When Does my Tenant's Guest Become an Extra Tenant?
Most landlords will happily allow their tenants to have overnight guests now and again. But what if that guest stays on – a week, a month, or indefinitely? Is there any need to worry, and if so, what can be done about it?
Taking and Assigning Responsibility
There is one compelling reason to try to regularise the situation and get both tenant and guest to sign a new contract which names them both. In a joint Assured Shorthold Tenancy (AST), the tenants are jointly and severally liable, meaning that they are both responsible for all debts: if one leaves with unpaid rent or damaged inventory, the other is liable for the full amount owing. If your tenant is moving a partner, friend or lodger in because they can't afford to pay rent by themselves, it's in your best interests to draw up a new AST. Then if the household does fall into arrears, you have more chance of recouping the unpaid rent.
James Davis, Upad's CEO and a landlord himself advises: "If an AST period is coming to an end and you're going to renew, it makes sense for the new contract to include both occupants. That said, if you create a new agreement and then your tenants split up, you'll then need to sign yet another contract to revert back to the single tenancy."
AST contracts often include a clause specifying how often and for how long tenants may have guests to stay. Though these may cause your tenant to reconsider their social arrangements, they don't have many practical implications for a tenant who chooses to ignore them. There is no way for a landlord to force additional occupants either to leave or to sign their own tenancy agreement. If a landlord is insistent that the tenant should not have guests in the property, the only option is to serve the tenant themselves with a section 21 notice to quit.
Useful Information for Landlords
Many landlords worry that if they allow a lodger or a guest in the property, that person then gains automatic right of tenure and cannot be removed. This is not the case: in the event of non-payment of rent, for example, a section 8 or section 11 notice served on your tenant would cover their guest too. If they are paying rent to your tenant while the tenant is resident in the property, they're your tenant's lodger, and gain no right of tenure.
Given that merely being resident in the property doesn't give a guest rights, landlords frequently choose to allow or ignore it, concluding that if the rent's being paid regularly, the tenant's social life is not something they're going to worry about.
Though this laissez faire approach can often be the right one, there are some pitfalls that need to be avoided.
James says: "The one time I'd never advise this approach is in houses with multiple, unrelated occupants on separate tenancy agreements. If the occupants aren't already friends, having extra people staying in the house can be a huge source of friction, so I'd advise setting out house rules about guests, and stating that the permission of other residents must be gained first. And emphasise this to new tenants when they move in, otherwise someone, some time down the line, is going to feel that they're being treated unfairly."
Additional Points to Be Aware Of
Ensure that the person with whom you have the tenancy agreement is the one from whom you take rent payments. Accepting a standing order from their guest's bank account could create a tenancy between you.
For tenants receiving LHA, having a housemate will affect their benefit eligibility. The local authority must be informed, and in this case, a new contract including the guest as a joint tenant, should be drawn up.
Landlords of properties three stories or more in height have an additional factor to take into account. If there are more than five occupants comprising two or more households, the property may need to be licensed by the local authority as an HMO. Occupants are counted whether or not they are included on a tenancy agreement, so long-term guests, sub-letters or lodgers can all trigger the need for HMO licensing.
• if the rent is being paid on time and you choose to ignore the guest, there's nothing wrong with that approach, but
• if a new tenancy agreement is being signed anyway, it's best to include all residents as joint tenants.
• unusual circumstances like tenants in receipt of LHA or multiple residency households may need a different approach.