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Jul, 2014

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  1. #1

    Default Is an HMO a 'business' in terms of a residential estate headlease?

    Would a HMO be classified as a 'running a business' from a property where the head lease covenant for the property restricts the running of a business from the property?

    The property in question is a house within a private residential estate and the covenants are part of the estate head lease.

  2. #2
    Join Date
    Jul 2010
    Location
    Nottingham
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    902

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    Quote Originally Posted by accidential landlord View Post
    Would a HMO be classified as a 'running a business' from a property where the head lease covenant for the property restricts the running of a business from the property?

    The property in question is a house within a private residential estate and the covenants are part of the estate head lease.
    In my view, an HMO is simply a name for a type of residential status.

    The same as the phrase a 'family home'.

    The 'business' is the letting of the property, and not the type of residential let that one happens to be operating.

    Otherwise, if you let your property to a couple, the interpretation would have to be the same - i.e. that you were operating a business in the house because you were letting the property, which is clearly not the definition of operating a business.

    The fact is, the tenants purpose for being there is for them to eat, sleep and rest - there is no business activity going on.
    I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.

    That also means I cannot share in any profits from any decisions made!

  3. #3

    Default

    The head lease has restrictions on operating a business partly in order to control the number of cars on the estate.

    If a licence is granted to allow 12 adults to live in a house and that house only has two allocated spaces then this would be contrary to the purpose of the head lease covenant.

    If a licence is required then wouldn't that makes it a business? I appreciate that the tenants are not operating a business but the landlord is or else he would not require a licence. This would be different from a normal AST let where no licence is required and therefore no business is operating?

  4. #4
    Join Date
    Jul 2010
    Location
    Nottingham
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    Quote Originally Posted by accidential landlord View Post
    The head lease has restrictions on operating a business partly in order to control the number of cars on the estate.

    If a licence is granted to allow 12 adults to live in a house and that house only has two allocated spaces then this would be contrary to the purpose of the head lease covenant.

    If a licence is required then wouldn't that makes it a business? I appreciate that the tenants are not operating a business but the landlord is or else he would not require a licence. This would be different from a normal AST let where no licence is required and therefore no business is operating?
    Not really sure which side of the fence you are on, but I'll play devil's advocate on the side of the landlord, here I'll present their argument:

    Strictly speaking, there is no business going on inside the house. If the covenants are there to prevent more than two cars parking, then that is what the covenants should say. If someone has shoe horned in a rule to control something else, i.e. not allowed to operate a business such that too many cars do not park, then loop holes are being created. Covenants should be direct and specific - we see it all the time in the tax legislation which creates huge loop holes that large firms take advantage of all the time.

    The letting of the HMO is the landlord's business, the house is his tool. The landlord requires a licence yes, but the landlord's business is not being operated out of the house. As such, the house is the business asset, and the business is not operated from the house.

    12 people can live in a house with just two parking spaces, there is no breaking of the covenants there if they only have two cars.

    People living in the house are not conducting a business.
    I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.

    That also means I cannot share in any profits from any decisions made!

  5. #5
    Join Date
    Feb 2006
    Posts
    3,343

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    I think if there is a change in occupancy from family accomodation and there are more than 6 people occupying the property as a HMO, you will require a planning permission change in use to "sui generis" catagory. If you don't do this, your neighbours can complain to the council who may investigate and make you comply. Check the current facts out yourself .
    All posts in good faith, but do not rely on them

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