HMOs are a popular amongst landlords as letting a house to multiple tenants can sometimes lead to more rental income than letting it to a sole occupant. However, a HMO landlord has more responsibilities they must be aware of.
An assured shorthold tenancy agreement (also known as an AST) allows a landlord to let a property to a tenant. The term of an assured shorthold tenancy agreement is usually 6 or 12 months and will usually convert to a rolling periodic tenancy at the end of the initial term.
A house in multiple occupation (HMO) is a property rented out by 3 or more people forming more than one household. Depending on the location of the property, a landlord might need a HMO licence. A HMO tenancy agreement is an agreement between the landlord and a tenant and will grant exclusive possession to a room in the shared house as well as access to shared facilities such as a kitchen, communal areas and a bathroom. Landlords who rent out a HMO have additonal responsibilities which need to be clearly spelled out in the assured shorthold tenancy agreement.
Landlords might seek a longer tenancy term to provide rental income certainty. A 12 month term can achieve this while providing enough time for the tenant to settle in whilst giving them an option to release themselves from the tenancy should their personal or professional situation change.
A landlord of a HMO property has additional responsibilities including maintaining the cleanliness and repair of the communal areas and facilities, ensuring the property is not overcrowded, and displaying their or their agent's contact information to the tenant. A HMO licence also imposes a minimum room floor area requirements based on the age and number of people living in the room.
Under a 12 month HMO assured shorthold tenancy, the landlord and tenant will have obligations, liabilities and consents which need to be clearly spelled out in the contract. For example, a tenant must not use the property for illegal, immoral or antisocial purposes. The landlord must not interrupt the tenant's right to quiet enjoyment. The tenancy agreement should also specify details about the property and common parts, how the tenancy can be terminated within or after the initial term, as well as the rent, payment frequency and payment dates.
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