HMO Tenancy Agreement

Most HMO landlords will issue their tenants with an assured shorthold tenancy agreement. 

Tenancies most often run for 12 months with a six month ‘fixed period’ during which neither party can end of tenancy (unless the tenancy itself has been breached).

Do I need an HMO Tenancy Agreement?

Your home is an HMO if both of the following are true:

• at least 3 tenants live there, forming more than 1 household
• you share toilet, bathroom or kitchen facilities with other tenants

Your home is a large HMO if both of the following apply:

• at least 5 tenants live there, forming more than 1 household
• you share toilet, bathroom or kitchen facilities with other tenants

A household can be one person living alone or a group of people who are related to each other and live together. A family is a group of people who are related to each other. They might be married or have children together.

• married or living together - including people in same-sex relationships
• relatives or half-relatives, for example grandparents, aunts, uncles, siblings
• step-parents and step-children

Most landlords who have HMOs will give their tenants an assured shorthold tenancy agreement.

Most tenancy agreements last for 12 months. This means that neither the person who owns the property nor the person renting it can end the agreement early unless there is a problem, like if someone doesn't pay rent or damages something in the home. It is a good idea to have a written agreement so that both the landlord and tenant know what their rights and responsibilities are. The agreement also protects tenants from being kicked out without notice or having to go to court.

When should I use a HMO Tenancy Agreement?

Landlords with houses in multiple occupation (HMO) usually find it easier to rent out rooms, especially when the tenants are strangers.

With a room-only agreement, you retain control over the common parts of the property so that tenants can only refuse you access to their individual rooms. This makes it significantly easier to perform inspections within the common parts of the property.HMO tenancies can be with more than one person or just one person.

Sharing space in a HMO

Living in an HMO means you might have to share your apartment with other people. This is called a joint tenancy. If you don't pay rent, the others who live with you will have to cover it. A sole tenancy means that you are only responsible for your well-being. However, when choosing to sign a joint tenancy, be cautious of the character and capacity of the people you will share living space with; by signing this document, you agree to become their backup plan financially should they default on rent payment or otherwise fail to meet their obligations under this agreement.

How best to deal with HMO Tenants and Utility Bills

In shared accommodation, the landlord generally includes bills in the rent charge. This is to make things more simple for everyone living there. The tenancy agreement will have all of this information i(e who pays what bill), and usually electricity, gas, council tax are some of them.

An energy auto-switch service will help you get the best available tariffs, saving money on your energy bills.

Alternatively, you can assign one tenant to be in charge of paying all the bills. This person will have to collect money from the other tenants. This option is less desirable because if a tenant decides to leave, someone else will need to take their place. This isn't always easy. If tenants don't pay on time or refuse to pay, it can cause problems between them. It's hard to know how much each tenant uses, so they may not want to pay the same amount if they think they use less. Landlords usually charge more money to cover the bills, so they make more money from it.

What is the Difference Between a Joint and Sole HMO Tenancy Agreement?

There are two ways to typically implement tenancy agreements for an HMO property: either by using individual contracts for each tenant, or through a single ‘joint and severally liable’ agreement. Make sure that the tenancy agreement you sign specifies whether the tenancy is a Sole or Joint Agreement.

HMO Joint tenancies

This is a common situation for students or for an HMO with friends living together. It usually works best if the tenants know each other and are likely to move in and out at the same time. Tenants are responsible together for both the rent and taking care of the property; they share these responsibilities (like in a single let arrangement, where the lead tenants, as stipulated in the tenancy agreement, are responsible).

For example, if one tenant doesn’t pay rent, then the other tenants will have to make up the difference. Also, if a room becomes available, it is usually the responsibility of the other tenants to find someone new to fill that room. A joint tenancy requires less administration than separate agreements for each tenant because there is only one overall agreement with one single rent payable (and one deposit to protect). All tenants' names should be on one tenancy agreement.

HMO Sole/Separate tenancies

HMOs made up of adults who don't know each other often result in separate ASTs (Sole) for each room. This means that each tenant is only responsible for themselves--they pay their own rent and the actions of other tenants do not affect their tenancy agreement.If one tenant does not pay rent or has fallen behind, the other tenants are not required to pay that person's share. This requires more work because each room should have its own tenancy agreement and each deposit should be protected when it is taken.

HMO Tenancy Agreement Contracts & Forms

Note: There are many tenancy agreement contracts available online, which can be tempting. However, before you download one of these free contract templates, keep in mind that not all of them will be suitable for an HMO setup. Make sure to use a contract that is specifically designed for HMOs so that it meets the demands of your situation. In almost all cases, HMO tenants are given an AST (Assured Shorthold Tenancy), but most AST contracts available online are intended for single-let situations. These will NOT be suitable for an HMO property, so make sure you choose the right template before getting started.