 25th August 2015
About 3 years ago

To require a licence - " It is three storeys or more (includes commercial storeys above and below and loft conversions) and; • It is an HMO occupied by five people or more or • it is subject to an additional or selective licensing scheme (currently in operation in areas of Bristol, Bath and North Somerset) "

So your scenario above would not require a licence if the bedrooms were on the first floor. If it was a town house with another storey then it might.

Puzzler

2:52 AM, 25th August 2015
About 3 years ago

Of course you would still have to ensure other regulations were met

Puzzler

2:54 AM, 25th August 2015
About 3 years ago

Of course you would still have to ensure other regulations were met as although unlicensable it would still be an HMO and your comments about fire and crowding etc. would still need to be considered

Mike

12:23 PM, 25th August 2015
About 3 years ago

Puzzler, I think you misunderstood my point, so i will brief it again, you as a honest landlord and in good faith let your house to a tenant, a small family, but later on learn that he has shafted you by sub-letting each and every room, despite a clause in the tenancy agreement, so now my question was, where do you stand from various points,
these are from the point of Local council, who for example in Harlow can classify even a two story building as an HMO where two or more households share common facilities. secondly, you as a landlord could be charged for allowing your property to be run as an unlicensed HMO, in which case you could face heavy penalties, along with your property not not being fit for use as an HMO, due to other strict requirements regarding fire and safety of the tenants.
thirdly, without your knowledge, as you wanted to give your tenant the privacy he deserves, without you intruding upon him frequently, you had no idea that your tenant had been taking you for a big ride, profiting out of your property, and stuffing more people and causing overcrowding conditions, which can cause higher than normal wear and tear on your property, along with health risks, and so on.

So finally my question was if you found yourself in this situation, what can you do, how soon can you get rid of that tenant, and whether you have any authority over sub-tenants and if you can evict them immediately by reminding them that their occupation is illegal, as the main tenant was under obligation not to sub-let, so if he did, he broke the rules, under which all the sub-tenants must leave at a very short notice.

So these are the things I would like your views on, who is breaking the law by a tenant who starts to sub-let and Authorities always seems to come after landlords.

Luke P

12:25 PM, 25th August 2015
About 3 years ago

I think what you're asking is what happens if you didn't know.

Once the LA have been alerted they usually make an inspection. They list all the problems (contrary to a proper licensed HMO) and come to you, the owner. If it's established that you had no idea, then they (now that you DO know about the status of the household), give you the option to complete the necessary works to meet the proper HMO criteria or you must act to remove the 'tenants'. You're not automatically in trouble if someone creates an HMO without your knowledge.

Mike

12:35 PM, 25th August 2015
About 3 years ago

Puzzler, I think you misunderstood my point, so i will brief it again, you as a honest landlord and in good faith let your house to a tenant, a small family, but later on learn that he has shafted you by sub-letting each and every room, despite a clause in the tenancy agreement, so now my question was, where do you stand from various points,
these are from the point of Local council, who for example in Harlow can classify even a two story building as an HMO where two or more households share common facilities. secondly, you as a landlord could be charged for allowing your property to be run as an unlicensed HMO, in which case you could face heavy penalties, along with your property not not being fit for use as an HMO, due to other strict requirements regarding fire and safety of the tenants.
thirdly, without your knowledge, as you wanted to give your tenant the privacy he deserves, without you intruding upon him frequently, you had no idea that your tenant had been taking you for a big ride, profiting out of your property, and stuffing more people (usually illegal immigrants) and causing overcrowding conditions, which can cause higher than normal wear and tear on your property, along with health risks, and so on.

So finally my question was if you found yourself in this situation, what can you do, how soon can you get rid of that tenant, and whether you have any authority over sub-tenants and if you can evict them immediately by reminding them that their occupation is illegal, as the main tenant was under obligation not to sub-let, so if he did, he broke the rules, under which all the sub-tenants must leave at a very short notice.

So these are the things I would like your views on, who is breaking the law by a tenant who starts to sub-let and Authorities always seems to come after landlords.

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