Landlord Law Essentials

Landlord Law Essentials Part 9 - Shared properties & HMOs

Generally, when you rent out a property, there is more than one person living in it. Often it will be a family or couple. However, frequently it will be to a group of people, who are not family, sharing.

There are a number of specific legal issues which this situation throws up which I am going to be looking at in this section.

Shared houses and flats
Joint tenants
Renting a room in a shared house
Disorganised comings and goings
Houses in Multiple Occupation
Further Reading

Shared houses and flats

There are five possible ways that people can share a rented property (similar rules apply in Wales, albeit with the Welsh terminology):

First, where they all sign the tenancy agreement as’ joint tenants’
Secondly, where a landlord rents out rooms on an individual basis. Here, the tenants will have a separate tenancy agreement for their own room and will share the rest of the property with the other tenants
Third, where one or more people are living there as guests or lodgers of the tenant. I am not going to be talking about lodgers here, but you can find a huge amount of information on my special free website, Lodger Landlord.
Fourth, in a family situation, it is not unusual for just one or two people (say just the father or the parents) to be the tenant, but for the rest of the family (partner, children, perhaps other relatives such as a grandparent, and maybe also a nanny or live-in nurse) to live in the property as ‘permitted occupiers’.
Finally, there is what I generally refer to as ‘disorganised comings and goings’. Something to be avoided!

I am mostly going to be talking about the first two situations in this article.

Joint tenants

This is where two or more people sign the tenancy together. This is currently the most popular method of renting to sharers.

It is popular with the landlord as all the tenants have what is called ‘joint and several liability’.
It is also popular with many tenants as they get to choose who they share with

What is joint and several liability?

This means that all the tenants are, collectively ‘the tenant’ and are liable, individually and jointly, for everything.

For example, four tenants may have agreed to pay £100 each of a rent of £400 per month. However, the landlord can sue all of them or just one of them for the whole £400 if they fail to pay. If damage is done to the property, the landlord can sue any of the tenants for compensation, not just the tenant who did the damage.

This type of let is particularly popular with students, who will often club together and share a rented house or flat for the academic year.

Problems with ending a joint and several tenancy

There can be problems with this type of let tenants are to leave at different times.

So, if the tenants come to you complaining about one of the tenants who is behaving in an anti-social manner, you cannot just evict that tenant. You can only evict all of them together.

There are also problems if one of the tenants wants to leave and the others want to stay. This is going to be particularly problematic once the Renters Rights Act comes into force, as fixed terms will be abolished and tenants will be able to give two months’ notice to leave.

The landlord will then be left with the problem of what to do about the remaining tenants. If they are to stay, a new tenancy agreement will need to issued; otherwise, you can be fined up to £7,000 (as discussed in Part 6).

For this reason, you may want to consider renting by the room where the tenants are not family or cohabiting. I discuss this in the context of student lets in my blog post here.

Note that the rules are slightly different in Wales.

Renting a room in a shared house

If you are renting to individual people who will want to come and go at different times, it is generally more convenient to let the property on a room-by-room basis.

So each tenant will have their own individual tenancy agreement for their room and shared use of the common parts with other tenants.

This is generally more work for the landlord as it involves more paperwork. However, the good news is that you can generally earn more per property if you let it out on a room-by-room basis than you can if you let it out as a whole unit.

There is also the advantage that if one of the tenants want to leave and give notice to quit, this will not affect the other tenants. They will still have a valid tenancy agreement. The notice to quit will only end the tenancy of the vacating tenant.

The other advantage is that although individual tenants can keep you out of their own rooms, this does not apply to the common parts of the property (so long as you are entering for a legitimate purpose). So, for example, if you need to enter to get the sink in the kitchen repaired or show round a prospective new tenant, you can do this. Although it is advisable to notify the tenants when you will be coming.

Finally, note that you must have a tenancy agreement type which is suitable for this type of let. Suitable tenancy agreements are available to all members of my Landlord Law service as part of their membership entitlement.

Disorganised comings and goings

This is where landlords lose control of their property and tenants are allowed to choose their replacement. The replacement will then pay the outgoing occupiers’ share of the deposit to them.

This situation should never be allowed to happen:

It is likely that no ‘right to rent’ check will be carried out. As of 13 February 2024, the fines for non compliance with the rules will start at £10,000 so this could prove to be an extremely expensive mistake
Under the 2021 case of Sturgiss & Anor v Boddy & Ors a landlord who had allowed this situation to develop was found liable for breach of the deposit regulations, as the Judge held that the occupiers had a tenancy
If the landlord ever wishes to evict the occupiers, he will not know the names of the tenants or the details of their tenancy
You will be subject to a fine of up to £7,000 under the Renters’ Rights Act for failing to provide a tenancy agreement when the tenants change.

So make sure that you are always in control over who is living in the property and who the tenants are.

Houses in Multiple Occupation

When people live together in the same building where they are not family, there are often problems.

For example, often this type of accommodation is low quality and the tenants will be people living on the edge of society. Although there are many, many landlords who provide superb facilities for their tenants in shared properties which are in tip top condition, the worst housing is generally of this type.

For this reason, this type of property, known as ‘houses in multiple occupation’ or HMOs, is treated differently and there are additional regulations which apply to them.

There is a very long definition of an HMO in the Housing Act 2004, but basically it is where three or more people who are not family or related to each other (ie form one ‘household’, which can include resident staff such as carers), share living accommodation.

In these situations, the following additional regulations apply:

Management regulations that impose additional obligations on landlords, for example, regarding keeping the property in a safe condition and dealing with rubbish. These regulations apply to ALL HMOs, whether or not they are licensed.

Amenity standards set out basic facilities which must be provided in HMOs. For example, as regards room size, kitchen and washing facilities.

Licensing – Landlords of some HMOs, but not all, will need to obtain a license from their local authority. All properties with five or more unrelated tenants (i.e. five or more occupiers forming two or more ‘households’) will be subject to mandatory licensing. In Wales, there is an additional requirement that the property have three or more storeys.

Failure to obtain a license can incur a maximum fine of up to £30,000 and make you liable to a Rent Repayment Order. Landlord Law members can find out more about this here.

One of the problems with writing about HMOs is that the requirements vary across the country. There are basic legal requirements, but many local authorities have additional licensing requirements for HMO landlords in their area. And sometimes for properties which are not HMOs at all (this is known as ‘selective licensing).

Therefore, if you are considering renting a property to three or more tenants (or even in non-sharing situations), you should speak to the Housing Officer at your Local Authority before doing anything, to find out what the requirements are in your area.

For example, you may find that the licensing fees, and any conditions imposed by the Council as a condition of granting a license will render your HMO financially unviable.

Other HMO issues

I have been discussing here the HMO rules which apply to HMOs as defined in s254 onwards in the Housing Act 2004. However, there is a separate HMO definition at s257 of the Housing Act which applies to certain flats. This has different licensing requirements.

Flats that do not fall into this definition will not normally require licensing at all if they are HMOs, unless the Local Authority has an additional or selective licensing scheme.

HMO Enforcement and Penalties

Local Authorities are becoming increasingly more active in enforcing the HMO rules. You could be faced with any of the following if you fail to comply with Local Authority requests:

A penalty charge notice, which can be for up to £30,000 per offence (so if you breach several of the management rules, this could prove very expensive). Landlord Law members can find out more about this here.
A prosecution in the Magistrates’ Courts, where fines are now unlimited
If an HMO licene is not obtained, Local Authorities can issue a Civil Penalty fine of up to £30,000 AND both Local Authorities (where payment is via some form of benefit) or tenants, if they pay the rent, can apply to the First Tier Tribunal for a Rent Repayment Order for up to 12 months rent (after 1 May 2026 this will go up to 2 years worth of rent) – this can be VERY expensive
Where the landlord has a housing-related criminal conviction, Local Authorities can also apply to the First Tier Tribunal for a banning order

So, if there is any chance that your property is an HMO, it is really important that you are aware of all the rules and take care to comply with them. Otherwise, the fines can rack up to quite a sum.

That is all I am going to say here about shared properties and HMOs.

However, if you think your property could be an HMO, you should do further research and, ideally, take professional training. Or employ a professional HMO Manager.

We have a lot of help and guidance on HMO issues on Landlord Law.