A Brief Guide To HMO Tenancy Agreement

Post by : Sam Allcock on 30.03.2021

There are specific rules and regulations for HMO rental property, which are different from others. Compliance with these rules and regulations is crucial for landlords to avoid associated fines and penalties. It is better to understand and fulfill legal obligations as an HMO landlord.

A tenancy agreement is a legal document that provides both tenants and landlords with solid legal grounds. Without a legal contract, it would be hard to find an insurance cover. Let us look at what to include in the HMO tenancy agreement and the varied options available in this regard.

What Type Of Tenancy Agreement Is Better For HMO?

In most cases, HMO landlords have AST (Assured Shorthold Tenancy) Agreement. It is the most common tenancy agreement between HMO landlord and tenants. AST is not suitable if you share the property with your tenants. There are different rules to observe in such cases.

1.     AST Contract

AST contracts have two main types. It could either be a fixed term (lasting for 6-12 months) or a periodic weekly/monthly basis). The contract may also have a break clause, which enables the end contract at any point earlier but with a legal notice.

2.     Rent Increment clause

The contract may or may not include rent review clauses. It provides information about when a rent increase can happen when tenants would be notified about it and calculate a rent increase. All the necessary information regarding rent and rent increment is included in it.

3.     Terms Of Tenancy

It may also include all terms in written form. Most commonly, the information regarding the starting date of the tenancy period, rent, rent due date, rent review clause, and tenure of the agreement are added. Names of people involved in the agreement may also be added.

4.     Term-end

At the end of the contract agreement, tenants are free, and it is totally up to them whether they want to move along further or want to move on. In case they want to move ahead, they may agree to a new contract with increased rent and other terms. The other option is to roll on a weekly and monthly basis with the same rent.

5.     Eviction

The landlord cannot evict tenants because he wants them to go. There is an eviction procedure that a landlord must follow if he wants any of the tenants to leave. The method includes providing notice to leave or otherwise get a court order for eviction. The agreement also refers to circumstances that could lead to an agreement end and eviction.

6.     Special Terms

It is also optional to add tenants’ obligations and put in some particular clause. It is all as per the landlord’s requirements and priorities. Special clauses may also refer to misconduct and zero-tolerance against it. Mostly misbehavior and complaints of noise pollution may result at the end of the agreement.

7.     Landlord’s Obligations

The agreement must also clarify the landlord’s obligations. A landlord is responsible for several things. He must get a gas safety check every year. He must provide the latest gas safety and energy performance certificates. It is also the landlord’s responsibility to manage repair and maintenance costs. In case of property inspection or other related visits, he must give earlier notice of the visit.

Joint Or Separate Agreement

It is another important aspect to consider. The HMO rental model is different from other rental properties. Again, the landlord’s choice is whether he wants to have an agreement individually with each tenant or he agrees to have a joint tenant.

Having an individual agreement can be time taking, and it may also add up the cost to the landlords’ end. Whether it is a single or a joint agreement, make sure to mention it in the tenancy agreement. A landlord must also look into bill segregation and bill payment. Whether the role is to be assigned to one of the tenants to collect a bill from the rest and get it paid, or he wants to take this admin responsibility too.

Putting it altogether

Tenancy Agreement for HMO rental can either be joint or separate. The agreement in most of the cases is AST (Assured Shorthold Tenancy) Agreement. Pre-planning and prioritizing may help landlords in setting the right clauses and terms in the agreement. It is a secure way to deal with tenants and let them know what you expect from them as responsible tenants. The agreement also highlights obligations and responsibilities at the landlords’ end.

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