Tenant subletting

Southern_Pete

Hi
I have an HMO which I want to let to a single tenant who would then take on all responsibility for the house. In turn they would then sublet the rooms. The property has full planning permission to be an HMO.
Can anyone recommend an agreement(s) that I could A) use between me and my Principle tenant and they could then use between themselves and their respective "lodgers".
I have looked at the lodgers agreement at Limecastle but it appears to be written as if I am living at the property which I am not.
Cheers for your help

adg1

I'm not too clued up on this but I'd guess your agreement would be an AST or Tenancy Agreement (depends on the value of the property etc) with the subletting clause removed. You would take a deposit in the same way (I'd probably ask for more than 4/6 weeks though) and original T would pay you the full rent as per the TA you and he sign.

He then sublets the rooms on his own choice of TA/lodger agreement.

This leaves him liable for the whole house and it is up to him to sublet the other rooms.

Jowo_2

I'd say ADG1's advice sounds fine. You have a sole tenant named on the AST for the full rent and full deposit which has a clause giving the tenant permission to sublet. There is an inventory/schedule of condition in place for the entire property signed by the tenant. They are then responsible for issuing a lodgers agreement to their lodgers and managing their room inventory/schedule of condition, taking up deposits, etc. The tenant has all bills in their sole name.

However, have you considered how risky this strategy is which means that you could end up with someone pimping off your property by charging extra to the lodgers and keeping the difference, plus the loss of control for the type of occupant there? What if they end up turning your property into a cannabis farm or a big party house which then aggravates the neighbours? What if they aren't very good at marketing the property, managing the lodgers and dealing with repairs and you end up with a damaged property, or the intermediary landlord has lots of voids and ends up in arrears to you, or it turns into a doss house full of couch-surfers or immigrants having a hot-bed system?

If you read the Landlord Action site, they used to have an article there about how unsuspecting landlords have rented their properties to a couple of tenants and then found it transformed into a backpackers hostel...Again, the landlordzone or Gumtree forum has the odd alarming thread where a landlord inspects a small property and finds bunk beds and mattresses jammed everywhere.

jdturk

insurance companies do not like this and I was not allowed to let my tenant to rent other rooms out to subsidise his cost

Sharon87

This is kind of the situation at my house. Me and my brother are the only ones named on the contract, even though the couple who lived here had their references checked. It has been a nightmare for us, it took some argument for me to get my name on tenancy for housing benefit when I was on a low wage.

It's also a nightmare finding new tenants, having to advertise and also having to pay extra rent if we don't find any. We have to be really on top of the money situation with bills and everything.

I would not recommend you doing this, as you may not get many people up for risking paying for the whole house if they can't find anyone to move in.

tbs624

adg1 wrote: »

I'm not too clued up on this but I'd guess your agreement would be an AST or Tenancy Agreement (depends on the value of the property etc)

It's not the value of the property that is relevant here, but the total rent paid for the property. If it is more than £25k per annum, then it cannot be let on an AST

adg1 wrote: »

You would take a deposit in the same way (I'd probably ask for more than 4/6 weeks though) and original T would pay you the full rent as per the TA you and he sign.

Not sure why you suggest that the OP should take more than 4/6 weeks as a deposit, especially bearing in mind that (a) other properties competing for tenants in the same area are likely to go with that level of deposit and (b) if you ask for an amount greater than the equivalent of 2 months rent it will be held to be a premium , not a deposit.

OP, join a national LL association, or a local affiliated one, and safeguard your property by getting a proper agreement in place from the start. It's not the place to cut corners. You haven't said why you are wanting to set the tenancy up in this way?

property.advert

I did this through university and to be honest, was making so good money that I should have done it as a job afterwards.

Admittedly, I needed somewhere to live and used to rent houses and sublet the unused rooms. I took it to a new level where I lived as I provided washing machines, tumble driers, I had all the 2nd hand shops working with me etc. Fire regulations made it more difficult.

I see nothing wrong with it but as an owner, you have to ask yourself the question just how much extra there is in a property and whether you would be better off doing it yourself. Usually the person doing it would at least like to live rent free.

Southern_Pete

Guys
Seriously impressed I've only just joined up to MSE.com and I appreciate the feedback you have all given me.
Bit more back ground - this is a house I am letting as a multi let and hence know the tenants in there. I find the time and effort involved keeping it full not worth the extra a HMO gives me over a standard let. So I am looking to let to the longest serving tenant who will then sublet out. He is on site to manage the property (which lets face it does need more than a single let), in the right circles/networking groups to keep it full and will result in not only me getting a good rent but also (if all 4 rooms are full) him not having to pay so much.
I do take on board your comment Jowo regarding the risk element and what happens if my main tenant has voids and doesn't pay, ultimately I'm the one still taking the risk.
So if I've got this right I let to him with a standard AST with the sublet clause removed and he raises lodger agreements with each of the room lets.
Thanks Again!!!

adg1

tbs624 wrote: »

It's not the value of the property that is relevant here, but the total rent paid for the property. If it is more than £25k per annum, then it cannot be let on an AST

Thats what I meant sorry! Total value of rent per annum.

tbs624 wrote: »

Not sure why you suggest that the OP should take more than 4/6 weeks as a deposit, especially bearing in mind that (a) other properties competing for tenants in the same area are likely to go with that level of deposit and (b) if you ask for an amount greater than the equivalent of 2 months rent it will be held to be a premium , not a deposit.

A higher deposit due to the unpredictable nature of the tenants in the house, not the tenant on the contract. Potential for more damage and rental arrears so a higher deposit would cover more.