Last time in this short series we looked at joint and several tenancies. Today I want to take a look at rooms in a shared house.
Rooms in a shared house
This is where all the tenants sign individual tenancy agreements for their own room (or rooms if they have more than one) and for shared used of the rest of the property. This has the following consequences:
1 Tenancy type
In most cases the tenancy type will be an assured shorthold tenancy. Many people mistakenly think that this sort of arrangement will create a residential license. However it is perfectly possible to have an AST for a room and indeed in most cases this is the type of occupation which will be created, whether the parties want this or not.
The main situation where this will not happen is where a landlord is renting out rooms in his own home. You can read more about this on my Lodger Landlord website.
2 Liability for rent
The tenants are only liable for the rent for their own room. The bad news here is that if one of the tenants decides to leave there will be a void for his or her room until they are replaced (unlike joint and several tenancies).
The good news is that overall landlords generally achieve a higher rent per property renting in this way.
2 Ending tenancies and Eviction
If one of the tenants wants to leave and the others want to stay, this is not a problem as the ending of their tenancy will not affect the others in the house (other than by the fact that they will have a new person living in the property).
However if the landlord wants to evict the tenants he will need to bring a separate claim for each of them – as they all have their own tenancy.
This could make it expensive therefore if a landlord wants to get vacant possession of a property which has 10 tenants renting their own rooms where none of them are prepared to leave voluntarily as he will need to have 10 separate claims for possession.
3 Council tax
In this type of property the landlord is liable for the Council tax rather than the tenants. It is important therefore that the rent charged takes this into account.
Unlike joint and several tenancies you will not normally be able to get the utilities put in the names of the tenants as no-one will want to be responsible for someone else’s electricity use (for example).
So either the landlord will issue separate bills to the tenants for the utilities or the rent will be inclusive of this. If the latter, you need to make sure that your tenancy agreement has some provision to increase the rent if the utility bills increase. Note – there is a special tenancy agreement designed for this situation on my Landlord Law site.
One advantage of the room in a shared house model over the joint and several tenancy type is that it will normally be easier for landlords to access the property.
Tenants have the right to exclude their landlord (even if this puts them in breach of their tenancy agreement) from the property they rent where they have ‘exclusive occupation’ but in this sort of arrangement this will just be their room.
They will not have exclusive occupation of the shared parts of the property and so will find it difficult to exclude the landlord provided he is there for a lawful reason.
This will include things like showing new tenants round an empty room, and maintenance of the shared parts.
This tenancy type is suitable for people sharing who are not going to want to live in the property for the same length of time. So shared houses for professional people for example. It is also sometimes used for students.
This tenancy type is less common than the joint and several type, involves more paperwork and is more difficult to manage. However done correctly it can be very lucrative.
However be aware that if you rent property in this way it is inevitable that the property will be an HMO if there are more than two individual tenants. So you will need to take account of the HMO regulations and you may need to get a license. See more about HMOs in our HMO Legal Basics series.
The last post in this series will be about you should NOT be doing!