Guaranteed rent through Company Let. How do we pay high street agent Letting fee?

cherrytree123

No it doesn't. We're remortgaging (for the onward purchase as well) and already have a BTL mortgage offer in place for this house, however it specifically states the lender will not accept us creating a tenancy agreement with a letting company who subsequently sublet to tenants. So we've checked around for a HMO mortgage instead and as expected the rates are higher. Additionally the rates for 'Individual ASTs for the tenants' are nearly doubled that for 'One AST for all named tenants'. 

Are you able to advise how this normally works please - in our case if we were to create a contract between us and the rent to rent company directly, would this be considered 'Individual ASTs' or 'One AST'?

Slithery

It wouldn't be an AST at all as you are letting to a company instead of direct to the tenants. You'll need a commercial business mortgage instead which usually require years of company accounts to access.

cherrytree123

Oh I must have misunderstood something. I'll be speaking to our mortgage broker again tomorrow to clarify this. Thank you.

Slithery

https://www.gov.uk/tenancy-agreements-a-guide-for-landlords/tenancy-types

cherrytree123

I see, thank you. I'll ask about commercial business mortgage tomorrow. This is getting complicated. Fingers crossed we'll be able to find a nice tenant family (but our listing on OpenRent is still not showing, sigh). Good night for now and thanks again.

cherrytree123

Hi all. I am back with more questions please. This time about running a HMO directly (under 1 AST)

First some updates - turned out commercial mortgage rates are too expensive (start from 4% whereas our current BLT mortgage offer is only 1.39%) so the guaranteed rent option won't work for us.

So it's been over a week now we have listed our house on OpenRent and so far have had 3 viewings,. First two were tenant families and the last viewing turned out to be 3 friends, all working professionals. They like the house and would like to rent together under one AST (they've been renting together for 2 years in another house on a room basis through an agent, there are 5 bedrooms there). They said the rent here is quite high compared to what they are paying currently so if they find another person later would that be ok. So I have below HMO questions please;

1) Looking up our council website, we only need a HMO "License" if you have 5 or more people forming 2 or more households. So in our case, if we have 3 or 4 individuals we can just go ahead, correct? Or do we need to inform the council anyway?

2) We have gone through the council's  'Landlords guide to standards for HMOs'. We meet all requirements, room sizes, facilities, hard-wired smoke alarm etc BUT we don't have firedoors. Is this mandatory or guidelines only?

Many thanks 

tom9980

cherrytree123 said:

Hi all. I am back with more questions please. This time about running a HMO directly (under 1 AST)

First some updates - turned out commercial mortgage rates are too expensive (start from 4% whereas our current BLT mortgage offer is only 1.39%) so the guaranteed rent option won't work for us.

So it's been over a week now we have listed our house on OpenRent and so far have had 3 viewings,. First two were tenant families and the last viewing turned out to be 3 friends, all working professionals. They like the house and would like to rent together under one AST (they've been renting together for 2 years in another house on a room basis through an agent, there are 5 bedrooms there). They said the rent here is quite high compared to what they are paying currently so if they find another person later would that be ok. So I have below HMO questions please;

1) Looking up our council website, we only need a HMO "License" if you have 5 or more people forming 2 or more households. So in our case, if we have 3 or 4 individuals we can just go ahead, correct? Or do we need to inform the council anyway?

2) We have gone through the council's  'Landlords guide to standards for HMOs'. We meet all requirements, room sizes, facilities, hard-wired smoke alarm etc BUT we don't have firedoors. Is this mandatory or guidelines only?

Many thanks 

Remember when i told you repeatedly you were not capable of doing this?

A house in multiple occupation (HMO) is a property rented out by at least 3 people who are not from 1 ‘household’ 

https://www.gov.uk/house-in-multiple-occupation-licence

You would have 4 people most likely in 4 households.

Yes you need fire doors you must meet all requirements to get a license, different areas can have different requirements and the license costs are not cheap either.

Cakeguts

cherrytree123 said:

Hi all. I am back with more questions please. This time about running a HMO directly (under 1 AST)

First some updates - turned out commercial mortgage rates are too expensive (start from 4% whereas our current BLT mortgage offer is only 1.39%) so the guaranteed rent option won't work for us.

So it's been over a week now we have listed our house on OpenRent and so far have had 3 viewings,. First two were tenant families and the last viewing turned out to be 3 friends, all working professionals. They like the house and would like to rent together under one AST (they've been renting together for 2 years in another house on a room basis through an agent, there are 5 bedrooms there). They said the rent here is quite high compared to what they are paying currently so if they find another person later would that be ok. So I have below HMO questions please;

1) Looking up our council website, we only need a HMO "License" if you have 5 or more people forming 2 or more households. So in our case, if we have 3 or 4 individuals we can just go ahead, correct? Or do we need to inform the council anyway?

2) We have gone through the council's  'Landlords guide to standards for HMOs'. We meet all requirements, room sizes, facilities, hard-wired smoke alarm etc BUT we don't have firedoors. Is this mandatory or guidelines only?

Many thanks 

 As I understand it there is a tenancy law that covers HMOs and the cut off is 3 unrelated people who form two of more households not 5.  The 3 tenants sharing would already cause you to have an HMO.  What you are looking at is the rule on HMO licensing not the tenancy law on HMOs.  Just because you don't need a licence doesn't mean that you don't have to follow the law on HMOs and it also doesn't mean that the council will not prosecute you if you don't make your property satisfy the laws on safety in HMOs.

What you need to find out is what you need to do to bring your property up to the standard required for an HMO if you want to let to these 3 people. 

HRH_MUngo

What happened to the families who you said viewed your house?  Were they not interested?  IMO, these would be a better bet than an HMO (provided of course that they pass the referencing).

However....as Cakeguts mentioned - the right property in the right place is important.  I have a five-year-old two bedroom flat on an estate that is still being built. There are good bus, rail and motorway links and the estate is on a brownfield site so there are things like schools,doctors etc already in existence. 

My husband and I bought this flat purely to rent out, as a business transaction.  Therefore I have no emotional attachment to the property, it is purely an investment.

 I have advertised the flat twice through OpenRent.  The first time I had nineteen enquiries and the second time 25, within a couple of weeks.  Not all of these were progressed into a viewing (if they do not return the questionnaire I send them, or the replies are unsuitable, then they are not offered a viewing).   Even so, I think there were ten viewings the first time and five the second (because the second time  we found  suitable applicants halfway through the arranged viewings - I cancelled the others).  

I  know this flat is an entirely different type of property to your own and will attract a different category of renter - I just thought that you should have had far more enquiries than three if people saw it as a desirable let.

HMO is tricky, especially for an inexperienced landlord with sentimental feelings towards their property - I would not go there.

Marvel1

Let's say I'm the tenent and the property is fully managed by a letting agent, my deposit is not protected, it's you I'm coming after to claim 1x to 3x the deposit not the agent.