Subletting flat, what kind of agreement do I have?

[casual_reader]

The property is a terraced house converted 23 years ago into three flats. It's owned freehold under one title. Twelve years ago I became tenant of flat A. Then seven years ago I moved up to flat C. However the landlord allowed me to continue renting flat A from him and to sublet it. Landlord is very much a verbal agreeent, talk it through, old school landlord. He is mostly into commercial property and that definitely affects how he acts as a residential LL.

My subtenant has a non-AST contractual tenancy agreement with me. (So for example I have a deposit but it doesn't need to be protected). But what's my agreement with my landlord for the sublet flat? It was agreed verbally that I could do this and then any issues are discussed as and when. Am I still an AST tenant of that flat even though I don't live in it, or did the AST end and become something else when he agreed to the sublet? I don't have a company and I've rented both flats from him personally. The rent has been paid in full and on time for both flats for all these years and there are no particular issues.

Actually I'm wondering now because I'm considering asking to take on flat B along the same terms. It's coming empty and landlord has agreed I can find the next tenants. Though need to make sure the departing tenants can be persuaded not to find someone themselvs. The rent is cheap for the area - £1100 for a 2-bed when the LHA is £1350 - though I'd doubtless be sucked into spending money on it.

Thanks for any thoughts.

[jpkeates]

On a practical level, while you are happy with your relationship with the landlord and the relationship between the tenants and you is good, the details of the arrangements are not that important - it's only when things go wrong that they matter a lot.

Your arrangement with the landlord for Flat A can't be an AST, because you don't live there.
So it's likely to be a common law tenancy, with broadly the same terms as in the AST agreement that you signed.
The potential difficulty is that most residential tenancy agreements assume that they are ASTs and don't contain clauses that might be helpful if they are not, usually the key missing items relate to notice and rent increases.
But the immediate issue is that the normal AST provisions relating to periodic tenancy and security of tenure for the tenant don't apply when the tenancy is not an AST (or an Assured Tenancy).

If you are relying on your being a resident landlord to support the non-AST tenancy with the tenant in A, you'd need an expert to look at exactly how the property is divided up to have any confidence if that will fly or not.
It should, from the brief description you've supplied, but the devil's always in the detail.

[casual_reader]

Thank for your swift reply!

Although under one title, the property is three flats for the purposes of council tax and utilities. There are three gas and electricity meters.

When the rent goes up it tends to be in big jumps but years apart. It's gone from £700 to £850 to £950 to £1100 per flat. It's happened more because of a rising tide raising all ships than because of any particular improvement he's paid for.

I tend not to risk disturbing the subtenant but I did get him to agree a small rent increase last year via an email 'Notification of rent increase' which he replied agreeing to.

The landlord is a great 1990s/2000s style landlord but not keen on acquainting himself with some modern developments. For example, with flat B, he will still ask them to pay a deposit, which he will not protect. He will call it an advance on the last month's rent, but then he will still ask them to pay the last month's rent! However, when they depart he will just repay the money in full, since there have never been any inspections. So, all are happy. Yet I do think he could get into trouble if a tenant had Google and took against him.

I'm still trying to convince him of the need for an EICR which will involve upgrading the consumer units to add RCDs. I'm off the hook because I have correspondence showing I have made a full and sincere effort to acquaint him with the law, he just hasn't signed off on it yet. I'm waiting for another quote and hope to make progress on this soon. Last quote looked like about £1500 for three EICRs and adding RCDs.

I am not sure yet with the EICR if it's a point-blank refusal or if it is like when some roof tiles needed replacing and the gutters repaired. He kept rejecting quotes that involved putting up scaffolding. But did accept it when I finally found a cheaper quote from some old boy who just climbed up a ladder.

One other sleeping issue is that he actually owns the property with his sibling, 50% each. Sibling receives half the rent but is totally silent. But one day I suppose sibling or sibling's heirs may reveal themselves and this will all come unstuck. So - a bit cautious about signing up for £3300 in rent a month, even if it's fish in a barrel finding reliable subtenants...

[DoricPixie]

As the landlord of the tenant in flat A I’m not sure you are off the hook. The Electrical Safety Standard in the Private Rented Sector (England) Regulations 2020 apply in all cases where a private tenant has a right to occupy a property as their only or main residence and pays rent. This includes assured shorthold tenancies and licences to occupy. Your landlord isn’t liable for flat A’s EICR because it isn’t your only or main residence.

[casual_reader]

Thank you, DoricPixie, that is interesting. So, your interpretation would be that the EICR and remedial work for Flat A would be my legal responsibility. My landlord is absolved of responsibility because he is letting the property to me on a common-law tenancy.

But he is responsible for the EICR and remedial work for flat C, because he's let it to me on an AST.

That might explain his reluctance. So, basically I need to pay for Flat A and pay for it out of the profit I'm making on that flat.

There is a potential safety issue on that flat, actually. It has a conservatory which I believe is on the same circuit as the kitchen which it leads off from. Really it shouldn't be used in winter. But if the tenant tries to heat it with a powerful electric radiator, at the same time as they are using oven, the circuit can potentially overload. This happened once (many years ago) and the oven plug actually melted. I think adding RCDs would fix that risk. Sounds like that will be on me to sort out, I'm hoping it won't be anything larger than that for example saying the conservatory should be on the main circuit.

[Ted.E.Bear]

I'm off the hook because I have correspondence showing I have made a full and sincere effort to acquaint him with the law, he just hasn't signed off on it yet

I think that you are still in breach of the regulations. I guess that you probably won't be prosecuted, but if there is a fire or other accident due to faults in the installation then you will probably be in the firing line...

If you are somebody's landlord, then you are legally responsible for their safety etc.

Depending on the conversion meeting building regulations, this could also be a Section 257 HMO. There are various, potentially severe, consequences of not following HMO regulations. (particularly if it requires licensing).

[casual_reader]

I think that you are still in breach of the regulations. I guess that you probably won't be prosecuted, but if there is a fire or other accident due to faults in the installation then you will probably be in the firing line...

If you are somebody's landlord, then you are legally responsible for their safety etc.

Depending on the conversion meeting building regulations, this could also be a Section 257 HMO. There are various, potentially severe, consequences of not following HMO regulations. (particularly if it requires licensing).

Thank you, yes, I agree it does look like it's my responsibility.

The issue of whether the property might be an HMO did come up some years ago. Landlord told me that if it was, he was selling up, too much bother!

Fortunately the council concluded that it was not. They didn't even come to inspect, they just accepted that the flats were self-contained, sharing only a hallway and landing, and also considered individually would not be HMOs. I guess it must have met the 1991 building regulations when it was converted in 1999.

There is some talk of selective landlord licensing being introduced in the borough, but this is one of the wards that are specifically excluded. Either because there are not many rentals around here (while there are many privately owned houses, and also council and HA properties), or there aren't many issues with it, compared to elsewhere.

[casual_reader]

Thank you, Ted.E.Bear, yes, I agree it does look like Flat A's EICR is my responsibility.

The issue of whether the property might be an HMO did come up some years ago. Landlord told me that if it was, he was selling up, too much bother!

Fortunately the council concluded that it was not. They didn't even come to inspect, they just accepted that the flats were self-contained, sharing only a hallway and landing, and also considered individually would not be HMOs. I guess it must have met the 1991 building regulations when it was converted in 1999.

There is some talk of selective landlord licensing being introduced in the borough, but this is one of the wards that are specifically excluded. Either because there are not many rentals around here (while there are many privately owned houses, and also council and HA properties), or there aren't many issues with it, compared to elsewhere.

[DoricPixie]

Yes, that is what I believe the regulations say although I must add the caveat that I am not a lawyer.

I don’t think it’s the reason your landlord is reluctant to get the EICR done though. I think he’s one of those landlord who doesn’t care about the law and so far this has worked out fine for him but one day it may royally bite him on the arse.

[jpkeates]

Thank you, DoricPixie, that is interesting. So, your interpretation would be that the EICR and remedial work for Flat A would be my legal responsibility. My landlord is absolved of responsibility because he is letting the property to me on a common-law tenancy.

You are responsible because you are the landlord letting out the property.
You seem to think it's not an AST, but, based on what you've said subsequently, why do you think it isn't?

But he is responsible for the EICR and remedial work for flat C, because he's let it to me on an AST.

Yes, if you're living there, it's probably an AST.

That might explain his reluctance. So, basically I need to pay for Flat A and pay for it out of the profit I'm making on that flat.

Yes, but you may not be allowed to because normally a tenant can't do that.

This happened once (many years ago) and the oven plug actually melted. I think adding RCDs would fix that risk.

An RCD is to protect against a short circuit, not an overload.
A better fuseboard would probably help - the fuse should trip before anything melts.

[casual_reader]

Thanks, jpkeates. My understanding is it would be impossible for the tenants in Flat A to be AST tenants because I am living in another flat in the same property. We signed a non-contractual periodic tenancy agreement.

One further detail, the property has a large garden. Originally the entire garden belonged to Flat A, by default because nobody had the key to the side-return door. I transformed the garden when I was living in A. Then when I moved upstairs, I opened up the side return door. I also split the garden in two, by way of what I'd planted. Then in my agreement with A, they have the front half of the garden and I have retained for myself the back half.

Since they didn't follow the clause in the agreement about mowing the lawn, we agreed to remove it and instead they allow me to do the gardening. So I'm out there watering and also I've planted quite a bit this year too. I think that my being resident and also providing a service to the tenants is another grounds for it being a non-AST?.

I also have to walk down the garden path through their garden to reach my section. In fact maintaining control of the garden was a large part of why the sublet came into being in the first place.

As well, of course, as there being a freeholder/actual landlord who lets a tenant rule the roost so long as rent is paid.

[casual_reader]

Thanks for the correction about RCDs. I did get an electrician to quote on it, and he said there wasn't much room for a modern consumer unit since they tend to be bigger. The boards are on the wall in the hallway above where the front door opens, and without moving the meters too there's not much space. Though there are at most 4 circuits per flat, and I think if the boxes for the doorbell were moved there might be room. I've just sent the photos to another electrician who specializes in EICRs and I'll see what he has to say.

Perhaps I'll agree to pay for the EICR on flat A if landlord pays for the new consumer unit or RCD, since as freeholder I'd hope he'd want to upgrade the electrics himself. But we'll see.

[jpkeates]

Thanks, jpkeates. My understanding is it would be impossible for the tenants in Flat A to be AST tenants because I am living in another flat in the same property. We signed a non-contractual periodic tenancy agreement.

It's difficult to be sure, to be honest.
You could be right.
But if it's not the same property for HMO purposes, there's at least some grey area.
But, frankly, the legislation isn't helpful and can be contradictory.

But it's hard to be living in one property for the purposes of being a resident landlord and not living in the same property for HMO purposes.

I am not at all sure what you mean by "a non-contractual periodic tenancy agreement".
A tenancy agreement is a contract.

As long as there's no dispute about the garden, I'd imagine it'll work out.
If you do end up subletting the other two properties, you can make whatever rules you want really.
It would be sensible to make it clear, though.
If someone lets flat A from you, and the superior lease of Flat A says it includes the garden, it's possible that (should there be some kind of catastrophic dispute) the tenant of flat A could exclude the other people from their "garden".

Although, to be fair, the arrangement sounds like it's too good for anyone to want to rock the boat.

[Ted.E.Bear]

Thank you, Ted.E.Bear, yes, I agree it does look like Flat A's EICR is my responsibility.

And you can be fined up to £30,000 for that.

Fortunately the council concluded that it was not. They didn't even come to inspect, they just accepted that the flats were self-contained, sharing only a hallway and landing, and also considered individually would not be HMOs. I guess it must have met the 1991 building regulations when it was converted in 1999.

Do you have any of that in writing? If they change their mind then you would be the one legally responsible. I think that if there are 5 people living in the house (regardless of the number of tenants) then it would become licensable. The penalties for getting it wrong can be pretty severe.

It would probably all fly under the radar, but if one day you have a dispute with a tenant then it could all get very messy. (Are Gas, EPC, etc. all ok?)

But it's hard to be living in one property for the purposes of being a resident landlord and not living in the same property for HMO purposes.

I think that is the case for house conversions which meet building regulations, there would be a tenant with basic protection but still not a section 257 HMO.

[jpkeates]

I think that is the case for house conversions which meet building regulations, there would be a tenant with basic protection but still not a section 257 HMO.

It all gets very messy, though.
Everyone assumes that the conversion met Business Regulations, but then can't prove it - that kind of messy.