Other problems and disputes in HMOs

It is usual to be asked to pay a deposit prior to moving into an HMO. Generally this is a matter of contract. However the landlord cannot request a deposit that exceeds two months' rent. [1] This must be returnable on termination of the tenancy. Its purpose must be as security for utility supplies and damage to the property. HMO landlords are under the same duties as any other landlords to ensure that deposits are placed with a Tenancy Deposit Scheme.

Tenants should insist on an accurate inventory of the accommodation and contents of the property at the beginning of the tenancy. If no inventory is provided the tenant can make one themselves listing furniture and the general condition of the house. Ideally it should include photographs. This will help resolve disputes at the end of the tenancy. A sample inventory is available for download.

The tenant is not normally liable for 'wear and tear' (normal 'wear and tear' is not defined by statute, but includes all of that normal degradation of furniture and fittings caused by ordinary and reasonable use of the equipment over time). The onus is on the landlord to justify, keeping all or part of the deposit. See the section on Deposits for more information.

Where a number of joint tenants share accommodation, how bills are to be shared will either be stated in the tenancy agreement or be verbally agreed between them. Verbal agreements are enforceable although of course the terms will be harder to prove. Tenancy agreements normally make all tenants jointly and severally liable for bills so the landlord can require any of them to pay.

As regards metered utilities such as gas and electricity tenants are only liable to pay for what they have used. They will not be liable for the consumption of previous tenants. When a new tenant moves in the meters should be read and the supplier of the utility notified.

In some cases, landlords of HMOs resell gas and electricity to residents and tenants. This is usually done by installing meters through which residents purchase gas and electricity. The cost charged by the landlord generally exceeds that charged by the utility providers. The Office of Gas and Electricity Markets (OFGEM) decides on maximum prices for each utility provider. These are based on the prices they normally charge so the maximum price will depend on which provider supplies the property. The prices are reviewed annually. For information on the maximum price in a specific case, either the regulator or the utility provider should be contacted. (OFGEM has recently announced plans to remove all price controls on gas and electricity and this may have an impact on the prices charged by landlords).

In general the person liable for the payment of council tax in relation to any property is the resident. The resident is a person over the age of 18 who is solely or mainly resident in the dwelling. Where there is more than one resident they are liable in the following order:

• a resident owner

• a resident long leaseholder

• a resident tenant

• a resident subtenant

• a resident licensee

• any other resident.

Joint tenants are liable jointly for the council tax. This means that any joint tenant can be required to pay the full amount. They must then look to the other tenants for their share.

The regulations provide that where a dwelling is an HMO the non-resident owner will be liable for council tax.

Where a non-resident landlord writes a term into a tenancy agreement that an HMO tenant is liable for council tax, the Upper Tribunal has ruled that this would be an unlawful premium under Section 82-90 of the Rent Scotland Act. [2]

The main exemption from council tax of relevance to HMOs is where the property is either student halls of residence or is occupied solely by students.

See also the section on Council tax.

Tenants may leave HMOs for a number of reasons, for example, life style changes or problems with other sharing occupiers. Where the tenants occupy under an assured tenancy, the only obligation to give notice will be that specified in the tenancy agreement. However in many cases the tenancy agreement specifies no notice period for the tenant. If the outgoing tenant does not give the specified notice s/he will be liable for rent for the notice period. The remaining tenants will also be under a duty to mitigate any loss. Where the tenancy agreement is of a longer length, the departing tenant is jointly and severally liable firstly with the other joint tenants for the entire rent, and secondly by agreement for their own rent, for the term. Any replacement tenant will either be a subtenant of the existing tenants or an assignee of the departing tenant depending on the circumstances.