Problem with rental becoming HMO?!

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    Problem with rental becoming HMO?!

    My two bed flat is currently rented by 2 x couples (who took out the lease together as one contract). At the time I raised the question with the estate agent as to whether this would be classified as a House of Multiple Occupancy (HMO) as I wasn’t entirely comfortable with the idea of 4 people living in the flat (how this came about was by accident as the tenant moved in his girlfriend and his friend did the same) but I was advised that it wouldn’t be an issue because each ‘couple’ is counted as one household and a HMO is classified as more than two households in the same shared property.

    Fast forward 6 months, my estate agent has now told me that the local Council will be changing the rules with effect from 09th December to reclassify HMO as more than 3 people in the same shared property. Apparently this will apply to all new AND existing rentals.

    As a HMO under the new guidelines I would need to apply for a very costly HMO licence, as well as submit additional paperwork and pay an extra admin fee to the estate agent, which I’m not prepared to do. I’ve therefore told the estate agent that due to the change in council legislation I need to terminate the contract with the tenant, but they are refusing to do so, claiming that there is no break clause.

    Does anyone know what rights I have and whether the estate agent is in any way accountable? I struggle to believe that I would not have any grounds on which to cancel the tenancy contract due to a change in government legislation when this is out of my control. Could I really be forced to register for a HMO licence when the intention was never to rent my property on this basis nor is that the basis on which the property is currently contractually let?

    Any help would be greatly appreciated.

    Ps. Before anyone begins with the ‘we hate landlords’ campaign - I’m an accidental landlord who only rents my primary property because I was forced to move away due to work. I’m not trying to profiteer from letting, just cover the mortgage!

    #2
    First of all, your agent was wrong in the first instance.
    An HMO is created by more than two people irenting in more than one household - so the property has been an HMO since there were four people in it.

    It didn't require licensing because the threshold for that nationally is 5 people, and, from the sound of it, your local authority didn't have an extended licence program in place.
    Now they do and are requiring that all HMOs have a licence (or they've just decided to enforce the existing rules).

    The issues are significantly beyond the cost of a licence - HMOs (licenced or not) have broadly the same legal requirements, and the chances of a normal residential flat meeting them is slim.
    And the local authority may have additional requirements on top of the legal minimum.

    Your right to terminate the agreement will depend on the wording of the agreement.
    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
      For reference:

      The regulations for an HMO are quite comprehensive.
      Including (but not limited to):
      • To provide all occupiers with the manager's name, address and telephone number, this information must be clearly displayed within the property
      • To ensure that all fire escapes are clear of any obstacles and that they are kept in good order, to ensure that all fire safety measures are maintained in good working order and that adequate fire safety measures are in place with regards to the design, structural conditions and number of occupiers in the HMO
      • The manager must maintain adequate water supply and drainage to the dwelling
      • The manager must not unreasonably cause the electric and gas supply to be interrupted
      • The manager must ensure that every fixed electrical installation is inspected and tested by a suitably qualified person, at intervals not exceeding five years
      • The manager must provide the electrical and gas inspection certificates within seven days of receiving a request in writing from the local housing authority
      • To ensure that all common parts of the HMO are maintained in good decorative order, and safe and working condition. This includes outbuildings, boundaries and gardens
      • The manager must ensure each unit of living accommodation and its contents are clean before occupiers move in and are maintained in good repair and clean working order throughout the occupation by the tenant
      • The manager must provide adequate facilities to dispose of all waste produced by the property

      Some of these are more onerous than they appear - the "fire safety measures" one probably involves hiring a specialist to carry out a fire risk assessment and doing what they suggest (which will probably involve a higher than "normal" standard of fire resistance in internal doors, heat sensitive fire alarms in kitchen(s) and proper fire escape routes)

      There can be planning implications for an HMO as it is a distinct "type" of property.
      There are often complications with flats, related to the terms of the lease, insurance and any mortgage lending in place.
      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


        #4
        Ok thanks for your prompt and thorough response. Interesting about this already having (unknowingly) been a HMO!

        in terms of right to terminate, it is a standard tenancy contract. There is no ‘break’ clause, but I wasn’t sure if there is any umbrella legislation which makes a tenancy contract null and void in the event that there is a change in government legislation - otherwise a landlord could find themselves suddenly stuck in illegal contract after a sudden change in law (for example).

        Comment


          #5
          Is there anything in the Agreement which stipulates how many adults can live there?
          My views are my own - you may not agree with them. I tend say things as I see them and I don't do "political correctness". Just because we may not agree you can still buy me a pint lol

          Comment


            #6
            You (YOU!) need to read THAT council's HMO licensing rules. Carefully: Twice.

            I no more trust an agent to get such things right than I'd trust a council to understand details of landlord/tenant law.
            I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

            Comment


              #7
              Originally posted by ricoeliso View Post
              in terms of right to terminate, it is a standard tenancy contract. There is no ‘break’ clause, but I wasn’t sure if there is any umbrella legislation which makes a tenancy contract null and void in the event that there is a change in government legislation - otherwise a landlord could find themselves suddenly stuck in illegal contract after a sudden change in law (for example).
              No, there is no umbrella legislation (that I know of) that will help you.
              Usually legislation that chances existing agreements is phased in to avoid this kind of situation.

              But this situation is precisely why it's almost impossible for two couples (or three friends) to find properties.

              On a practical level, you probably need to tell your tenants that you intend to serve notice as soon as you can, because it's going to be very difficult for them to find a place elsewhere.
              Let them know you'll be reasonable about them giving you notice.
              And tell them that if the council enforce the work needed, they'll be living in a building site for a while.

              I wouldn't underestimate what powers the council have, they can issue fines in this situation, for example = what you're doing is unlawful.

              On a practical level, you might be able to get the agent to drop their claim for a higher fee on the basis that they misinformed you and caused you to make a decision that you wouldn't have done had they not done so.
              And, to add to the pressure on them, the person liable for all of the regulations is the person managing the HMO, which, I suggest, you advise them is probably them (that's pushing it in reality, but it's something to use as a lever).
              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


                #8
                When does the tenancy agreement end? The council are unlikely to enforce it on 10th Dec.

                Comment


                  #9
                  Originally posted by royw View Post
                  When does the tenancy agreement end? The council are unlikely to enforce it on 10th Dec.
                  This ^.

                  When does the fixed term end?

                  Did they get permission to move partners in? If not, is there anything in your contract about who can live at the property?
                  Assume I know nothing.

                  Comment


                    #10
                    You could ask the Council for a Temporary Exemption Notice whilst you deal with the issue. They may give you a 3 month TEN and under some circumstances will extend this my a maximum of another 3 months. Its not guaranteed, but it would allow you to serve a s21 notice on the tenants. It would also make the property legal whilst the TEN application was being considered, which it would not otherwise be after December. If the tenants drag you through the courts to evict, this may take longer than the exemption and you may then be forced to apply for a licence. Whether the cost would be recoverable would be something you would need to discuss with a solicitor.

                    Comment


                      #11
                      Originally posted by Hooper View Post

                      This ^.

                      When does the fixed term end?

                      Did they get permission to move partners in? If not, is there anything in your contract about who can live at the property?
                      Hi, there is nothing that stipulates how many people can live in the flat that I can see in the contract, but there are four signatures on the contract from the 4 people living there.
                      my tenancy doesn’t actually end until August next year so it is sometime to be having this situation.
                      letting agent is so far unresponsive on the matter, other than they keep telling my it’s not their issue.

                      Comment


                        #12
                        Originally posted by DPT57 View Post
                        You could ask the Council for a Temporary Exemption Notice whilst you deal with the issue. They may give you a 3 month TEN and under some circumstances will extend this my a maximum of another 3 months. Its not guaranteed, but it would allow you to serve a s21 notice on the tenants. It would also make the property legal whilst the TEN application was being considered, which it would not otherwise be after December. If the tenants drag you through the courts to evict, this may take longer than the exemption and you may then be forced to apply for a licence. Whether the cost would be recoverable would be something you would need to discuss with a solicitor.
                        Thanks for your suggestion. What is an S21?

                        the tenants have actually been very helpful and offered to resign the contract in the name of just 2 if it would make it easier

                        Comment


                          #13
                          Originally posted by ricoeliso View Post

                          Thanks for your suggestion. What is an S21?

                          the tenants have actually been very helpful and offered to resign the contract in the name of just 2 if it would make it easier
                          Where to start.

                          In the politest terms possible, I would suggest that being a LL is not for you and if you want to continue, get a new agent asap.

                          Reading your previous threads it's a matter of time until you come unstuck (moreso). And it wont be the agent getting hit!

                          Sidenote: If there are 4 signatures on the tenancy its hardly "accidental" that they came to be there is it

                          Comment


                            #14
                            Originally posted by ricoeliso View Post
                            My tenancy doesn’t actually end until August next year so it is sometime to be having this situation.
                            I'd start looking at what needs to be done to get the licence then.
                            The cost of the work required to bring the property up to level required is likely to be considerably more than the cost of any licence.
                            letting agent is so far unresponsive on the matter, other than they keep telling my it’s not their issue.
                            If the agent arranged the tenancy for three or more occupants, they allowed the creation of an HMO.
                            If they didn't, they might be right - but their view that two couples is OK is wrong.
                            The tenants have actually been very helpful and offered to resign the contract in the name of just 2 if it would make it easier
                            That doesn't make any difference, an HMO is created because of the number of occupants, not the number of tenants.
                            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


                              #15
                              Originally posted by Lesney Park View Post

                              Where to start.

                              In the politest terms possible, I would suggest that being a LL is not for you and if you want to continue, get a new agent asap.

                              Reading your previous threads it's a matter of time until you come unstuck (moreso). And it wont be the agent getting hit!

                              Sidenote: If there are 4 signatures on the tenancy its hardly "accidental" that they came to be there is it
                              That’s somewhat opinionated isn’t it?! I didn’t say 4 signatures on the tenancy was an accident, I said I’m an accidental landlord because I rent my property to cover the mortgage whilst I’m unable to occupy it. Not because I’m wanting to build a buy2let empire. Suggesting being landlord isn’t for me doesn’t really help, and I wasn’t asking for you opinion about this. I was just asking for advice relating to the HMO situation.

                              Comment

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