Wicked landlord seeks help - especially for Squidgy

[Worldlife]

What are you thoughts on this one......

We have a hard working young man who is on the second month of an assured shorthold tenancy.

His Mum, who lives in Scotland saw our advert on a company website and wanted somewhere nicer for her son to live than the digs he was living in at that point of time. Mum offered, without asking, to be guarantor for the rental agreement.

We pointed out at the time of letting that the tenancy agreement stipulated:-

6.7 Not to assign or sublet the Premises or any part of them

6.8 Not to part with or share the possession of the Premises.

We said that that with our last tenant we were quite agreeable to changing the tenancy to a joint tenancy agreement when a young lady moved in with him. We said that we had kept the rent down to reflect the single occupation situation but indicated the rent would rise for a joint tenancy.

Our tenant has just telephoned to say that a girlfriend has moved in and he has increased his standing order to pay the rent we said we would require if granting a joint tenancy.

I said that Mum, as guarantor should know about the changed situation and my immediate reaction was to be concerned whether or not our assured shorthold tenant would be giving any right of occupation to his girlfriend.

Whilst I'd like to do business with this young man directly do you agree that Mum as guarantor must be informed immediately of the situation? - In my view her son might best do this but we will confirm.

If the girlfriend is contributing to the rent and we accept an informal increase without a new agreement then I feel that we would condone the establishment of a new and different tenancy.

Wonder if there is letter or "licence agreement" to underline that the girlfriends long stay is not a tenancy. Perhaps there may be pro-forma document somewhere.

[squidgy]

ooh. First off - do you have a formal guarantor agreement with your tenant's mum? I suspect that my guarantor is not legally enforceable, there's certainly no mention of it in the tenancy agreement. But hey ....

Instead of referring to your tenant and his girlfriend throughout, I'll make up names for them. Let's call your young tenant Michael, and his girlfriend Catherine.

As it stands, Michael is your tenant. Catherine isn't. However, Catherine is Michael's licencee. This means that Michael can evict Catherine without a court order - but you can't. Oh - and Catherine can't evict Michael.

However, Michael still can't evict Catherine illegally. If Michael's given her reasonable notice, then at the end of it, Michael can lock her out and refuse to let her back in, and dump her possessions in the street. However, he can't forcibly eject her from the building. So if Catherine refuses to go out, then Michael would need to get a court order too.

If Michael moves out but Catherine stays, then you would have to get a court order to evict her.

However, as you've pointed out, Michael is now in breach of his tenancy agreement. This means that you can invoke Grounds 12 - which means you can get a Possession Order after giving them just two weeks' notice, rather than the two months you normally have to give with assured shorthold tenancies. But you'll lose your right to do this if you create a joint tenancy for both Michael and Catherine.

Um - have I explained that properly?

Whilst I'd like to do business with this young man directly do you agree that Mum as guarantor must be informed immediately of the situation?

No - not yet. Not until you've decided whether or not you want to create a joint tenancy.

If the girlfriend is contributing to the rent and we accept an informal increase without a new agreement then I feel that we would condone the establishment of a new and different tenancy.

Only if you write it in his rent book. Don't consider it your own money yet, because you might have to refund it - assuming you get it in the first place.

my immediate reaction was to be concerned whether or not our assured shorthold tenant would be giving any right of occupation to his girlfriend.

I see your point - but if you took it to its extreme, you'd make it impossible for any of your tenants to have any visitors at all. You'd need a court order to evict your tenant, but I don't see how it would be more difficult to evict any of the tenant's guests at the same time.

Not sure what happens if your tenant dies whilst he has guests on the premises. Will check.

[Worldlife]

Thanks from myself and also Mrs W/L for your answer.

Let's just add another character!. Anne is Michael's Mum and after the breakup of the marriage Anne moved to Scotland but Michael wished to remain on the South Coast. Anne cares very much for Michael and flew down from Scotland to stay in the flat for a few days - she loves the place and is contributing to the rent. Michael is delighted with the place too.

We are impressed that Michael is working so hard and on a visit to do work at the flat can see he is really looking on the flat as a home!!!

If we can sort out the human relationship issues I think we may have a good long term tenant.

by squidgy
ooh. First off - do you have a formal guarantor agreement with your tenant's mum? I suspect that my guarantor is not legally enforceable, there's certainly no mention of it in the tenancy agreement. But hey ....

Anne has signed the tenancy agreement as guarantor

by squidgy
As it stands, Michael is your tenant. Catherine isn't. However, Catherine is Michael's licencee. This means that Michael can evict Catherine without a court order - but you can't. Oh - and Catherine can't evict Michael.

That's how we saw the situation and that's what worries us.

by squidgy
If Michael moves out but Catherine stays, then you would have to get a court order to evict her.

The potential loss of rent and damage to the flat over and above the amount of the retained deposit should be kept in mind.

by squidgy
However, as you've pointed out, Michael is now in breach of his tenancy agreement. This means that you can invoke Grounds 12 - which means you can get a Possession Order after giving them just two weeks' notice, rather than the two months you normally have to give with assured shorthold tenancies. But you'll lose your right to do this if you create a joint tenancy for both Michael and Catherine.

Excellent point. There is goodwill and we both try to understand each others interests as tenant and landlord. Maybe we should now consider sending a formal termination of the shorthold tenancy at the end of it's six month period but confirm we will be prepared to consider a new tenancy agreeemnt (or joint tenancy if the girlfriend situation looks as if it may be developing into a long term relationship)

Agree with you that we should encourage Michael to be the first to inform his Mum of the situation and let her know that we would be prepared to consider a future joint tenancy subject to satisfactory references for Catherine

by squidgy- re offer of increased rentOnly if you write it in his rent book. Don't consider it your own money yet, because you might have to refund it - assuming you get it in the first place.

There is no rent book as the rent is paid by regular standing order. A figure over and above the written contract would appear in the statement.

After dealing with Michael's telephone call concerning a repair it was pointed out that there had been an overpayment of rent in the previous month. The information regarding the girlfriend came and the proposed increase was then offered.

by squidgy
I see your point - but if you took it to its extreme, you'd make it impossible for any of your tenants to have any visitors at all. You'd need a court order to evict your tenant, but I don't see how it would be more difficult to evict any of the tenant's guests at the same time.

Agree with that absolutely and we are concerned that Michael does not regard ourselves as a Mum substitute. Though I suspect that Anne is a little pleased that there is someone with an eye on her son!!!

We are wondering if, with the consent of Anne, we could grant a licence for Catherine to occupy the flat during the present shorthold. What would be the wording of such a licence and woud it be enforceable?

If a licence was enforceable then the existing tenancy could be automatically extended at the end of the six month period without the need to create a joint tenancy. I think Michael would like this - we mustn't work on the basis that a move in girl friend is a stable long term relationship.

Thanks m8.....

[squidgy]

Maybe we should now consider sending a formal termination of the shorthold tenancy at the end of it's six month period but confirm we will be prepared to consider a new tenancy agreeemnt (or joint tenancy if the girlfriend situation looks as if it may be developing into a long term relationship)

Hold your horses - don't do it just yet - because Michael's breach of terms is your trump card.

So - keep your options open for the time being. You need to make it clear to Michael that waiving your rights now does not prevent you from enforcing them at a later date. The best way to do that, in my opinion, is to put an informal time limit on the waiver - preferably one month or less.

Perhaps you could ask Michael how long he's planning to let Catherine stay. If he gives a figure of less than one month - great. If he says more than a month, or is vague, then say words to the effect of, "I'm afraid I can't really allow that. You see, strictly speaking, Catherine is your licencee - and by having licencees, you're in breach of term 6.8 in your tenancy agreement. But - I don't mind for now, as long it's for less than a month. Tell you what - if Catherine's still here in a months' time, we'll discuss the situation again, yes?"

If you think a month is too long, that's fine - choose what ever time frame you feel comfortable with. I suggest a month at the most, but a week at the least. But you don't want to make the waiver period too short - because if you end up having to renew this informal waiver agreement every few days, then it makes it look like you're never going to enforce your rights at all, thereby defeating the point.

I'll assume you've already done this now, and will look at your other points.

[squidgy]

The potential loss of rent and damage to the flat over and above the amount of the retained deposit should be kept in mind.

True - but once Michael has gone, it should be a lot easier to get a possession order to evict Catherine. However, I think you'd need to be careful that your attempts to evict Catherine don't constitute an illegal eviction of Michael.

Consider this. How does a leaving tenant formally notify the landlord that they have vacated the premises? Presumably by removing their possessions and handing the keys back to you. If you change the locks or cut the utilities before the tenant does this, then that's illegal eviction.

A tenant might say to you, "I'm moving out Wednesday next week." You think, great, so you line up a new tenant to move in on Friday. But what if the tenant doesn't stick to his word, and is still there on Thursday? Tough. You still need a court order to evict him. You can never bank on a tenant's word to move out by a certain date - so don't agree to relet or sell vacant until either (a) everyone has definitely gone, or (b) you've already got the possession order that'll make them go.

My point is - it is Michael's responsibility to evict Catherine. Michael cannot formally vacate the premises while Catherine is still there. So if Michael offers you the keys back before Catherine has moved out - don't accept them. If you do, you will lose your right to charge Michael any more rent - but you won't be able to charge Catherine rent if she never had a tenancy agreement to begin with. Do not accept the keys, or refund the deposit, until it's clear that both Michael and Catherine and all their belongings have been moved out. If this doesn't happen, then follow the same procedure for gaining possession that you would use if it was just Michael, and Catherine wasn't there.

If Michael moves all of Catherine's things out but doesn't tell her in advance, then Michael is guilty of illegal eviction - but you're not. Similarly, Michael may be guilty of illegal eviction if you have grounds for possession, but Michael hasn't told Catherine that this is likely to happen - but again, it's Michael's problem, not yours.

Having said all that - if Michael leaves without formally vacating, and Catherine starts paying Michael's rent, then it might cause other problems - I'll deal with that in my next post.

[squidgy]

If Michael leaves without formally vacating and Catherine pays his rent - make it clear that you will only accept it on behalf of Michael. As long as you do this, you're still covered by clauses 6.7 and 6.8 of the agreement with Michael, and can invoke Grounds 12 to get possession from Michael, and therefore also from Catherine.

But don't let Catherine's occupation in Michael's absence drag on for more than a month or two - otherwise, it could be construed as a new tenancy for Catherine. If you want Catherine as a tenant, that's fine, but don't enter into a formal tenancy agreement until after you've served notice under Grounds 12 against Michael, and got Catherine to put down her own deposit. Otherwise, if Michael happens to come back, and Catherine chooses not to let him in, then you'll be guilty of illegal eviction. If Catherine won't put down a deposit of her own, then use the Grounds 12 proceedings against Michael to evict her - but do not credit Catherine with Michael's deposit. Once the notice has expired, Michael should then be refunded his deposit, minus legal deductions, regardless of whether Catherine is now a tenant or has been evicted.

I think I've got my understanding of the law right. Will deal with whether you're better off with a joint tenancy or not in the next post.

[squidgy]

Once Michael and Catherine are joint tenants, you can enforce the rent against both of them. However, while Catherine remains a licencee of Michael, you can only enforce the rent against Michael - however, you can use Michael's contract as grounds to gain possession to evict Catherine.

From Michael's point of view, if he were to become a joint tenant with Catherine, he would be surrendering his right to evict Catherine. So if he moves out but Catherine stays, then you still have the right to chase after Michael and hold him liable for the rent - and whether Catherine gets evicted or not is totally up to you. Michael might not want that. If neither Michael nor Anne nor Catherine were to pay the rent for two months, then you'd have grounds for possession - however, you'd still be able to claim those last two month's rent from Michael or Anne. Which would be good for you - but I can't see Anne being too enthusiastic to take this commitment on.

Obviously you'd only be able to enforce it against Anne if you tell her about the joint tenancy in the first place. If you terminate Michael's guarantee-backed tenancy, and replace it with a joint tenancy for both Michael and Catherine, then Anne's previous guarantee becomes worthless.

Okay - will deal with specific points now.

[squidgy]

We are wondering if, with the consent of Anne, we could grant a licence for Catherine to occupy the flat during the present shorthold. What would be the wording of such a licence and woud it be enforceable?

Formal licence agreements do exist - but it would be up to Michael to create it, not you. Whether he formalises it or not doesn't make much difference to you - as long as Michael remains the sole tenant on the existing contract, Anne's guarantee will cover it.

If you want Michael to continue to be the sole tenant, but want to increase the rent, then I suspect you'd need a new tenancy agreement for that too - and Anne's existing guarantee won't cover it. The fact that there happens to be two people living there rather than one doesn't automatically entitle you to any more rent.

Another possibility is to create separate tenancies for Michael and Catherine - however, you create a "house in multiple occupation" if you do that, and you won't be able to do it without Michael's permission. As long as Catherine remains Michael's licencee, Michael retains the right to evict Catherine. As soon as you enter into your own agreement with Catherine, Michael loses that right.

[squidgy]

Last thought on this one. You might be able to give Michael some sort of tenancy agreement that allows him to take in lodgers, subject to other conditions, in exchange for a higher rent. The advantage for you is that if Michael's lodgers move out, it's his problem and not yours, he still pays you the same rent regardless of whether he has a lodger or not.

But a tenancy agreement that says he pays you more rent if he has a lodger, but less if he hasn't? I can see that Anne would be more likely to guarantee such an agreement - but I've never heard of one.

[fabienne]

Blimey, that's scary!

[Worldlife]

Just returned to the computer to find the sequence of very helpful posts

Thanks again for the contributions so far......

We are obviously looking at the worst possible scenario......

We have no objection to Catherine being at the flat and would in fact appreciate the extra rent offered by her presence.

I think Michael wants to keep the tenancy in his own name rather than a joint tenancy with him and Catherine

If you put on your mediators hat now do you think it would cover all our fears if, subject to his Mum's agreement, we ask Michael to organise the necessary licence and send copies to both myself and his Mum.

If the licence has no time limit presumably it would be best for us to decline the offer of additional rent for the next four months.

We will at the end of this period confirm, our agreement to the extension of the assured shorthold tenancy to become a periodic shorthold tenancy with rent reviews and with the main terms of the assured shorthold tenancy remaining in force. The letter of agreement to be signed by all parties.

What do you think?

[Worldlife]

PS We kept the rent on this very large flat nearer single bedroom rental rather than two bedroom market prices. Michael appreciates that is the situation.

I think it shows we have a good tenant in that he came to us and offered to pay the figure that we mentioned would be appropriate to the property if it had a second bedroom (it has instead a separate dining area of the kitchen).

The property is fully furnished and well equipped. Having a second occupant puts additional wear and tear on equipment and furnishings.

[squidgy]

We have no objection to Catherine being at the flat and would in fact appreciate the extra rent offered by her presence.

I think Michael wants to keep the tenancy in his own name rather than a joint tenancy with him and Catherine

If you put on your mediators hat now do you think it would cover all our fears if, subject to his Mum's agreement, we ask Michael to organise the necessary licence and send copies to both myself and his Mum.

I see. I think the only way you'll be able to do it is to offer Michael another tenancy, on similar terms to his current tenancy, but at a higher rent.

The rent he has to pay now - let's call that the "low rent". The rent you'd like him to pay if there's two people there - let's call that the "high rent". Any rent that Catherine might pay - let's call that the "licence rent".

If you don't offer Michael a new tenancy on the "high rent", then you'll still only be able to charge him the "low rent" he's on now, regardless of whether or not Catherine is there.

Now you're thinking - what if Michael refuses to take on the new "high rent" tenancy? Don't forget your trump card - you can force the issue by threatening to invoke Grounds 12 possession proceedings. But that'll only work if Catherine hasn't already moved out by the time you do it.

Once you've got Michael onto the "high rent", then Michael will be responsible for the whole of the "high rent" to you. You are still Michael's landlord - but Michael will effectively be Catherine's landlord. You will not be Catherine's landlord, and will therefore have no claim for rent against her.

Whether Michael wants to charge Catherine any "licence rent" or not will be up to him, and you needn't be involved. Catherine's liability would be to Michael, and not you. Paying her "licence rent" to you would not discharge her liability to Michael - and if Michael doesn't get his rent from Catherine, then he can quite legally evict her, just as you'd be able to evict Michael if you didn't get your rent from him.

However, whether she pays or not, Michael is still liable to you for the "high rent". Even if she moves out. If you decide to renew Michael's tenancy and drop him back down to the "low rent" again, then you can if you want - but you aren't forced to.

Now I guess you're thinking - you need to be sure that Michael will get the "licence rent" from Catherine, so that he can afford to pay the "high rent" to you. But how will you do that? By getting Michael to agree to you that he won't evict Catherine?

That would defeat the point of the licence. If you want Catherine to stay there, regardless of whether or not Michael wants her to, then you'd be better off sticking them both on a joint tenancy - and playing your trump card against Michael to create it, if necessary. I think you need to decide whether you want Michael to keep his right to evict Catherine, or to lose the right. If you aren't prepared to let Catherine stay without increasing Michael's rent, but don't trust Michael to pay the rent if Catherine does leave, then letting Michael keep the right to evict Catherine is obviously more risky for you.

[squidgy]

If you aren't prepared to let Catherine stay without increasing Michael's rent, but don't trust Michael to pay the rent if Catherine does leave, then letting Michael keep the right to evict Catherine is obviously more risky for you.

Oh - you might think that you can get around that problem, by guaranteeing to Michael that you will drop him back down to the "low rent" again if Catherine leaves. But I think that's a very bad idea. What if Michael evicts Catherine illegally?

As long as there's absolutely nothing in your contract with Michael that depends on whether Catherine is there or not, then it's not your problem. But if there's a chance Michael can claim a rent discount for it, then things could get very messy.

[merlin]

Squidgy have you ever thought about working for the benifits agency, with your knowledge you would soon be put in charge.

Having dealt with our local agency years ago, I was met with, " I dont know", or " I am not sure" or I will have to ask my supervisor.

[Worldlife]

Superb information squidgy.

I think so much depends here on maintaining goodwill all round. Let's say it is not unreasonable for a young man to have a series of stable relationships with young women.

Michael does not want to commit himself to a long term relationship by offering Catherine a joint tenancy.

Reading between the lines I think Anne Iwould expect be a somewhat disappointed if she couldn't stay at the flat with her son when she comes down from Scotland.

For the next four months the additional rental to close the gap between the lower market price and the upper market price (£80 per month) is not critical but Michael has offered to pay this immediately.

How about this solution:-

Michael licences Catherine to stay at the property for no longer than the duration of his valid tenancy. The landlord will not regard clauses 7(7) and 7(8) these are the correct numbers concerning sub-letting et! of the tenancy agreement to be contravened as long as Michael has such valid and enforceable agreement.

The licence for Catherine's occupation be drawn up by Michael at his expense and submitted to Anne (as guarantor) for approval and to the landlord for information.

During the remaining period of the assured shorthold tenancy Michael may, if he wishes, make a goodwill payments to recognise the changed circumstances. The new increased in rent will be stipulated on the letter confirming the creation of the periodic shorthold tenancy.

If the relationship between Michael and Catherine turns out to be a long term stable one then subject to satisfactory references from Catherine it would be possible to create a new joint tenancy and forego Anne's guarantee.

The licence situation of course gives Catherine very little long term security. Putting on your legal hat for Catherine would you be able to destroy any cosy relationship between Michael, Anne and the landords?

Could you set Catherine up in the flat? Could you get benefit payments for her to remain in possession if the landlords instigated eviction procedures?

[squidgy]

Having dealt with our local agency years ago, I was met with, " I dont know", or " I am not sure" or I will have to ask my supervisor.

Yeah - but don't forget, that was in the days before Google.

I'm still trying to straighten it all out in my head - but if it wasn't for Google, I wouldn't have a clue about any of this stuff. And the only reason I did those hundreds of relevant Google search phrases in the first place, is because I had a reason to, when my landlord wanted to evict me.

I think so much depends here on maintaining goodwill all round. Let's say it is not unreasonable for a young man to have a series of stable relationships with young women.

Michael does not want to commit himself to a long term relationship by offering Catherine a joint tenancy.

To be honest - I don't think I've totally understood the situation just yet - so let me check. Am I right in thinking the following?

• You don't want more than one person to stay in the flat unless you can charge a two-person rent premium for it.
• If you do want to let the flat to someone on a two-person rent, you want to be fairly sure that this rent is going to be paid.
• You therefore feel the need to check the means of both people who plan to stay in the flat - even if one of them is merely a licencee of the other. You would also want to check that a formal licence exists for the same reason.

Now this slightly confuses me. Because the way I see it - you're already satisfied that Michael can pay the one-person rent. One option for you would be to put him on two-person rent anyway - but just take the risk that he might not be able to pay the difference if Catherine moves out. In the event that this happens, then you could either (a) be nice and drop him back down to the one-person rent he's on now, or (b) invoke possession proceedings on the grounds of rent arrears.

Say Catherine turns out to be a tardy payer, and Michael can't make up the difference to you. What you could then do is tell Michael is that you might drop him back down to one person rent again - but only once Catherine has gone. However - do not guarantee to do this. Michael's rent arrears to you will then be your trump card. Tell Michael that you'll start possession proceedings against him if he falls behind on the rent - but that you advise him to do the same against Catherine. Make it clear that although Michael doesn't need a court order to evict Catherine - you don't want him to evict her illegally.

Yes it's risky - but what might happen is that Michael earns so much that he's able to pay you the full rent anyway, regardless of whether Catherine pays her rent to him or not.

You see - then you say ...

During the remaining period of the assured shorthold tenancy Michael may, if he wishes, make a goodwill payments to recognise the changed circumstances.

This suggests to me that you're prepared to take the risk that Michael might not be able to pay the two-person rent anyway - am I correct? Because if so, I still think it would be better to increase Michael's rent formally, so that you can enforce it legally. That way - whether you do enforce it or not, will be your discretion - and not his.

If the relationship between Michael and Catherine turns out to be a long term stable one then subject to satisfactory references from Catherine it would be possible to create a new joint tenancy and forego Anne's guarantee.

Good idea. Remember, Catherine is a licencee of Michael already. The way I see it is that Michael might like to keep it that way for a while, just in case things don't work out - but in the meantime, you'd still like to charge more rent, because of the higher occupation.

The licence situation of course gives Catherine very little long term security. Putting on your legal hat for Catherine would you be able to destroy any cosy relationship between Michael, Anne and the landords?

Hmmm - I suppose it depends whether Michael would feel as though he's struggling to pay your rent without Catherine. If Michael's confident that he can pay the higher rent for a while anyway, regardless of whether Catherine is there or not, then it would be much better for Michael to be your sole tenant, and have Catherine as a licencee. If Michael feels that he's struggling to afford it - then that somewhat defeats the point of the licence too.

Building repairs and site safety - your responsibilities as landlord to both Michael and Catherine are much the same, regardless of whether they're joint tenants, or if one is the licensee of the other.

Could you set Catherine up in the flat? Could you get benefit payments for her to remain in possession if the landlords instigated eviction procedures?

I can't see how. If you ever have legal grounds to evict Michael, then those same grounds can be used to evict all his licencees too. When was the last time you heard of parents being legally evicted, yet their children having an enforceable right to stay? Children who live with their parents are licencees of their parents.

If you evict both Michael and Catherine legally, but Michael hasn't told Catherine in advance that this is going to happen, then Michael might be guilty of evicting Catherine illegally - but that would be Michael's problem, not yours. Being evicted illegally does not give you a right to re-enter the premises you've been evicted from. If Michael evicts Catherine illegally, she might be able to sue him or prosecute him - but she won't have a right to get back into the flat that you own. Point is, as long as you play it straight with Michael, you won't have a problem, regardless of whether or not he plays it straight with Catherine.

Housing Benefit - admittedly, the licence makes it incredibly complicated. If Catherine were to claim housing benefit to pay her lodgings rent to Michael, then being in a relationship with Michael might get in the way. If Michael were to claim housing benefit to pay his rent to you, then lodging income from Catherine might be deducted, he might also have a non-dependent deduction for Catherine, and if he claims as a single person, he might also have a deduction for being in a two-bedroom flat when it's only considered reasonable for single people to be in one-bed flats. Changing to a joint tenancy would make it a lot easier for them to claim housing benefit - should the need arise.

However, as you suggest, allowing Catherine to continue to be Michael's licencee for now doesn't stop you from setting up a joint tenancy for both of them at a later date.

BTW private landlords should never ever give permission to receive housing benefit direct payments for their tenants. However, if you already have given permission, and the council then charge you for an overpayment, then this legally constitutes rent arrears, and can be used to instigate possession proceedings. There was a test case in the late 90's when this actually happened, and the judge ruled in the landlord's favour. But there's no guarantee that you'll get your money back from the tenant once they've already gone.

[squidgy]

It's way too wordy! Okay - will try to chop down the words But since I'm not sure what you're hoping to achieve, I've been trying to cover all possibilities.

In a nutshell - if you would like Michael to keep his right to evict Catherine, then I can't see how you can limit the risk that Catherine might not be able to pay her share of the rent. It's better to find out if Michael has the means to cover the rent for both of them. If he doesn't appear to have the means - and you don't want to take the risk - but you do want the higher rent - then I think joint tenancy is your only option, subject to satisfactory references for both Michael and Catherine. If you feel that both Michael and Catherine put together are too risky, then your only option is to invoke Grounds 12 to evict, and go find a new tenant.

[Worldlife]

Once again squidgy thanks....

I nominate you for a Degree in Googling...well done.

The situation is not as bad as it seems in writing and I'm certain we will will come to an amicable arrangement and Michael will arrange the necessary licence.

It is as well to know the complexities that could arise should we fall out!!!!!

[squidgy]

The situation is not as bad as it seems in writing and I'm certain we will will come to an amicable arrangement and Michael will arrange the necessary licence.

Yes, but why would you be interested in the details of that licence?

The only reason I can think of, is that you want to limit the risk of Catherine not paying her rent.

Is that the only reason? Or is there another one? And if so - what is it?

Sounds like there's a danger of you not being able to see the wood for the trees. Don't let the details distract you from the screamingly obvious.

[squidgy]

It is as well to know the complexities that could arise should we fall out!!!!!

To be honest, I think it's not such a big deal.

Most of what I've said in this thread so far is probably not relevant - but it's helped me consolidate my existing knowledge, and try to fill in the gaps.

I reckon I've got the overview now. But we haven't quite understood each other yet. Perhaps you've misinterpreted something.

So, very quickly, and without referring to anything I've already said - are there any reasons you'd be interested in the details of Michael and Catherine's licence, apart from these two ...

• limiting the risk of non-payment of rent?
• giving Catherine any right of occupation?

[Worldlife]

Squidgy the reason I would be interested to see a copy of the licence is:-

a) to know that a licence exists
b) that it is a properly drawn up licence and not a scrawled note.

Of your two bulleted points the rental issues are not of major concern but unauthorised occupation of the flat is a priority issue.

As Michael has consulted us we are jointly in a situation to come to a mutually satisfactory arrangement bearing in mind the points you have made.

Hope that explains

[squidgy]

Okay.

a) to know that a licence exists

A licence exists whenever you stay over with anyone, or when anyone stays over with you. Whenever you have children who don't end up in local authority care, a licence exists. The fact that Catherine is at Michael's place but isn't your tenant means that, by definition, a licence exists.

b) that it is a properly drawn up licence and not a scrawled note.

In the absence of a written licence, statutory rules apply. Licencees are entitled to "reasonable notice", and can't be illegally evicted - but that's pretty much it.

Of your two bulleted points the rental issues are not of major concern but unauthorised occupation of the flat is a priority issue.

Aha - now we're getting somewhere. Define "unauthorised occupation". Unauthorised by who? By you? Or by Michael? Catherine's occupation has already been authorised by Michael. We need to break out of the legalese and get to the point.

However, Michael's authorisation of Catherine's occupation can't go above the authorisation you've given Michael. If you evict Michael - then Catherine goes with him.

If Michael dies on his own, you can pretty much shovel the corpse out, clean up, and re-let immediately. However, if Catherine is there when he dies, you can't - you'd have to get a court order if you wanted to evict Catherine. However, I think Catherine might succeed the tenancy if Michael died. That means you'd be able to charge her the rent, and invoke arrears possession proceedings if she doesn't pay it, under the existing assured shorthold terms you have with Michael. But I'm not sure - I'll check. If Michael doesn't die before he moves out, this won't be a problem.

You say the rental issue isn't of major concern. Is it of any concern at all? Let's quantify this level of concern. Is it of any more concern than the level which prevented you from letting to Michael in the first place without Anne's guarantee? Or not?

I think that if it's of less concern, then you can keep things much as they are. Sure, put Michael's rent up, and use Grounds 12 to force the issue if necessary - but that's all you need worry about. There really isn't any point in you worrying about the terms of Michael and Catherine's agreement.

But if it's of more concern, then that won't do. Either they become joint tenants - or Catherine moves out - or they both move out.

Personally, I'd have thought that the most significant direct cost of letting is the mortgage interest. And I'd have thought that the most significant component of the property price is the square-footage. For that reason, I find it difficult to believe that it's significantly more expensive to let a given square-footage to two people than to one person. Therefore, if I didn't know better, I'd assume that your concern for the rent premium for having Catherine there is less than your concern was for the basic rent to have Michael there. For that reason, I think you'd be okay just to up Michael's rent, keep him as sole tenant, and leave it at that.

I'm just trying to think of it as a simple risk analysis - but you've got more experience, so you're probably more aware of lettings risks than I am. Are you finding this helpful - and are there any obvious risks I've overlooked? Thanks.

[Worldlife]

by squidgy
And I'd have thought that the most significant component of the property price is the square-footage

You are right there ..... the thing is that properties are usually advertised in categories such as room with shared facilities, studio, one two or three bedrooms and as furnished or unfurnished.

We reckon £480 per month for a spacious furnished self contained furnished flat of one large reception room, double bedroom, dining area, kitchen and bathroom is pretty good value. There's a parking area at the back and a front paved garden too!!!

Most flats over the £500 price bracket are two bedrooms but the fact that our tenant who has done the walking research on what is availailable is immediately happy to pay £560 shows we have not got it wrong. A happy continuous tenant (our last stayed five years) makes tremendous savings on rent lost during changeover periods and of course we don't have agent fees.


Another way of working out the rent is as a percentage of the value of the property. Ignore the mortgage it's just a straightforward calculation. What return could I get on the capital employed elsewhere.

The property is approaching £100,000 in value and so the rent income less landlord's outgoings is £440 month = 5.28%

This is below the norm. "Buy to let landlords" with large mortgages are pressured into seeking unrealistic returns that can result in an overpriced rent. We only have a small business mortgage on this property - merely to take advantage of the tax relief situation on the interest

Lucky people aren't we? We have also have found a free caretaker for an investment that is gaining in capital value!!!

Now I reckon you and I have done enough worrying about this situation and so in the next post I will set out the letter I'm sending to the tenant based on the advice you have given.

A written licence seems to me a tighter arrangement than a loose verbal or a nod of the head!!!

Once more thanks............

[Worldlife]

Letter to tenant and copy to guarantor based on the discussion on this thread.....

Dear xxxxxxxxx,

Occupation of the flat by Ms xxxxxxx xxxxxxx

Thank you for letting us know about the situation concerning Ms xxxxx xxxxxxx. Your action here is most appreciated.

It was worrying to learn that you might be creating an unauthorised tenancy in contravention of clauses 7(7) and 7(8) of your tenancy agreement. Some landlords might take a very serious view of such a breach. For future reference you should know that subject to satisfactory evidence such a breach could invoke a Grounds 12 Possession Order (two week’s notice, rather than the usual two months notice)

It is noted, and appreciated, that at this stage in the relationship (the tenant) does not wish to create a joint tenancy with Ms xxxxx. Subject to satisfactory references a joint tenancy would have been an option I would have been happy to consider.

It was agreed in our joint discussion yesterday evening that:-

 A legally valid licence for xxxx’s occupation is arranged by xxxxx at his expense and submitted to his mother (as guarantor) for approval and the landlord for information

 Such licence will be for no longer that the duration of xxxxx’s valid tenancy and the landlord will not regard the xxxxxl’s assured shorthold tenancy to be contravened once such a valid licence is in place.

 Subject to the continued satisfactory conduct of the tenancy I will , towards the end of the current shorthold, send you a letter for you to sign setting out our mutual agreement to the creation of a periodic shorthold tenancy at an increased rent ( initially £560 per calendar month but subject to reviews)

I am sure xxxxx’s legal advisor will agree that it is imperative in all our interests that an unauthorised tenant does not secure occupation rights to the property. The law is complex on these issues and trust you appreciate our concerns.

As you have gathered my husband xxxx can act on my behalf on some of the management issues for the flat and I note on his instructions you have contacted Gastxxxx and had a boiler defect repaired. We will in due course expect Gasxxxx’s invoice for this job . Work of this nature is regarded as a priority. The broken sashcord in the lounge is noted and will be attended to as soon as possible and when convenient access can be arranged.

[squidgy]

We reckon £480 per month for a spacious furnished self contained furnished flat of one large reception room, double bedroom, dining area, kitchen and bathroom is pretty good value.

Bargain! You're charging less than what I'm paying, and you're providing a lot more space for it!

However, my landlord has led me to believe that it doesn't matter whether I stay single or become half of a couple, the rent will still be the same - however, two single people in my flat would be technically overcrowded, I have to be either a single person or a childless couple.

The rent assessor has said that my whole rent, short of 50p a week, would be eligible for housing benefit - should I fall upon hard times. Phew.

A happy continuous tenant (our last stayed five years) makes tremendous savings on rent lost during changeover periods and of course we don't have agent fees.

Very true - but I don't think that higher rent means higher tenant turnover. You don't think tenants are relying on their savings, do you? I think other things have much more impact on tenant turnover - such as the friendliness of the neighbours. Or their intrusiveness. And the general state of repair of the building - or others nearby. And the accessibility of grocery stores, and public transport.

The property is approaching £100,000 in value and so the rent income less landlord's outgoings is £440 month = 5.28%

Ouch. You say it's a flat - so I guess you don't own the freehold?

I reckon you should be charging £560 a month anyway - regardless of whether Catherine is there or not. Sounds like the market can stand it. And you can use grounds 12 to force the issue.

Anyway - your letter, will read and make sure you're not giving any ground away.

[squidgy]

Just checked on something - if you take in a lodger, but then move out, then that lodger will probably become your tenant by default.

That means that if Michael moves out but leaves Catherine behind, then Michael will still be your tenant - but Catherine may become a sub-tenant of Michael. Catherine would not become your direct tenant. Michael will continue to be responsible for the rent to you, but you'd be able to use your existing agreement with Michael to evict Catherine, as well as Grounds 12 for Michael's breach by creating the situation in the first place. I think that Catherine's default tenancy with Michael would be an assured shorthold.

If Michael and Catherine are going to have separate bedrooms, then Michael will probably qualify for the Rent-a-Room tax concession.

It was worrying to learn that you might be creating an unauthorised tenancy in contravention of clauses 7(7) and 7(8) of your tenancy agreement.

Oooh - careful. If you suggest that Michael is creating a tenancy, then it might be seen as evidence that the tenancy Michael is allegedly creating already exists. Okay, so it's very unlikely, but better safe than sorry. So I think it's better to say "It was worrying to learn that you might have taken in an unauthorised lodger in contravention of clauses 7(7) and 7(8) of your tenancy agreement." Or you could replace the word lodger with licencee - it means much the same thing.

A legally valid licence for xxxx’s occupation is arranged by xxxxx at his expense and submitted to his mother (as guarantor) for approval and the landlord for information

Such licence will be for no longer that the duration of xxxxx’s valid tenancy and the landlord will not regard the xxxxxl’s assured shorthold tenancy to be contravened once such a valid licence is in place.

Replace the word "licence" with the phrase "lodgings agreement" - it makes it clearer. You could also make it clearer that the agreement would be between Michael and Catherine, and that you would not be a party to it.

It's best if that lodgings agreement contains all the provisions for termination that might arise from you terminating Michael's tenancy - however, it should not be worded in a way which excludes termination for other reasons - or for no reason at all.

It also need to be clear that the lodgings agreement does not give rise to a tenancy. It might be useful if you could specifically exclude tenancy in the event that Michael dies or moves out - but it might not be legal. So it's probably best if it only tries to exclude tenancy generally.

I am sure xxxxx’s legal advisor will agree that it is imperative in all our interests that an unauthorised tenant does not secure occupation rights to the property. The law is complex on these issues and trust you appreciate our concerns.

I'd be wary of suggesting that occupation rights are even a possibility. Also, "unauthorised tenant" is vague. Unauthorised by who exactly? If Michael moves out and starts sub-letting, would that be okay with you? It's not unauthorised if Michael's authorised it - but I don't think that's what you mean!

No, I think what you actually mean is that you don't want Michael to grant any occupation rights that aren't his to grant in the first place. For example, if you owned the leasehold on a flat, you wouldn't want to let it to a tenant on a fixed term that's longer than your lease has left to run. If you did, then it might make things slightly inconvenient for the freeholder - but it wouldn't be a major problem, and there are ways that the freeholder can deal with it. The point is - the freeholder would prefer not to have the hassle. A similar thing applies here.

However, not sure how you'd word it. It's better if you say it as clearly as possible. But then - perhaps this point is so obvious, you don't need to say it at all. So I think that being vague about it might be even worse than not saying it.

I hope this is helping.

[Worldlife]

Just back from the flat and met our tenant and also his Mum down on a visit from Scotland.

We have all chatted amicably over this and I've given the letter to them and explained our concerns.

Mum is also worried about the vague arrangement for Catherines stay.

I reckon their legal advisor can only come back to me if there is any point they wish to clarify and I cannot see their involvement causing a situation that is more potentially prejudicial to my position than the current one.

Mum is taking it to her solicitor to sort out and I'll keep you posted of the verdict....

by squidgy
Ouch. You say it's a flat - so I guess you don't own the freehold?

Oh yes we do!! At the beginning of the year we had the absolute freehold but most Building Societies and Banks reject freehold flats for mortgage purposes as it is difficult to enforce maintenance covenents etc. Our flat is the ground floor of a two storey Edwardian house and earlier this year we made a joint freehold with the owner of the first floor flat . The new joint freeholders then granted a lease to the previous freeholders of each individual flat. The necessary repair and maintenance obligations as a condition of the lease.

PS We got a generous contribution to the legal work as part of a new Building Society capped loan

[squidgy]

I was starting to think that the risk of Catherine becoming a default tenant might mean this is a bad idea. However, if that does happen - you can claim the rent from Anne, in the same way you would if Michael moved out without telling you about it.

What do you do when a tenant moves out, but doesn't tell you, you chase the rent, and discover the flat is empty? You can't just re-let it - because they might come back. If you re-let the flat before you've given your previous tenant the proper notice, that would be illegal eviction. So I think you would still have to serve the notice, and get the possession order, before re-letting. Am I right - or do you tend not to bother with details like this?

[Worldlife]

you can claim the rent from Anne, in the same way you would if Michael moved out without telling you about it.

Absolutely right squidgy....this is the key to my action.

I have every expectation of a satisfactory answer from Anne after she has obtained legal advice.

It's simple really......

As neither Anne or her son want to create a joint tenancy I need to have a licence situation endorsed by Anne remaining guarantor (she is a career woman in secure employment)

If this is not forthcoming then I will contemplate sending a notice to quit. I don't have absolute proof that Catherine is living at the flat and I reckon the "Grounds" notice could be contentious. If I just serve notice to quit at the end of the Assured Shorthold Tenancy I don't see that there would be any serious problems. Should Catherine be there and not move out I am wondering if even then I could hold the guarantor liable for rental loss and any damages- no doubt her solicitor would wish to protect her from that situation and it will be interesting to see what is suggested.

If there is a furture problem I was interested in a fixed price (tax deductable!) service offered by
Landlord Action but you can see that this "website under construction" doesn't even mention the core service detailed in "The Complete Guide to Letting Property" - by Liz Hodgkinson

An alternative to legal expenses insurance is Landlord Action founded by the landlord Jonathan Chippieck after he bacame traumatized by the vast amount of money he lost on account of a bad tenant. This three-step scheme allows landlords to get ghastly tenants evicted cleanly and speedily for a fixed sum.
Step One cost £98 (excluding VAT) and involves a member of the team visiting the tenant and serving an eviction notice. Step Two, enacted after 14 days if the first step fails, involves a solicitor issuing proceedings, setting a court date and instructing a barrister. This costs £398. If that doesn't work, Step Three means the court bailiffs are sent in to ensure the return of the property. Debt collection can also be arranged.

John Chippeck believes that landlords are oftehn their own worst enemies when it comes to unpaid rent. "Most are small-time amateurs who don't like bothering tenants for rent", he says. "They keep hoping it will be paid next month. BUt I've learnt that tenants who miss one month will usually never pay again. They have to be chased up within a week, at most"

"Unlike insurance, where you pay for cover whether needed or not, Landlord Action only comes into force when there is a problem"

Landlord action can be contacted on 020 8906 3838

Wonder if it might be worth giving yourself a good trading name and linking to this site especially if they are not carrying on with their core service. Wonder if you could design your help to fall outside the debt recovery (you would be advising concerning tenancy contraventions) and acting, when the time comes as an agent to instruct a licensed debt recovery agent or help the person to be a litigant in person in a court action.

Maybe you prefer running with the foxes rather than the hounds