Let house to company:HMO? What tenancy agreement?

[Boudicca]

I am about to buy a 3 bed property which I will be letting to a large local company to lodge their exchange work placement students.

The company will be paying a fixed monthly rental for the property regardless of whether all the rooms are filled or not. The students usually rotate on a 4 to 6 month basis.

The idea is that the tenancy agreement will be between myself and the company and they will place the students as and when they need to and be responsible for them respecting the property and rules of the agreement.

I'm obviously happy with this as I will always get full rent regardless of whether all the rooms are full or not.

The property has three bedrooms and shared kitchen, living room and bathroom. According to the local council it will be a 3 bed 2 storey HMO that does not require a licence but must meet regulations. I have no problem with that (fire door etc) - even though I have some doubt as to whether it is an HMO as the occupants themselves will not be paying rent individually and it won't be their "first residence" which will be their home abroad.

Anyway, that aside, I was wondering about the tenancy agreement.
There won't be an agreement with each individual occupant as they come and go quickly, but also because they don't pay the rent - the company does. The company is the one who will be liable in case of damage, non respect of safety regulations or non payment of rent etc

Can anybody make suggestions or point me toward an example of a tenancy agreement that would be suitable?

Thanks!

[jeffrey]

The letting will be a common-law (contractual) one, outside the Housing Act 1988; a company cannot be an AST tenant.
The company may grant to the occupiers either ASTs or just licences.
As the letting will probably constitute a business tenancy, under part II of LTA 1954, this is probably the best drafting route for your solicitor to follow.

[Boudicca]

ouch! Sounds complicated and perhaps expensive? I've never used a solicitor before to draw up an AST as I've used a letting agent.

[jeffrey]

ouch! Sounds complicated and perhaps expensive? I've never used a solicitor before to draw up an AST as I've used a letting agent.
But it's not an AST, is it?

[red40]

Yes its a HMO although you could ask the council to explain the legislation as to why its a HMO.

There main residence on work placement is your property, regardless of where they live elsewhere in the world.

An occupant doesn't necessarily have to be paying rent, the Housing Act 2004 also says any 'other consideration' and since they are using the house as part of a work placement, that would be your other consideration.

[Boudicca]

Thanks everyone.

Yes Jeffrey - I realise it's not an AST, what I meant is I haven't budgeted for using a solicitor for letting contracts before so was worried it would be expensive. I've managed to get hold of a couple of examples of Company Letting Agreements which would be very suitable and would probably only needed tidying up and checking by a solicitor - so shouldn't be as bad as I feared.

I have no problem with it being a HMO - the regs are quite straightforward once you sit down and go through them. The required fire door, alarms etc aren't going to break the budget and I would rather put them in even if I wasn't 100% sure they were needed.

The only HMO rule that may cause a problem is the size of the kitchen which has to be 7m2 minimum. Most of the properties available have very small kitchens. I'd have no problem if I wanted to rent it to a family (who would probably need a bigger kitchen) but I would have a problem for a 3 bed HMO - even though my work placement students are more likely to eat out or have take aways (their food is subsidised too). It would have made finding a property a lot easier if it wasn't a HMO, but never mind - at least I know what I have to look for and haven't already bought one whose kitchen is too small!

Thanks again!