This is the final part of a three part series on shared properties. This post is on what you should NOT do! Its what I call
Disorganised comings and goings
This is where the landlord has more or less given up and the tenants deal with things, coming and going to suit themselves. So if a tenant wants to leave, they will find someone to replace them. Often the incoming tenant will pay the outgoing tenant’s share of the deposit money to them. However nothing is written down. Often the landlord is happy so long as they get their rent.
This can sometimes ‘work’ for a surprisingly long time and it is easy and convenient. However the problem is when things go wrong. Lets take a look at how the law will treat this sort of situation.
1 Tenancy type
Often this situation will have started with tenants A, B, C and D signing a tenancy agreement on a joint and several basis. This then runs on as a periodic and the tenants deal with any replacements themselves.
What is the situation of the new occupiers? Well so long as some of the original tenants are in occupation they can’t be tenants as they have not signed any tenancy agreement. They will probably be deemed to be lodgers or the original tenants.
If all the original tenants have left, then it is more difficult. Probably under s54(2) of the Law of Property Act 1925 the tenants living at the property at the time the last of the original tenants vacates will be deemed to be the new tenants but it is hard to say. It will depend on the situation at the time.
It is also possible that if all the new tenants pay their rent to the landlord direct, it will be implied that the old tenancy has ended and a new tenancy with the new occupiers created, but frankly I doubt that.
2 Liability for rent
Only the tenants who have signed the tenancy agreement will be liable for the rent. If the other occupiers are lodgers then they will owe their rent to the original tenants, who will be their ‘landlord’. Although I suspect in many cases they will pay it direct to the ‘proper’ landlord.
As suggested above this could create a new tenancy but I am inclined to think it wouldn’t.
2 Ending tenancies and Eviction
This is where the problems start. If you read the joint and several post I did, you will see that a tenant does not escape his liability under the tenancy just by moving out. So if A, B and C have moved out (to be replaced by E, F and G) they (A, B & C)will still be jointly and severally liable under the tenancy to the landlord along with D.
Unless the fixed term has ended and they have served a Notice to Quit on the landlord which will end the whole tenancy. Under the Law of Property Act 1925 s54(2) a new tenancy will then be created automatically between the then occupiers in the property if they pay rent to the landlord which is accepted.
What if it is the landlord who wants to recover possession of his property? Well he is going to have a problem if this situation has been going on for many years as he probably won’t know who his tenants are!
3 Council tax & utilities
Unless one of the tenants is mad enough to make him or herself liable for this, it will have to be down to the landlord and they will have to recoup it from their tenants, either from the rent or by invoicing them. Which is going to be difficult if they do not know who they are.
4. Tenancy deposits
There will also be a problem for the last tenants remaining in the property when the landlord wants it back. As it is extremely unlikely that they will be registered as the owners of the deposit money at any deposit scheme (if indeed the deposit is registered at all) they will find it difficult to get their deposit money back.
After all they never paid it to the landlord, they paid it to the outgoing tenant (or occupier).
This type of arrangement is really bad news – however well it may seem to be working at the moment you are almost certainly storing up trouble for yourself.
If one of the tenants is willing to take on the responsibility you could (with the agreement of any of the original tenants still in the property) arrange for them to be the sole tenant with the right to sublet to a specified number of lodgers. However this will inevitably have HMO implications and the tenant will probably need to comply with the HMO regulations and may need to get a license.
Otherwise you need to either get a new tenancy agreement signed with the current occupiers and make sure this is done every time the occupiers change. Or arrange for them all to have their own agreement for a room in a shared house.