Home » Resources » Redress » Student lets can be a minefield, tread carefully

Student lets can be a minefield, tread carefully

Student lets minefield imageAll letting agents will want to ensure that, when instructed by a landlord, they comply with the applicable legal requirements and the obligations set out in the TPO Code of Practice. However there are particular issues that are unique to student lets.

It is important, when instructed by a landlord who wishes to let a property to students, to establish if a House of Multiple Occupation (HMO) will be created. www.gov.uk defines a HMO as follows: A property is a House in Multiple Occupation (HMO) if both of the following apply:

  • at least 3 tenants live there, forming more than 1 household
  • each tenant shares toilet, bathroom or kitchen facilities with other tenants

The property is a large HMO if all of the following apply:

  • it is at least three storeys high
  • at least five tenants live there, forming more than one household
  • each tenant shares toilet, bathroom or kitchen facilities with other tenants.

A household is either a single person or members of the same family who live together. A family includes people who are:

  • married or living together – including people in same-sex relationships
  • relatives or half-relatives, e.g. grandparents, aunts, uncles, siblings
  • step-parents and step-children.

Three or more unrelated students will form an HMO and strict regulations apply. I expect an agent to be aware of the nature of the local council’s requirements and advise their client of the need to comply. For a large HMO, the landlord must ensure that the property meets health and safety standards and obligations; a licence from the council will be required to let it. Agents should be aware that it is imperative that a licence is obtained if one is required and ensure that it is arranged; a council can prosecute a landlord for running an unlicensed HMO; one implication of a successful prosecution is that the tenants may apply to a tribunal to reclaim some of the rent paid.

Guarantors must be told that they may be held accountable for damages or rent arrears regardless of which tenant failed to pay or caused damage.

Jane Erskine image

Jane Erskine

Once potential tenants have been found, referencing will be undertaken. Frequently, students will not be in a position to pass referencing, having a low credit rating, hence a guarantor, usually a parent, is asked to sign a guarantee to underwrite rent arrears or damages. Most guarantors expect that they are only guaranteeing their own student child’s obligations but where the tenancy agreement makes the tenants jointly and severally liable, the agent should inform all guarantors that they may be held accountable for rent arrears/damages regardless of which tenant failed to pay or caused the damage. If each student is granted an individual tenancy agreement (less likely but does occur) this will not apply. Clear information must be provided; an agent should take care that they ensure that they prepare an appropriate guarantee agreement and clearly explain to the guarantor(s) the exact nature of the commitments that they are undertaking.

Student lets are often agreed months before the start date and the deposit may be paid upon signing the tenancy agreement. A frequent concern is the registration of the deposit. Under Tenancy Deposit Protection legislation, the deposit holder has 30 days to register the deposit monies with a tenancy deposit scheme and provide the prescribed information effective from the date those monies are received (importantly, not the start date of the tenancy).

AND ANOTHER THING…

Finally, problems may arise if tenants change during the tenancy. Best practice would stipulate that either a new tenancy or an addendum agreement be drawn up, to make clear the identity of the current tenants. As it may well be impractical to conduct a check out during occupation by a group of students, the agent should ensure that there is a clause in the agreement, or confirmation is obtained in writing, to show that the incoming tenants agree to take on the previous tenants’ obligations in respect of the state of the property. If this is not done and the tenants dispute the landlord’s proposed retention of the deposit at the end of the tenancy, there may be difficulties if there is no link between the first tenants – provided with the check in document – and the outgoing tenants. It is not unusual for a tenancy deposit scheme, in deposit disputes where the tenants have changed during the tenancy, to advise that outgoing tenants could not be held responsible for the damage if there is no link between the tenants, so it cannot be safely concluded that the damage had occurred during those tenants’ occupancy of the property.

Having considered such a case, I was of the view that the agent’s actions, or rather lack of action, in that they had not ensured that each new tenancy addendum clearly stated that the tenants accepted the property by reference to the initial inventory which would be used as a measure of condition on vacation, had significantly disadvantaged the landlord and I made a compensatory award.

My continuing message must be that good communication, seeking to ensure that all parties understand their obligations, will, hopefully, mean that the tenancy runs as smoothly as possible.

What's your opinion?

Please note: This is a site for professional discussion. Comments will carry your full name and company.

This site uses Akismet to reduce spam. Learn how your comment data is processed.