Using Individual Tenancy Agreements
I’m often asked ‘should I use individual tenancy agreements or a Joint Tenancy Agreement?’
- Individual Tenancy Agreements: Where each tenant has their own separate tenancy for their specific bedroom and a license to use communal areas.
- Joint Tenancy Agreement: Where all the tenants sign just one tenancy agreement and have exclusive use of the property for the length of the agreement.
There are several disadvantages and some advantages to individual tenancies - including a brilliant legal advantage that very few landlords know - more on this later.
When students go to university and live in halls - each has an individual contract for their accommodation with either the university or the accommodation provider. So it’s not unusual. A lot of these ‘strangers’ become life long friends.
When to use individual tenancy agreements
Where you have a property with say six bedrooms but there is a scarcity of groups that size then you should consider using this method to your property.
Or perhaps your timing was not right and you have an empty house at a time when students aren’t looking in groups.
Disadvantages
Your tenants will most likely not know each other before moving in. And therefore they may not get on. Where you are filling several rooms or the whole property at once, there is not much you can do about this.
One thing you can do is hold an open viewing and invite as many prospective tenants at once. They can then see each other and ‘somewhat’ get to know one another before moving in.
Where you are filling a room in an existing property (must be one where each tenant has an individual tenancy agreement) then a good idea is to involve the tenants in the selection process.
This happen to me a few years ago when I moved into a shared flat; we each had individual tenancy agreements. I had to pass a selection test with all the existing tenants. Thankfully I did. But where the current tenants did not like a prospect the landlord would not let to that person.
Run away
Under a joint tenancy if one tenant leaves you can pursue any one of the other tenants for the lost rent. If they all have individual contacts and one skips then you can only chase the one that has run away - which may prove difficult.
House trashing
And again under a joint agreement if one trashes the house or their room you can use the deposits from all of them to cover your costs. Not with individual tenancies. (Although students in halls often find they billed for damage when nobody has owned up!)
‘Joint’ in law
Even where you do issue individual tenancies a court may hold it to be joint tenancy especially if the group share all the facilities, pay bills and shop together
The Legal Advantage
As I said earlier there’s a brilliant legal advantage and here it is: You are only issuing a tenancy for a specific room. Not the whole property. The tenant will also have a licence to use the communal areas. But - they do not have exclusive use of the communal areas. This means you have the right to enter communal areas without giving 24 hours notice required under a tenancy.
It may be good practice to still give 24 hours notice - but you are not required to do so.
Hope you find this uselful - either way let me know.
Thanks
Paul Allison
Filed under: Tenancy Agreements