Renting a flat out room by room as opposed to renting out the whole flat

JennyP

My tenants will be moving out soon and I'm wondering what to do about renting the flat out. I've always rented it out as a whole flat on a conventional ast. But wondering if I'd be better off renting it room by room. I think it'd be easier to find tenants and I also think I might make a bit more money - which I could do with right now.
I wondered what the pros and cons were and if there's anything I ought to be thinking about.
I'd have to get locks put on the doors of each room. I checked with the local authority and this plan wouldn't make my flat an HMO. Anything else?

anselld

The drawback is getting Ts to take responsibility for communal things when they are unconnected and may be changing over at different times.
eg. Bills - Ts can still share the bills, but there is more opportunity for dispute or abuse.
Upkeep - perhaps a generalisation, but unconnected persons are less likely to keep communal areas in a good state, easy to decend into blaming each other.
Deposits and damages - Deposits need to be protected separately, but how do you assess deductions for communal areas when one person is leaving and one is staying? Who pays for communal damage, again easy to blame each other.

You have said it will not be HMO so it must only be two occupants, so is it really worth the extra hassle for a small uplift in rent?

G_M

Really? Not an HMO? How many rooms? Or do they mean not a licenceable HMO?

LL's are liable for council Tax on HMOs.

And I echo asselld's reference to bills - probobly best to include utilities in the rent, but then you have the risk of the heating being left on full blast 24/7.

red40

If you put 3 occupants in a self contained flat who aren't related means you will have created a HMO subject to section 254(3) of the Housing Act 2004

HTH

CIS

As G_M has pointed out it would cleanly within the Council Tax definition of a HMO - irrespective of the licensing aspect.

Over the years HMO's have probably been the most costly cases I've seen when they go wrong - usually not in the landlords favour either.

Craig

Slinky

We had a house along the street from us turned into an HMO (unlicenced). Was a nightmare as there wasn't enough space for all the tenants to park so they were blocking the street. Rubbish not put out, tenants arguing, Police helicopter hovering overhead at 2am in the morning at one point when it all kicked off, with Police allowing tenant back in to collect his stuff....... We went through several months of hell, I felt so sorry for the neighbours closer than us. Fortunately enough people complained to the landlord and the tenants caused so much aggro the landlord had to redecorate and rent out to a single family in the end.

Be sure the extra income is worth the potential extra aggro.

datlex

Many years ago I rented a flat with friends. We were jointly and sever-ably liable for the rent. We paid our rent separately to the agent representing the landlord. It being an equal share of the rent for the total flat. We also had a equal share of the deposit. The agent had a nice little scheme where by he put deposits in an account that earned interest, if you had no repairs needing doing then you got the full amount back plus the interest. If there were repairs then the interest helped lower the bill for the landlord. When one person moved out, another was able to replace them, just taking over their share and commitments.
It worked well for us.
What you may need to look out for however is the utility bills, phone lines etc.

[Deleted User]

datlex wrote: »

Many years ago I rented a flat with friends. We were jointly and sever-ably liable for the rent. We paid our rent separately to the agent representing the landlord. It being an equal share of the rent for the total flat. We also had a equal share of the deposit. The agent had a nice little scheme where by he put deposits in an account that earned interest, if you had no repairs needing doing then you got the full amount back plus the interest. If there were repairs then the interest helped lower the bill for the landlord. When one person moved out, another was able to replace them, just taking over their share and commitments.
It worked well for us.
What you may need to look out for however is the utility bills, phone lines etc.

I assume you realise that interest on savings now would amount to very little, probably pence? Not sure how this is meant to help the OP lol.

JennyP

deannatrois wrote: »

I assume you realise that interest on savings now would amount to very little, probably pence? Not sure how this is meant to help the OP lol.

You couldn't do that now anyway as deposits have to be in the government scheme.

JennyP

G_M wrote: »

Really? Not an HMO? How many rooms? Or do they mean not a licenceable HMO?

LL's are liable for council Tax on HMOs.

And I echo asselld's reference to bills - probobly best to include utilities in the rent, but then you have the risk of the heating being left on full blast 24/7.

OK, I did ring the council a month or two back about this and they said I didn't need to do anything regarding the HMO but in the light of your email, I guess they meant it was an HMO but not a licenceable one.

All the messages have put me off a little though I knew of all these problems really....

But landlords do let properties room by room and make more money so how do they overcome all the problems? Particularly the problem of heating being left on and therefore unpredictable bills?

I am considering doing it because twice now, I've let to friends who were sharing then had hassle when there were fallings out and one person wanted to give notice and the other didn't and so on. The people who rent from me currently rent the flat as a whole but they still ask if they can give notice or if a friend can move in and so on so, apart from the liability for the bills passing to me, I feel as if I have all that hassle.

Liability for shared areas worries me and I wonder what landlords who currently let out property room by room do about that. I did wonder if in the rent I could include a weekly cleaner for communal areas so that the bathroom and kitchen are at least cleaned every week. The flat is also nearby so I can do inspections pretty easily.

But there is an advantage that I can see aside from getting a bit more money in rent: currently when my tenants move out, I risk a void and the amount I lose weekly in rent if it's empty is rather a lot. I'm struggling a bit as I only work part-time so depend on the income from the flat. If one room was empty but the other two let out, it wouldn't be so bad - i.e. void periods would hopefully not occur when all three rooms weren't let and no income was coming in. I also think that with London rents being so high, it would be easier to find tenants on a room by room basis.

CIS

For council tax purposes would certainly be a council tax HMO, even if it was not a licensable HMO.

Tread carefully over the rooms and make sure you're 100% before you go down this route.

Craig