Room Only Tenancy Agreement
If you are renting your property to multiple tenants there are two ways of going about it.
1. The first is to have all the tenants sign the same Assured Shorthold Tenancy Agreement and make them jointly and severally liable (plus perhaps insisting on guarantors), or
2. The second is to give each tenant a Room Only Tenancy agreement which gives them their own room plus shared use of the rest of the property, (lounge, bathroom and kitchen etc).
The main advantage of a 'Room Only' approach is that you may get a higher rent as the sum of the parts often appears greater than the sum of the whole, and practically if one tenant leaves and a new tenant moves in you do not need to get everyone to sign a new AST Agreement, because you are only dealing with the one new tenant.
The main disadvantage of a 'room only' approach is that there is more paperwork and if one tenant leaves it is your responsibility to find their replacement not the other tenants. In a jointly and severally liable scenario the other tenants are highly motivated to plug the hole in the rental payments to you as the landlord otherwise it would come out of their own pockets. A further disadvantage is that if there is property damage in communal areas, it can be hard to assign liability under a room only agreement whereas if the tenants are jointly liable such arguments are more straight forward.
Can I not just give the individual a license rather than a tenancy?
Unfortunately not. Where the Landlord is not resident at the property an Assured Shorthold Tenancy will almost always arise and there will be protection from Eviction under the Protection from Eviction Act 1977.
How do I ensure my agreement is definitely for a Room Only AST?
Please use our document as it is suitable for this scenario. The key ingredients are that it must expressly state that it is for a specific room, i.e. 'Room 2', 'the blue room', or the 'back room on the second floor' etc), and it must also make provision for the payment of utilities, (gas, electric water council tax etc).
How many tenants can live at the property?
There can be no more than three tenants (who are unrelated) living at the property. You must make yourself aware of the rules concerning Houses of Multiple Occupation (HMO's) as the property will almost always be an HMO unless there are just two individual tenants or all the tenants happen to be part of the same family.
Under Room Only Tenancy Agreements you can take a deposit to protect yourself against losses but as with normal AST's you must place the deposit in an approved deposit scheme.
And finally, the Tenant Fees Act 2019 came into force on the 1st June 2019 and it excludes fees prohibited under the Act, while it also allows for certain damages to be recoverable. This is applicable to Room Only Agreements as well.