Appropriate form of tenancy for individual tenants in an owner occupied HMO

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    Appropriate form of tenancy for individual tenants in an owner occupied HMO

    Hi, sorry very basic question - i'm not a 'professional' HMO landlord,

    It's more a case of being drawn into the matter of HMO law simply because licensing now seems to make ANY home occupied by more than two unrelated people an official HMO.
    (whereas, in the past, you'd just be a home owner who had a couple of lodgers).

    Now that we are in this more officially regulated environment,

    Can i ask the rather basic question of what form of tenancy agreement is required for lodgers (now 'HMO tenants'), with whom an owner shares facilities, but who are unrelated to the home owner?

    Is it a shorthold assured tenancy pertaining to one specified room in the house?

    Thank you

    #2
    There is a specific exemption that means a property owner with two lodgers does not form an HMO.

    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      I think you may be talking about Additional Licensing, which varies from council to council and even within a council area.

      Comment


        #4
        Yes, thank you for the point of clarification leaseholder64

        This is the situation, and as i understand it three unrelated occupants in any single dwelling requires additional licensing.

        I'm thinking that this moves me into a slightly more rigorous legal framework, perhaps.
        As an HMO 'manager', perhaps i need to focus a bit more carefully on the appropriate tenancy paperwork.

        (in the past, i guess you used to just take a lodger on on a more informal basis)

        Comment


          #5
          I'd call the council, as I suspect you might still be exempt if you are one the three occupants and own the property.

          If you aren't exempt and the council require you to meet HMO regulations there's going to be whole lot more than the paperwork to sort out.
          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            Thanks that's an interesting point

            I suspect that the licence involves a fee, so they'd still want me to, though this is certainly an interesting possibility.

            In actual fact, my situation currently is s257 HMO, but i'm thinking of altering the house such that it can be a single HMO.

            (I have a post pending which I hope will come through on how that can be effected).

            The possibility of a much simpler system is certainly what is attractive.

            Comment


              #7
              Does that mean that your dwelling and those of your 'lodgers' are self contained flats but in the same converted building? If so then they are not lodgers and will probably be excluded tenants. The HMO requirement relates to your Councils decision to include s257 HMOs within the scope of their Additional Licensing regime. If you can get a temporary exemption notice and convert it into one house quickly then you may be ok but if not then you're probably already in breach and that will have all kinds of ramifications, (potential for a Council fine, potential for tenants to claim a rent repayment order, inability to use s21...)

              Comment


                #8
                Yes, i think you are right

                I have decided to re-unify the house for all kinds of reasons (flexibility using space etc) so i'm worried now about the best way to achieve this, given the current situation (they ARE separate units in effect).

                I can quite easily go ahead with ALL the s257 HMO and additional licensing requirements (albeit late)

                That is probably my fastest bureaucratic way to comply with various requirements

                What's really worrying me, though, is whether and how easily, having done that, I could then re-unify the house.

                Getting repossession via the usual means (notice under short hold assured tenancy), then just physically altering the house

                If i get all the licencing as an s257 HMO (plus an additional licence for a three person unity), can i still make a free decision to repossess and reunify the house after that?

                Or am 'locked in' to having a house with separate units?

                Thanks if you can shed any light on this

                Comment


                  #9
                  You should try to get a Temporary Exemption Notice from the Council first. If you live in the same converted building then the tenants are probably not assured tenants and you would serve a common law NTQ. However they may choose to test that in court in case a judge thinks they have an AST, so you would serve a s21 notice at the same time, just in case. However, the s21 will not be valid without the licence or a TEN. Another issue could be that the TEN could expire before you manage to evict and complete the work. You really need the cooperation of your tenants so you nay have to consider financial incentives to help them on their way

                  Comment


                    #10
                    Thanks for this comment DPT57

                    However- surely an easier route would be this -

                    1. obtain the various additional licences plus s257 HMO classification.
                    Although late, i can probably do this as i'm showing willing to comply on everything.

                    2. once all that's sorted, so everything is on an even keel legally, in terms of HMO additional licences and s257 HMO licence, in due course, i serve notice in the normal way, or just let them know that i'm not renewing short hold assured tenancies as they come to the end of their period

                    3. As soon as i have repossession of the various units in due course, the place isn't a S257 HMO anyway, as that, by definition, would be a building occupied at least two thirds by people in separate units etc etc etc

                    4. re-unify the building at my own pace

                    (edit - in case i haven't mentioned, each tenant or group of tenants is on a shorthold assured tenancy pertaining to their unit)

                    (2nd edit -also, i'm pretty much all sorted on things like fire doors, mains powered smoke alarms, fire proof partitions)

                    what would be the problem with that?

                    Thanks as ever

                    Comment


                      #11
                      You could do that, but you may find that you have to spend a lot of money to meet the licence conditions. It also seems like a bit of a waste. These licences can be quite expensive and given your intentions I don't see why they wouldn't grant you a TEN.

                      What evidence does the Council have that its a s257 HMO? A leading housing lawyer I spoke to usually recommends brazening it out by saying that you don't accept their assertion and asking the Council to prove it. They can only do that non-invasively so apparently often back-off. It probably wouldn't work if they have planning and/or building control records relating to the conversion.

                      Despite the tenants having ASTs, they are probably legally common law tenancies if you live in one of the units, but having that document might be enough to persuade the tenants to go to court.

                      Comment


                        #12
                        Thanks for this input - sorry could i just clarify your meaning in the last sentence when you say '...having *that document* might be enough to persuade the tenants to go to court.' Which document do you mean, in that specific sentence?

                        Comment


                          #13
                          I meant the tenancy agreement. If you have given them an AST and now say actually its not an AST after all, they may be suspicious and decide to test it in court.

                          Comment


                            #14
                            Can I make the applications for HMO license, but simultaneously begin the process of repossession of units currently let under shorthold assured tenancies?

                            I have been reading some fairly worrying looking stuff online saying that receiving licenses can take several months (or even two years, in a discussion of liverpool council, though i'm in London). Or, as in some cases, the inspection may happen AFTER a licence is granted, etc. All very variable, and it's hard to believe most councils will sort it out especially quickly.

                            However, i also see that people are allowed to let property out in the meantime, within various online discussions (seems reasonable and likely, given the processing times in various areas).

                            However, surely all the really nasty stuff, like fines, and refusal to allow S21 to be validated, as well as repayment of twelve months rent, and so on, would not, or could not, be applied against a Landlord with application pending?

                            My timescale for repossession would be within six months (don't want to rush long term tenants, and the period of the rental expires then anyway, so it's more a case of not renewing)

                            Does this sound viable? I'm pretty worried about the penalties, not really worried about spending application fees even if ultimately they were unnecessary

                            But surely applying, but reoccupying a unit within your own building in which you live, can go on simultaneously via usual means pertaining to Shorthold assured tenancy and instruments such as S21 ? especially for landlord showing willing to comply?

                            Essentially i want to occupy the largest unit for myself, and wouldn't re-let my own dwelling unit. My reason, genuine as it happens, is that i need to occupy a larger living unit anyway (that's a basic decision separate from any legal matter, and is why i want to ultimately re posses most or all of the house) Then, de facto, i end up with a mostly non rented building, and just one remaining tenant in single unit within a larger building, as a first step. If (eventually) I end up with an HMO licence that i don't really need, because i'm moving to reunify the house, that doesnt bother me, i'm more worried about compliance and staying on the right side of the law in the meantime. I'm not worried about chasing tight margins and avoiding fees, i just need to avoid worry and chug along with my larger goal, which is really just occupying more of my building in about six months, and avoiding worry of fines etc or falling foul of the law, such as an invalid s21 situation

                            I appreciate the TEN suggestion, but also need to consider if that also is slow or can't be obtained for any reason.

                            Comment


                              #15
                              it really comes down to a point in law. Can s21 on a short term assured tenancy be served on a unit with a pending licence application. I hope there's a clear answer, because this is what it comes down to. I will of course seek professional advice, but thanks as ever for informed comment.

                              Comment

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