HMO or not?

[James83]

Hello all,

Sorry to not post in the HMO forum but it doesn't seem very active at present.

My uncle owns a 4 storey house (inc. basement) which he currently lets to 4 people. There is a small spare bedroom in this property and due to a work relocation i want to move in temporarily (would rather pay my uncle rent if i have to pay it to anyone).

My question is would this property then be a HMO? If i was not put on the contract would it be a HMO regardless?

It's only a temporary move so obviously it would be a big hassle to bring it up to HMO standards so just want to check if there are any options.

Any advice is appreciated, many thanks,

James

[Poppy35]

what is the tenancy that is currently running on the house at the moment with the 4 other people? Do they have on AST between then or individual agreements?

[James83]

Hi Poppy,

They have a 6 month AST between them

[Poppy35]

OK, how long has this tenancy been in place for? and are they related?

A new law came into force last year so more than 2 unrelated people could not share a property under an AST so it could be classed as an HMO already.

The option could be that subject to uncles permission you could become a lodger to the tenancy however I will down to others more qualified in this matter than I.

[James83]

well the house has been let for years, obviously tenants have moved in and out over that period, most have been MSc/PhD students at a nearby University (as the current tenants are). None of the tenants are related.

The contract has been continually renewed every 6 months.

I understand it is a HMO under the definition but does not require a licence at present as there are only 4 occupants. I assume the requirement for fire rated doors etc comes in as a condition of award of a licence?

[Grrr]

Someone else can comment on the HMO rules. But if they have an AST between them, then presumably they have use of the whole house? Your uncle won't have the right to add another tenant without their express agreement.

[jeffrey]

But if they have an AST between them, then presumably they have use of the whole house? Your uncle won't have the right to add another tenant without their express agreement.
Depends on how the premises were defined- i.e. did uncle let whole house to the four of them?
If he did, he has nothing left for letting to you!

[Grrr]

Depends on how the premises were defined- i.e. did uncle let whole house to the four of them?
If he did, he has nothing left for letting to you!

But OP said there is a small spare bedroom.

[jeffrey]

But OP said there is a small spare bedroom.
Irrelevant- if it's already let to the four, they don't have to use it.

[James83]

The contract is up for renewal in August and that is when i would move in.

I'm on good terms with the tenants, being the same age and having recently finished postgraduate studies, similar to them. It could be an informal arrangement. Aside from the fact i have no worries about how we would get on they have a very nice house for the amount of rent they are paying, i know they appreciate this.

[Grrr]

In answer to the OPs original question, I think it does sound like an HMO which would require licensing: 3+ floors and 5 unrelated tenants. But check on the local authority website as they all approach it slightly differently. There's usually guidance there.

I guess if, as you suggest, you weren't on the agreement you might be able to argue that you were merely a guest and not a tenant. The difficulty could come if (God forbid) there were ever say, a fire. If it was found that you were all in fact tenants and that the house wasn't licensed, then I imagine your uncle could face criminal prosecution. But IANAL (or a Licensed HMO LL!)

[James83]

Sorry for the tardy reply and bump but thanks for the advice all.

It now looks like i will move in as a 5th tenant and we will bring the property up to HMO standards and get a licence to err on the side of caution. I am only looking to stay temporarily so once i leave at least my uncle will be able to achieve a higher income from the house.

Another question has arisen though, do i have to be a signatory of the new AST? It is likely i will stay there for free as i do a lot of work/advice for my uncle so would not be paying rent. It therefore seems pointless to be on the tenancy agreement. What i am more concerned about is if one of the other tenants could create problems and use the fact that i was not a signatory as a defence - " I signed up to a 4 person agreement but now there are 5 there" or similar.

How would be the best way to approach this problem, insert a clause/condition that i will be living there?

Thanks again,

James

[jeffrey]

My view: there cannot be more than four joint tenants. Some other LZ members disagree!
Best way might be for the four tenants to treat you as a lodger (but you will have no security of tenure).

[James83]

Thanks Jeffrey, what is the reasoning behind that view? If eventually a 5th tenant moved in formally are you saying you would use something other than an joint AST? Individual agreements between L and T?

How would you go about having the tenants treat me as a lodger?

[jeffrey]

Thanks Jeffrey, what is the reasoning behind that view?
The Trustee Act 1925, s.34(2):

In the case of settlements and dispositions creating trusts of land made or coming into operation after the commencement of this Act:
(a) the number of trustees thereof shall not in any case exceed four, and where more than four persons are named as such trustees, the four first named (who are able and willing to act) shall alone be the trustees, and the other persons named shall not be trustees unless appointed on the occurrence of a vacancy;
(b) the number of the trustees shall not be increased beyond four.

[jeffrey]

If eventually a 5th tenant moved in formally are you saying you would use something other than an joint AST? Individual agreements between L and T?

How would you go about having the tenants treat me as a lodger?
A 'Lodger Agreement'.
Even if the four sub-let to you, they'd have the status (from your viewpoint) of being resident landlords.

[James83]

Thanks, it seems a long-winded and potentially risky way for me to temporarily reside in my uncle's house, i think i'd probably rather sign the tenancy and pay at this rate!

Is there anything to stop me signing the tenancy and just not paying anything? The other tenants have SOs directly into my uncle's bank account.

Regarding the tenancy agreement, what should you be using if you rent a property to more than 4 people then?

[jeffrey]

Regarding the tenancy agreement, what should you be using if you rent a property to more than 4 people then?
Two answers:
1. I wouldn't.
But, if I did:
2. I'd let whole property to four BUT, alongside the Letting Agreement, procure Supplemental Agreements- each drawn between L (1), four Ts (2), and a 'surplus' person (3)- to govern the surplus person's position.

[James83]

Thanks Jeffrey appreciate the advice