Unenforceable HMO mortgage rules?

Plenty of lenders allow individual tenancy agreements but often charge a higher interest rate.

Apart from some students, why would anyone want to be part of a joint tenancy? Having your life dictated by the whims of a housemate is nuts. Being jointly and severally liable with casual acquaintances or complete strangers is potentially hugely damaging. Why would anyone risk being a guarantor for a random bunch of people they have never met? Even for students joint tenancies are questionable. The only real advantage (for the landlord) is that they are jointly responsible for the end of tenancy cleaning.

The management of the property and ability to fulfil HMO responsibilities is much easier with individual tenancy agreements, as the landlord can enter communal parts of the property at any time without notice. Joint tenancies require the landlord to give at least 24 hours notice before they can set foot through the front door. For this reason alone the attitude of lenders is baffling.

With the abolition of fixed term tenancies, joint tenancies are surely going to be incredibly high risk for the lenders. Having to replace one tenant in an HMO is relatively painless. It might involve a loss of rent for one room for a few weeks. Unexpectedly losing a whole household will mean potentially lengthy voids at certain times of year resulting in a significant drop in income. How many landlords could financially cope without maybe 3 months rent?
Preparing a whole house for reletting is completely different to preparing an individual room. People joining an existing HMO household expect the communal areas to show signs of their housemates existence. People moving into an empty house expect all of it to be pristine on move in day.

Reply to the comment left by Jo Westlake at 30/12/2025 – 10:15
I agree entirely, so why DO those lenders still insist on one AST if that risks causing more defaults for borrowers? What’s the advantage for the lenders?

The Devil is always in the detail as they say
The new Renters Rights Bill when it becomes an Act of Law will overule any Terms and Conditions a Lender might want to impose or require.
Changes are coming and the Courts will be busy for years to come !

I wonder if a joint AST will actually reduce the risk once the bill is in place. In effect you can have a beak clause every time someone leaves, I e. They in effect give notice for all giving you options for vacant possession.

That way you can never be left with a single obnoxious tenant in an HMO that you can never evict without selling.
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Reply to the comment left by Paul Essex at 30/12/2025 – 11:23
That’s an interesting theory.
However, what happens if some of the joint tenants refuse to move out after one of them has given notice?
It’s all well and good saying they have to act as an entity. One out, all out, but is that how it will work in reality? Where are the rest of the household supposed to go? If most of them are happy and settled why would they willingly comply with the whims of the one person who chooses to give notice?

Reply to the comment left by Paul Essex at 30/12/2025 – 11:23
I am not sure that would work (but delighted to be proven wrong!): No break contractual break clause can override legislation, and the legislation is set up for tenant protection, not landlord convenience.

I think that some lenders simply dont want to lend on properties let to groups of people that are neither friends nor family, and this is a somewhat crude way of reducing the likelihood that will happen. I can understand why as the risks of loss of rent and damage to the property are higher.

Reply to the comment left by DPT at 30/12/2025 – 17:23
On the other hand, the risk of “group think” or “echo chambers” might be higher with a group of friends group compared to 5-6 individuals. So if the group decides to stop paying, then none will pay. Families and known to “sometimes” stop paying too.

To me, it really doesn’t seem to offer lenders more security.

I mainly rent to sharers on joint and several tenancies. Young professional graduates with good jobs moving to London with friends. The sort of property that has only recently been caught up in HMO licensing. In the past I have assumed that if one leaves they give notice on the whole tenancy, though in practice I have normally allowed them to suggest a replacement who I reference and approve.

I assume that this will continue, in that existing tenants will not want to cover the additional rent, but I as a landlord should presumably not be forced to accept new people into my property without selecting them. (One of the few times I rejected a proposed replacement, on the basis he failed to give me referencing information, the existing tenants belatedly thanked me. They had come to realise he would have been a nightmare housemate.)

More and more I think parameters will be set by mortgage lenders and insurers. I used not get landlord insurance, on the basis that my tenants would not risk a CCJ. (In three decades I have only had to threaten court action twice and both times they caved. The funniest being a hedge fund type on a good six figure salary who did not make his final rent payment, who quickly changed his tune when I told him that I would pursue him if I were owed anything at all.) Insurance is now required by one licensing authority and that with the RRA, is limiting who I can let to. No more affluent start up entrepreneurs. No more affluent overseas post grads who would pay me rent in advance. No more creative types with irregular income flows. On the bright side, the investment bankers work such long hours that they barely use the property. One 10 year old kitchen is practically unused.

But thinking of Borrower vs Lender, would such terms (joint tenancies only) in existing HMO mortgages be unenforceable in court (before or after RRA)?