Sharer's Agreements vs AST's

[nataliejayne]

HI there,

I have recently bought a flat, and there are 3 girls living there who are on separate licence agreements. They are on 3 month rolling contracts.

They obviously like the flexibility this gives them, if one wanted to leave etc. and it wouldn't impact the others. They just continuously find someone to replace them.

I would like to do an AST instead, as this is what i am familiar with. Is it possible to create 3 separate AST's for the girls? Obviously they dont want to be bound to the same contract.

Im a little confused at the difference between AST's and lisence agreements. Can anyone help?

Many thanks,

[Grampa]

If the people living in the property

1. Don’t have a live in landlord.
2. They have their own room.
3. They will be paying rent.
4. They have exclusive possession to one room at least.

The above dictate that they hold an assured shorthold tenancy by default already which means you may have a deposit issue if it is not protected correctly.

Also if you have 3 unrelated sharers in the property it is classed as a HMO (House in multiple occupation) it may not be a licenable one but it is one without a doubt which mean you have to comply with certain rules such as fire regulations. Call your local council and ask to speak to the HMO officer for advice.

Housing Act 2004

Section 254

Meaning of “House in multiple occupation”

2)A building or a part of a building meets the standard test if— .

(a)it consists of one or more units of living accommodation not consisting of a self-contained flat or flats; .

(b)the living accommodation is occupied by persons who do not form a single household (see section 258); .

©the living accommodation is occupied by those persons as their only or main residence or they are to be treated as so occupying it (see section 259); .

(d)their occupation of the living accommodation constitutes the only use of that accommodation; .

(e)rents are payable or other consideration is to be provided in respect of at least one of those persons' occupation of the living accommodation; and .

(f)two or more of the households who occupy the living accommodation share one or more basic amenities or the living accommodation is lacking in one or more basic amenities.

[nataliejayne]

Thank you for the info. They never paid a deposit to the previous owner, but I will be taking one now and registering. Can I do multiple AST'S?

I dont think a HMO relates to 3 unrelated sharers- i thought it was 5. As stated on the local councils webiste-

HMO Licensing

The Housing Act 2004 introduced the licensing of HMOs. It is mandatory to licence certain larger and higher risk HMOs, and we can licence other HMOs at our discretion.

HMOs subject to mandatory licensing are defined as:

• properties of three or more storeys
• let to five or more people
• who form two or more households.

Storeys include occupied basements and attics, including those occupied by a resident landlord. Commercial premises on the ground or any upper floor are also included. Children are counted from birth in the same way as adults.

Thanks!

[Grampa]

That is for a licenable HMO. Three unrelated sharers is a non-licenable HMO but still a HMO none the less.

From Exeter council website

HMO or non-HMO?

Here are some examples of household arrangements that are, and are not, HMOs:

2 bedroom house or flat, 2 unrelated tenants: NOT an HMO

2 bedroom flat, 1 couple living as though married and 1 unrelated sharer: HMO

3 bedroom house, 3 unrelated tenants: HMO

3 bedroom house, brother, sister and cousin sharing: NOT an HMO

From Landlordzone

(a) Definition of a HMO

Under the changes in the Housing Act 2004, if you let a property which is one of the

following types it is a House in Multiple Occupation:

•

An entire house or flat which is let to 3 or more tenants who form 2 or more

households

( and who share a kitchen, bathroom or toilet.

[Grampa]

To answer your other question yes you can do multiple ast's.

[Mortitia]

You can do multiple AST's but I personally would prefer to do just 1 AST which makes them all 'jointly and severally liable' for the rent and other conditions in the tenancy agreement.

This way you should get all the rent paid and not just part if one or two tenants don't cough up.

If one leaves you just recruit another and sign her up to the same AST

[Grampa]

I agree a single AST is the best way to go for the reasons Mortitia has given but you cannot add a new tenant to an exsising tenancy agreement you would have to do a new AST. I dont know which part of the housing act it comes under but it has been confirmed a number of times on courses I have been on.

I would say some of the reasons are, how do you serve s21's and if one is already in place and then a new tenant added to the tenancy how does that work. I could see it causing all sort of problems for notice periods.

A work round could be you just do a new 3 month AST for all tenants when a tenant changes.

[Mortitia]

I get around the problem of a new tenant by issuing an 'addendum to the agreement' whereby the parties agree the departure of X and agree to new tenant Y being included on the agreement under the same conditions. Every one signs including LL and it is witnessed.

This seems to work fine for me.

[Grampa]

Yes what would happen if you had to go down the eviction route using a S21.

Say AST dated 1st Jan - 30th June (6 months) with 3 tenants a, b c. Tenant C leaves at month 4 and tenant D moves in. In month 5 you get problems with tenants a or b and have to serve a s21.

You cant just put tenants a+b on the s21 you have to put all tenants and if you didn't it would get picked up by the judge who would have copies of the ast and addendum.

Then the question is what date do you put on the s21? Do you date it 2 months after month 5 (when the problems started) and the tenancy is now periodic for tenants a+b or do you date it 6 months after tenant D moved in?

Is the judge going to rule a new tenancy was entered into for all tenants when tenant D moved in? Or is he going to rule the addendum as a new tenancy just for tenant D?

Too many if or buts about this situation and in my view no 2 judges would rule the same.

Only a problem if you go to court though.

There is a little known notice called a section 6 which is used during a periodic tenancy to change the terms etc but even that cant be used to add a tenant.

[Mortitia]

Grampa - I have not had to evict with this system but have kept it rolling for 7 years now.

I find that when you get 3 sharers - girls in my case they seem to settle differences out between themselves or one leaves and another friend comes in. They are quite happy for me to adjudicate and sort things out.

On the other hand I am managing a property where there are 2 AST's running on 2 tenants. One reasonably new tenant (someone advertised for) is proving to be a difficult person and I can't wait until her AST is up - Section 21 already served.

Going back to OP I would take into account how long tenants have been in situ and how amenable they are. Take time to find out.