You’re taking on various legal obligations as an HMO landlord, and protecting yourself against future claims and disputes is fundamental.
There are lots of free, downloadable tenancy agreements that can be found online, however, it’s imperative you use an agreement suitable specifically for an HMO property; a standard single-let agreement will not suffice.
Laws and regulations can, and often do, change regarding a tenancy. To protect you they must be up to date at the point of signing. Creating a new tenancy agreement based on one you made even last month can leave you with an invalid lease.
If you are unsure we would strongly recommend using a qualified and regulated letting agent to take care of these agreements due to their up to date knowledge and experience of any changes.
We have a list of such letting agents so if you need some recommendations, contact our team who will be happy to put you in touch.
What does an HMO agreement need to include?
Regardless if you own a licensed or unlicensed HMO, your tenancy agreement forms the cornerstone of letting your property to a tenant by clearly setting out the responsibilities of both tenant and Landlord for the duration of the tenancy.
It is a legally binding document that protects the rights of both parties and importantly for you as the Landlord, it sets out your rights to charge rent and repossess your property should the need arise.
On this basis, it is vital that it is correct in every aspect to ensure that it is enforceable. It must cover any and all legal and regulatory requirements which can and do change each year.
One of the main differences between a single let and Houses in Multiple Occupation agreement is the number of tenants you’re entering into a contract with.
HMO landlords and tenants can elect to sign a joint tenancy contract between all parties but many elect for a separate tenancy contract.
The contract will likely be an Assured Shorthold Tenancy (AST), which is standard, unless you’re expecting to make more than £100,000 in rent per annum, or if you’ll also be residing in the property alongside your HMO tenants (which would effectively make them lodgers).
Your agreements for a HMO may differ depending on the size of the property and number of tenants you’ll be renting to. Different licensing rules apply for properties housing more than 5 tenants with shared facilities (all of whom must be from different households). England and Wales also have different rules compared to Scotland
Within the contract(s), you should also stipulate who will be responsible for paying rent, utility bills, council tax and also the overall care of the property.
With an HMO setup, it’s common for the landlord to retain control here and factor the charges into the rental value, but you could opt to name one of the tenants as the responsible party – this all needs to be arranged and written down as part of the contract.
Where can I find an HMO tenancy agreement template?
At the time of writing this article, the Britsh Landlord Association had a very good list of templates to consider; they provide a foundation for the kinds of details you’ll need to include in any HMO tenancy agreement.
However, we’d always recommend taking the time to speak to professionals.
Given the level of risk you’re undertaking, it’s well worth spending a few hundred pounds on the assistance of an HMO specialist and law firm, who will be able to draft up an HMO agreement specific to your terms and conditions.