Tenancy Agreements - 4 tenants

villieb

Hello,

A quick question to the regular landlords on here...

If you had 4 people moving into your rental property (two of them brothers), would you...

a) write up 4 separate tenancy agreements
or
b) write up 1 tenancy agreement with a lead tenant


I'm opting towards 4 separate tenancy agreements, this way each tenants deposit can be protected individually and if after the AST, one of the tenants wants to move out, the single tenancy doesn't need to be re-writen...

What would you do?

This is in England btw....

Thanks

Pixie5740

With Option A you start to run the risk of creating a House of Multiple Occupancy I think and depending on which council the property is in that could be a headache you don't need.

Option B seems the most sensible to me as then 4 people have joint and several liability for the whole rent.

If you have 4 separate tenancy agreements and one person moves out then you'll need a new tenancy agreement for the incoming tenant anyway so I don't see that Option A really saves you anything. In fact it creates more paperwork.

Guest101

Pixie5740 wrote: »

With Option A you start to run the risk of creating a House of Multiple Occupancy I think and depending on which council the property is in that could be a headache you don't need.

Option B seems the most sensible to me as then 4 people have joint and several liability for the whole rent.

If you have 4 separate tenancy agreements and one person moves out then you'll need a new tenancy agreement for the incoming tenant anyway so I don't see that Option A really saves you anything. In fact it creates more paperwork.

I think both options would create a HMO, but otherwise agree.

There's pros and cons to both situations.

thesaint

I think you will have council tax liablity if you have separate agreements.

Tansy_1980

Whether or not its a HMO will depend on the occupancy, rather than how the tenancy agreements are written. With 4 tenants its highly likely you'll have a HMO (unless they're all related) and therefore be liable for council tax.

With single agreements, each tenant will be individually responsible for their rent. It's a much simpler way of working things out and is easier for the tenant.

With a joint agreement the tenants will, presumably, be jointly and severally liable - this means that if one ducks out, you can expect the remaining tenants to make up the missing rent until a replacement is found. You'll also need to protect the whole deposit as one and appoint a lead tenant to act for the tenants with this - this can cause headaches if the occupancy changes down the line with people transferring deposits informally etc. It gets messy for everyone.

If you expect the occupancy to change I'd say it's better to set up individual agreements but if you find a group of friends who are likely to take the property for a year or two as a group and then all leave a joint agreement may be best. There are pros and cons to each option.

villieb

Thanks for the responses. I think I'm going to go ahead with option B - one tenancy agreement with a lead tenant.

With 4 tenants I think I will be a HMO landlord, I am contacting the local council to confirm.

Guest101

villieb wrote: »

Thanks for the responses. I think I'm going to go ahead with option B - one tenancy agreement with a lead tenant.

With 4 tenants I think I will be a HMO landlord, I am contacting the local council to confirm.

Do the tenants all know each other (aside from the two brothers obviously).

Rambosmum

I wouldn't make 'lead tenant' - I'd make them all jointly liable.

Option A means you would lose 1/4 rent if one moved out and you'd have to find another person, which the tenants may not agree to and you may have all 4 refuse to move in.

I think option B is less hassle and gives you more recourse to claiming rent back should things go wrong. How they then divide the rent up is up to them. I had a joint tenancy with 4 others, one had a smaller room so we agreed she paid less rent.

villieb

yes they do...

G_M

Single 'joint & several' tenancy.

When fixed term ends (note - AST does not end), if one moves out you can either

* change nothing - the other 3 continue o pay you the full rent (though in theory the departing tenant is still legally liable, so not really an acceptable option.

* issue a new tenancy in the names of the remaining 3

* issue a new tenancy in the names of the remaining 3 + a new person you vet and accept

* Execute a Deed of Assignment. Existing tenancy continues but with just 3 names

* Execute a Deed of Assignment. Existing tenancy continues but with a new 4th names in place of the departing name

With a new tenancy, deposit needs returning, then re-paying and re-registering.

With an assignment, provided the lead tenant named for deposit registration is staying, the new tenant can simply pay the departing tenant the deposit share.

mchale

villieb wrote: »

Thanks for the responses. I think I'm going to go ahead with option B - one tenancy agreement with a lead tenant.

With 4 tenants I think I will be a HMO landlord, I am contacting the local council to confirm.

Bear in mind with 4 tenants on 1 AST LL could be held liable for CT if tenants don't pay it, It would be advisable to charge CT in with rent.