Best way to structure three sharers contact?

Reply to the comment left by "Mandy Thomson" at "10/12/2014 - 10:16":

Hi Mandy, I have received a response from Croydon Council, advising me that a shared house ( by 3 or more people of 2 or more households like a couple + friend) - is also an HMO and requires a license. To obtain one I need to comply with all HMO requirements i.e. hard wired smoke alarms, fire doors, min space requirements (10m sq/person) and more.......
A licensing officer will identify a need for further improvements within my house.
A change of use from C3 to C4 (HMO ) is not required as it is a standard house, no locks on doors and they will share in everything. However, as the license is acquired on per room basis, all habitable rooms, including 2 rooms downstairs will be counted (even if they remain to be used as lounge + dining room). The license is valid for 5 years and the application process could take up to 8 weeks, which means I would need to decide on further 2 month void period ( in addition to 2 month already incurred for refurb).
As somebody mentioned before, letting to a single family seems an easier option.
It seems to me that the Council tries to cash out on anything and everything, as they are accepting that 3 friends sharing are like family, hence no need for change of use.
However, everything else is like an HMO i.e. ( separate units)

Hi Iwona

So according to Croydon Council, any couple who takes in a lodger is running an HMO??

According to the government, this is incorrect (I believe even Croydon have to adhere to the current laws, even if they don't agree with them).

I have copied the relevant clauses from Gov UK - Private Renting leaflet https://www.gov.uk/private-renting/houses-in-multiple-occupation below:

"8. Houses in Multiple Occupation
Your home is a House in Multiple Occupation (HMO) if both of the following apply:

at least 3 tenants live there, forming more than 1 household......

....."A household is either a single person or members of the same family who live together. A family includes people who are:

married or living together - including people in same-sex relationships
relatives or half-relatives, eg grandparents, aunts, uncles, siblings
step-parents and step-children"

Therefore, if your tenants are one single person, plus a couple (or 2 members of the same family, such as siblings) therefore, only 2 households, I can't see how it can be argued that the property is an HMO?

I'd suggest sending the person who wrote to you a copy of that leaflet, and copy those clauses above.

I am beginning to see why some landlords would prefer to have one household as the lodger(s) of the other, who is the official tenant, in order to make the position clearer for the council.

Sorry - correction - I've just re-read the leaflet... Croydon are right - by the 2004 Act, it's at least 2 households NOT 3 - I was confusing households with tenants!

Reply to the comment left by "Mandy Thomson" at "11/12/2014 - 14:28":

hi mandy
i dont think unofficial lodgers/sub tenants route by-passes hmo criteria as my licences state im meant to inspect every 3 months min and i think that is partly to check for sub letting.

Reply to the comment left by "Joe Bloggs" at "11/12/2014 - 14:46":

Thanks, Joe - I believe that may be correct. I've done some further checking on this, and according to Spareroom, an OWNER OCCUPIER is allowed up to 2 lodgers before it's an HMO, but it seems a householder who is tenant is only allowed one. Their HMO guide can be downloaded here: http://www.spareroom.co.uk//hmo_licensing_guide

I've also checked Tessa Shepperson's site, and she is saying much the same.

Therefore, to avoid being caught by HMO legislation, Iwona would have 3 choices, namely let to a family, live in the property herself and take in a couple of lodgers, or allow no more than 2 unrelated people to live there. Unless she was living there herself, she would need to make it absolutely clear to her tenants that they couldn't have any long term guests or lodgers, and ensure she checks the tenants thoroughly first so she can be sure they're trustworthy. As we all know, multi room rental accommodation is often illegally sublet.

Iwona has a fourth option, which is to sell - with the regeneration of Croydon, and the Westfield-Hammerson development in particular, there is a huge demand for property in Croydon right now. IMO, she would be better off with one bed flats, anywhere in Greater London, which let to young professionals. This is my business model and I have never had any problems with any of my tenants (professional couples) whatsoever.

Reply to the comment left by "Mandy Thomson" at "11/12/2014 - 15:24":

The 5th option is to short let up to 6months. Landlord pays all bills incl council tax. The council's criteria is that as long as isn't the main residence of the tenants you don't need a licence at all and it doesn't matter how the tenants are related or how many there are

I have just such a situation with 3 sharers, they are all on the AST and are jointly and severally liable for rent, bills etc. It is an HMO as the sharers are unrelated but is not licensable unless it is 3 storeys or more and has 5 or more occupants.

http://www.rla.org.uk/landlord/guides/housing_act/docs/all/what_is_an_hmo.shtml

See this article which is quite clear.

I have several properties that have unrelated tenants. Each has their own AST plainly saying they are individually responsible for any council tax. Do I assume from Romain posts that this is not so?
Pru

Reply to the comment left by "Puzzler " at "13/12/2014 - 12:09":

Puzzler- lucky you if you don't need an Additional licence for a small HMO. Individual councils have the power to impose additional licencing etc as is the case in Newham. The article you cite must be out of date as it says no councils are doing that- but they are now. But only full HMOs licencing is mandatory.

Reply to the comment left by "Pru Counsell" at "13/12/2014 - 16:36":

Hi Pru,

You can charge each of your tenants a portion of the overall council tax, or include it in a higher rent.
The key is to remember that this arrangement is just between you and your tenants, while you retain liability to the council.