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Homes in Multiple Occupation

What is a HMO?

A HMO is any property that is occupied by more than 2 people forming more than one household.  HMOs have additional safety requirements and are covered by some additional legal regulations.

HMO licenses

All properties that are occupied by 5 or more people and consist of over 2 storeys require licensing by the local authority.  Some authorities impose licensing on other HMO properties.  In order to obtain a license, the property has to comply with all the necessary requirements to protect the occupiers.  Landlords who do not license a licensable HMO face action by the local authority and can not use the section 21 eviction proceedure.

HMO tenancy agreements

Joint Tenancy

This would usually be taken out by tenants who already know each other.  With a joint tenancy, you rent the entire property.  Although this is usually the cheapest way to rent in a HMO, it does have it's disadvantages.  With a joint tenancy, all the tenants should move in and move out at the same time.  It is possible to get around this, but it will need legal documents to be completed and there are many pitfalls.  You should also be aware that you will have 'joint and several liability'.  There is no such thing as 'shares' of the rent - the 'tenant' is all of you together, and if the landlord is owed money then he can pursue any of you for payment.  The phrase "I paid my share" would have no validity in court - you could be liable for all the rent or for damage that you personally didn't cause.  Utility bills would be the responsibility of just one tenant - so the tenants would have to come to an arrangement about how these bills are dealt with.

Sole Tenancy

With a sole tenancy, you just rent a specific area (usually a room) in the HMO. This has the advantage that you are only responsible for your own area and your tenancy is independant of the other occupants. However, this arrangement is usually considerably more expensive and you have no control over the other occupants. The ideal utility arrangement is either inclusive or individual meters. If there is only one meter and the landlord, or another tenant, divides the bill between the occupants then this has the potential to cause confusion or dispute and should be avoided if at all possible.

Leaving a HMO tenancy

Sole tenants would follow the same process as any other AST tenant.

Joint tenants should be aware that once the fixed term is expired, any of the joint tenants can give notice and that will apply to the whole group. Where this happens, the remaining tenants are not forced to leave the property but will need to re-negotiate a new tenancy with the landlord and the full rent will still be payable. An inventory will need to be taken, and an appropriate amount of the deposit returned to the departing tenant.

If one joint tenant leaves on the last day of a fixed-term tenancy agreement, the same applies.

If one joint tenant leaves during the fixed term, the remaining tenants will be jointly responsible for paying the full rent. They could either sue for the proportion of the rent the departing tenant would pay up until the end of the fixed term, or they could find a replacement tenant acceptable to the landlord. This can not be done without the agreement of the landlord and the departing tenant (who still has tenancy rights). A deed of assignment would have to be created which assigns the tenancy currently held by "A, B & C" to "A, B & D". To prevent confusion/dispute an inventory will need to be taken, and an appropriate amount of the deposit returned to the departing tenant. Once the tenancy is assigned, the departing tenant has no tenancy rights and incurs no further liability from that point onwards.