Q. I HAVE a large property which I rent out. I have read in the papers that there is an increase in people looking to house share and that I could make a higher return by renting out rooms. Can I rent out rooms for sharers rather than renting out the house as a whole?

Mr D, Stroud

A. You are right that there is a continuing increase in people looking to house share. The recent bedroom tax and cuts in benefits are pushing more and more council tenants to look for house shares through the private rented sector, and the increasing cost of living means more professionals are looking to save money by sharing the cost with housemates. So there is a large demand for shared accommodation; but landlords beware, it is not as straight forward as you might think.

If you, or a member of your family, lives in the property full time and you are simply renting out rooms in your own home, you can do so fairly simply as this is a casual agreement between yourself and your lodger. If however the house is otherwise vacant and you let out the whole property there are more regulations to adhere to.

If there are more than five tenants, they represent three or more different households – people who represent different “families” – and the house is set over three or more floors, you will need a licence from the Local Authority to operate the let as a HMO (House of Multiple Occupancy). In order to issue this they will look at the suitability of the property, which may require additional fire alarms, fire doors and other safety features, and at your suitability as a landlord, or require that you have a suitable agent acting on your behalf to manage the HMO. If you intended to rent out the rooms separately with each tenant being only responsible for their room and their share of rent then yes the total rent may well add up to more than the equally divisible amount of the rental value for the house as a whole. But bear in mind that this option will require a higher management input as you will remain responsible for the communal areas within the house and there is likely to be a higher level of wear and tear. You will almost certainly have higher turnover of tenants so you may lose rent by having some rooms empty between tenants, if one or more tenants leave, its up to you, the landlord, to find new tenants to fill their place and you cannot charge the lost income to the other tenants.

Should you be found to have created a HMO without having applied for a licence you are likely to be heavily fined, so if in doubt check with your Local Authority before agreeing a tenancy.

You may rent out the property as a whole to two sharers, or as many as the local authority allows, under an Assured Shorthold Tenancy with each tenant being jointly and severally liable for the entirety of the rent and property. The benefit to renting the property under one tenancy is that the responsibility of the house and rent is on each tenant, so if one leaves, the others must still pay the full amount of rent. However, if you need to take a tenant off the tenancy to add a new one, you essentially have to close down and re-start the whole tenancy, reissue a new contract, check the house over for damage, re-register the deposit and so on, which can be labour intensive.

Send your letting questions to rose@sawyersestateagents.co.uk.