The Business Legal Services Blog

Houses of multiple occupancy: Preparing them for sale

In the current climate, houses of multiple occupancy (HMOs) are an attractive proposition for private landlords, but how do you prepare one for sale? This month, Anna Pettinger highlights the importance of following the correct eviction procedure…

I own a property that houses five tenants, but I want to sell it with vacant possession. What steps do I need to take to evict them?

Given the economic uncertainty and difficulties first time buyers encounter trying to step onto the property ladder, increasing numbers of people are renting for longer. This has led to a rise in houses of multiple occupancy (HMOs) nationally.

Commonly known as a ‘house share,’ HMOs often provide landlords with a greater collective rent than they would achieve if a couple or family was to occupy the same space.

To qualify as an HMO, at least three tenants must live in your property, as more than one household and share a toilet, bathroom or kitchen. A large HMO (one with more than five tenants, forming more than one household) currently needs a license and if you do not have one, you are committing an offence. I would advise contacting your local council’s housing department if you are unsure if you require one.

Each tenant within an HMO should have their own tenancy agreement, clearly outlining what space they can occupy (the rooms should be identifiable, for example, by number).

Assuming none of your tenants are in significant rent arrears, you can serve them notice under Section 21 of the Housing Act, should you wish to sell. However, this would be invalidated if you don’t have an appropriate HMO licence when one is needed. You must also comply with the procedural requirements for each tenant, which I can explain in more detail, if required.

Court action

If any tenants remain in the property after the Section 21 has expired, you will have to commence possession proceedings in the county court. This means issuing a separate claim against each tenant – and paying a court fee of £355 for each one. This can be an unwelcome surprise for unprepared landlords!

Assuming none of the tenants raise a defence against your claim (however spurious) the court will grant you a possession order, requiring them to vacate by a certain date. If they still refuse to leave, you will need a warrant of possession that costs another £121 per tenant. The court will then arrange for bailiffs to attend the property and carry out the evictions.

From serving notice to eviction can take five or six months, unless any tenants defend the claim. It is vital to comply with the Section 21 requirements and ensure you have an HMO licence, where necessary. If the notice is not valid, you will be unable to rely on it during possession proceedings and may have to serve a new one.

Given the potential difficulties you may face in evicting multiple tenants, I would recommend serving the Section 21 notices as early as possible during the sale process. You don’t want to commit to exchanging contracts or completing the transaction whilst any occupants remain.

If you would like to discuss managing HMOs or evicting tenants, don’t hesitate to contact me. Email: anna.pettinger@tayloremmet.co.uk or call (0114) 218 4000.

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