Licence to Occupy or AST???

[Ozone]

Hi,

I have a few rental houses, so familiar with AST's, but thinking of converting some office accommodation to HMO lets (which I feel will attract younger more transient occupiers) and wanted to rent rooms under a license to occupy to individuals on a weekly, or monthly, basis and be able to repossess the room quickly in the event of non-payment of rent? Can this be done???

However, following research and reading of the forum it would seem:-

- if the occupier has exclusive possession of the room then it's essentially an AST?

- the minimum notice to evict an occupier from a room is 4 weeks in any event?

- the regulations (fire safety, licencing, facilities etc.) are more onerous with HMO’s?

If the above are correct assumptions then I’m probably better converting the offices into self-contained 2/3 bedroom flats?

Any comments / advice / observations welcome as I don’t want to go down the wrong route!!

Cheers!

[Bel]

All your assumptions are basically correct.

The cost to convert to flats may require all your floors and ceilings to be upgraded for fire and sound-proof purposes which may raise your costs more than you anticipate.

You need to consider cost vs return very carefully.

HMO may generate more money but it will require a lot of management.

Flats may be easier to sell should you want to dispose of your assets later.

[Terry_Baker]

Do you have planning permission yet? Having plans and planning permission will increase the value of the building if you wanted to sell it. I guess the next step would be getting the builders in and see how realistic it would be to convert the offices into flats, and get a feel for cost. I believe building costs (for extensions and such) is at about £1000 per square meter, per storey.

[multipropertyguy]

I have few HMO's and advised by solicitor to grant Assured Tenancy, NOT Assured Shorthold Tenancy. They drew up contract very similar to AST but written at top is This is a Assured Tenancy, and wording within it saying ..this agreement does not in any way form a shorthold agreement'...or words to that effect.

This is good as by law I was told as these agreements are not AST's but Assured Tenancies I can hold their deposits in my own account and not a TPS account. Which for HMO's is great as if tenants vanish in the night I can simply use deposit to cover rent while I re-advertise and find a replacement.

[theartfullodger]

Bonkers. If actually granting AT then section 21 would not apply & if rent paid on time tenant almost impossible to evict. Or did I misunderstand- AGAIN?

[multipropertyguy]

I've never has any HMO tenants stay longer than 18 months and it has always been the tenant leaving either at end of six months or by vanishing in night.. Obviously you have more issues if you do wish to evict tenant but normally never gets that far as the HMO tenant normally go when they please and leave LL to pick up mess. Welcome comments though, always good to take on advise

[Snorkerz]

I've never has any HMO tenants stay longer than 18 months and it has always been the tenant leaving either at end of six months or by vanishing in night.. Obviously you have more issues if you do wish to evict tenant but normally never gets that far as the HMO tenant normally go when they please and leave LL to pick up mess. Welcome comments though, always good to take on advise

I'd be very wary of Assured Tenancies. If you want to sell and you have tenants in situ then the property value will be hugely reduced. There are many 'older' HMO occupants who do stay for years, and as the average HMO age is currently rising dramatically due to LHA changes, tenancy durations are likely to extend as 'older' often equals 'more settled'.

An AST with deposit protected by 'My Deposits' or 'The Dispute Service' would allow you to keep the money yourself.

[Bel]

Jeffrey suggested Assured Tenancies as a useful device for student lets.