Preston

Hi I'm not sure I fully understand all the complexities of your situation, but it does seem clear to me that you need to aim to simplify things rather than make them more complicated. First of all some background. You have created what are called variable (as opposed to fixed) service charges. By law, variable service charges must be reasonable and if a tenant wishes to challenge them they can apply to a Leasehold Valuation Tribunal to have them reviewed. This is rare, but it does mean that you need to bear in mind how an LVT might view the situation. It is also quite possible that if you ever want to apply for a court order for rent arrears that the court will refer the service charges to an LVT to decide on their reasonableness before you get your order. The following comments assume you are letting each room on a standard AST. If that isnt the case, it could have a significant impact on the situation. So, the first place an LVT will look is the tenancy agreement. Does the tenancy agreement make it clear that the proportionate contribution varies according to the number of rooms that are let and the level of occupancy in each room? Both would be slightly unusual. If the tenancy agreement doesnt say these things, the you may have difficulty particularly with the suggestion that you want to increase the contribution for rooms which become multi-occupied; it is, after all, still just one tenancy, even though two people are living there, unless of course you grant a new tenancy on new terms each time this happens? Even if the tenant of the multi occupied room agrees to an increase in contribution, what happens when and if the room becomes single occupied again - all the others will face an increase and how will they feel about that? And even if your tenancy agreement does cover these issues, remember the LVT will still expect the charges to be reasonable. For example, if you choose to keep two of the rooms vacant, would the charges for the remaining tenant shoot up and would this be reasonable? There is no right or wrong answer to this; it may be that fuel costs vary quite closely according to the level of occupancy; or it may be that they dont. With regard to council tax there could be quite a large difference between the council tax liability with only one or two people in the property compared with full occupancy. At its extreme, if only one of the rooms is occupied could you charge the one remaining tenant the full council tax liability and would you want to? My guess is that even if your tenancy agreement is clear on this particular issue, it may be considered an unfair term; after all, the tenant would effectively be paying tax for parts of the property that they dont occupy? So, my advice would be to try, if possible, to make things more definite and if you can move towards fixed service charges as you renew your tenancy agreements or relet the rooms. With regard to the council tax, you could work out what your annual council tax bill will be, estimate what your total occupancy is likely to be and include the relevant proportion in the rent at a fixed level. You might lose out a little,or you might gain a little, it depends on how good your calculations are, but it would be quite legitimate for you to take a "conservative" approach to ensure so far as possible full recovery. With regard to fuel costs, I would tend not favour varying the contribution simply because two people now occupy a room rather than one; why not just set a proportionate contribution for each tenancy and leave it at that? In setting the contribution you could take account of room size, appliances etc if you wished. Provided fuel costs dont vary hugely because of overall occupancy levels, then my guess is that an LVT would regard a proportionate contribution as reasonable. If, however, they vary greatly and so a tenant could end up paying alot more because you choose to keep rooms empty, then I would worry how that would be regarded by an LVT. In the latter case, I would stick with fixed proportions per room, whether occupied or not, and take the risk as landlord on the other rooms. In effect, I would then build in an element to the core rent to cover this risk. Anyway, sorry this is a very long and boring answer, In summary, my view would be to keep it simple! Good luck Preston