What is an HMO tenancy agreement?

An HMO tenancy agreement is a contract designed for properties where multiple tenants live as their main residence while sharing facilities such as kitchens or bathrooms. Unlike a standard tenancy agreement, it accounts for the shared nature of the property and may involve individual agreements for each tenant or a single agreement for all tenants in a group.

The agreement must reflect the unique setup of an HMO, ensuring that it specifies terms related to shared spaces and individual rooms. This type of agreement is commonly used for properties housing students, young professionals or tenants seeking affordable shared accommodation.

Key components of an HMO tenancy agreement

An HMO tenancy agreement should be extensive, addressing all relevant aspects of the tenancy to ensure clarity and reduce the likelihood of disputes. Below are the essential components that should be included:

Tenant and landlord details

The agreement must include the full names and contact details of all parties involved. For landlords, this may also involve providing the address for service of documents. For tenants, make sure that the correct details for each individual are listed, especially in properties where separate agreements exist for each room.

Property details

This section should provide the full address of the HMO property and outline what is being rented. If the agreement is for a room-only tenancy, specify the individual room allocated to the tenant and describe the shared facilities available, such as kitchens, bathrooms or communal living spaces.

Rent and payments

Include the agreed rent amount and specify how and when tenants must pay rent, such as monthly or weekly. Outline any late payment charges and detail what the rent covers, such as utilities or council tax, if applicable. In HMO properties where shared facilities are included, make it clear how utility usage is managed and whether costs are divided among tenants or included in the rent.

Deposit terms

If a deposit is required, specify the amount and its purpose. Provide details about the government-authorised deposit protection scheme used, as landlords are legally required to protect the deposit and supply tenants with the prescribed information. Clarify the circumstances under which deductions may be made, such as for unpaid rent or damage to the property.

Length of tenancy

State the start and end dates of the tenancy and specify whether it is a fixed-term or periodic agreement. If there is an option to renew or extend the tenancy, include details about the process and any conditions for doing so.

Tenant responsibilities

Clearly outline tenant obligations during the tenancy, including:

• Proper use and maintenance of communal areas and shared facilities.
• Respect for other tenants, including adherence to noise policies.
• Reporting maintenance issues to the landlord in a timely manner.
• Guest policies, including overnight stays.
• Cleanliness of shared areas, such as kitchens and bathrooms.

This section may also cover rules on waste disposal, use of appliances, and limits on alterations to the rented space.

Landlord obligations

Landlords are responsible for maintaining the property to legal standards. Include commitments to:

• Perform inspections of the property at reasonable intervals, providing tenants with appropriate notice as required by law.
• Carry out necessary repairs promptly.
• Conduct safety checks, including annual gas safety inspections and periodic electrical checks.

Additional clauses to consider in an HMO tenancy agreement

Given the shared nature of living arrangements in an HMO property, additional clauses can help landlords manage tenant expectations and minimise the potential for disputes. These clauses address aspects of shared living that are not typically required in single-tenancy agreements.

Communal area maintenance

Communal areas such as kitchens, bathrooms and living spaces are often used by all tenants in an HMO. Including a clause that defines responsibility for maintaining these spaces can help prevent misunderstandings. For example:

• Specify whether tenants are collectively responsible for cleaning communal areas or if the landlord will arrange professional cleaning, with costs included in the rent.
• Detail expectations for cleanliness, such as keeping surfaces clear, disposing of rubbish appropriately, and avoiding leaving personal belongings in shared spaces.

Utility usage

Utility bills are a common source of confusion in shared living arrangements. To avoid disputes, include a clause that outlines:

• Whether utilities such as gas, electricity, water and broadband are included in the rent or billed separately.
• How utility costs are divided among tenants if they are not included in the rent.
• Rules regarding excessive usage, such as caps on utility consumption, to encourage tenants to use resources responsibly.

For HMOs where utilities are included in the rent, landlords may also wish to reserve the right to adjust the rent amount if there are substantial increases in utility costs.

HMO tenancy agreement drafting tips

For private landlords, creating an agreement that complies with HMO regulations while remaining clear and accessible to tenants can help retain control over the property and prevent disputes. Below are practical tips to consider when drafting an agreement:

Use plain language

When drafting a tenancy agreement for HMO tenants, avoid legal jargon or overly complex language. Using plain English increases the likelihood that tenants will easily understand their rights and responsibilities. This approach is particularly helpful when dealing with individual tenancies or separate agreements, where each tenant may have specific terms related to their room and access to shared facilities.

Regularly review the agreement

HMO regulations and local council requirements may change over time, so it’s important for private landlords to review and update their agreements periodically. Staying informed about changes ensures that agreements remain compliant and relevant to both the landlord and tenants.

How to protect yourself as a landlord

Managing an HMO involves more than drafting a tenancy agreement. To safeguard your interests and meet legal responsibilities, landlords need to take a proactive approach that addresses common challenges and minimises risks. By incorporating the following practices, landlords can maintain compliance, reduce disputes and protect their property effectively.

Conduct thorough tenant referencing

Tenant referencing allows landlords to assess prospective tenants’ suitability before they move in. This process includes verifying identity, credit history, employment details and references from previous landlords. By doing so, landlords can make informed decisions about tenant selection, reducing the likelihood of rent arrears or behavioural issues.

Protect deposits in an authorised scheme

Deposits taken for HMO tenancies must be placed in a government-authorised deposit protection scheme. Landlords are also required to provide tenants with prescribed information about the scheme, including:

• The name of the scheme.
• The deposit amount.
• The conditions under which deductions may be made.

Failure to protect deposits correctly can lead to legal penalties, including compensation claims from tenants, so landlords must comply fully with these requirements.

Provide required documentation

Landlords are legally required to give tenants the following documents at the start of the tenancy:

• Energy Performance Certificate (EPC): provides information on the property’s energy efficiency.
• Gas safety certificate: confirms that all gas appliances and installations have been inspected by a registered Gas Safe engineer within the last 12 months.
• How to Rent guide: offers tenants guidance on renting in England, as stipulated by the Housing Act 1988.

Providing these documents demonstrates compliance with the law and gives tenants important information about their rights and responsibilities.

Perform regular inspections

Routine inspections allow landlords to monitor the condition of the HMO property and address potential issues early. By giving appropriate notice to tenants, landlords can check shared areas, individual rooms (if agreed) and safety features like smoke alarms and fire extinguishers. Regular inspections also provide an opportunity to address tenant concerns and keep the property in good condition.

Maintain clear communication

Establishing clear communication channels with tenants can prevent misunderstandings and help resolve issues promptly. Landlords should set expectations for how tenants can report maintenance problems or other concerns and commit to responding in a timely manner. Open communication helps foster positive relationships and reduces the likelihood of disputes escalating.

Mediation as a tool for dispute resolution

Despite proactive management, disputes between landlords and tenants can occasionally arise. Common issues include disagreements over maintenance responsibilities, rent arrears or breaches of house rules. Tenant mediation can be an effective way to resolve such conflicts without resorting to legal action.

Mediation involves a neutral third party helping both landlord and tenant reach a mutually acceptable resolution. This approach is often quicker and less costly than court proceedings and can help preserve the landlord-tenant relationship. Mediation is particularly helpful in HMOs, where shared living arrangements may lead to more frequent disputes.

How AST Assistance can help

For landlords seeking support in managing their HMOs, AST Assistance offers a comprehensive range of services designed to simplify responsibilities and protect investments. Our services include:

• Drafting tenancy agreements: we tailor agreements to HMO properties, incorporating clauses that reflect legal requirements and the unique dynamics of shared living.
• Tenant referencing: our thorough referencing process helps landlords select tenants with greater confidence.
• Deposit protection: we guide landlords through the process of protecting deposits correctly and issuing the required prescribed information.
• Legal documentation: we provide advice on preparing and issuing the documents required by law, such as EPCs and gas safety certificates.
• Mediation services: our experienced mediators can assist landlords and tenants in resolving disputes, helping both parties reach practical solutions without the stress and expense of legal proceedings.

AST Assistance is committed to providing HMO landlords with reliable guidance and practical solutions. Contact our team today to learn more about how we can help you manage your HMO effectively and reduce risks to your property and investments. Call us on 01706 619954 or fill out our contact form.