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Shared Tenancies are Not for the Feint Hearted

Updated on October 12, 2009

When friends or work colleagues decide it may be a good idea to pool their resources and rent a property together, it almost always proves to be a recipe for disaster – both for the tenants and for their landlord. Joint tenancies and shared tenancies are a social, legal and financial minefield best avoided if at all possible.

Grandparents adore having their grandchildren come visit them. And do you know why? No, it’s not just because they love them to bits or because of how much younger it makes them feel or even because they enjoy seeing their precious little smiling faces … it’s because they ARE just visiting. After two or three hours, a welcome sibling calls to collect them, and peace is restored in the universe.

We all enjoy having our friends from work or our best buddies over for an evening, whether it’s to watch a football match on TV or just to catch up on gossip. We enjoy their laughter when we may be feeling a little down in the dumps, we welcome their heartfelt support during troubled times and we like to reminisce about happy days gone by. But we also like the fact that they actually live somewhere else – and not with us.

Count how many friends you know. Then compare that with the number of friends you reckon you could actually live with under the same roof on a permanent or semi-permanent basis.

Those quirky little ‘ways’ they have that make you laugh out loud (and one of the reasons you like them as people), would probably soon get on your nerves, if you had to live with them 24 hours a day. Of course, they probably think exactly the same about you. It’s just the way things are. People generally enjoy doing things in a certain way, which is fine if you are living with a compatible partner; but when it’s a friend or just a work colleague, somebody ‘doing something in a certain way’ can engender murderous thoughts … even in the best of us.

Joint-tenancies between couples are a very common occurrence in the private rented sector; and shared tenancies – where two, three or more friends or work colleagues collaborate to live together – is becoming increasingly commonplace. There are advantages to this arrangement. Not least of these is the fact that a group of friends can cohabit much cheaper than if each of them were carrying the burden of day-to-day living expenses on their own. Other groups have worked out that, even though they would be paying much the same if they were renting a home independently, by pooling their resources they can afford a better or bigger home in a more amenable location.

While the financial benefits are clear for all to see, there are also social advantages, particularly for those that (up until now) have perhaps never lived on their own independently. Many sharers choose to cohabit as a first step towards independence when they initially leave the parental family home. It’s comforting to have the support and ‘togetherness’ of friends, rather than face the daunting prospect of sudden isolation. Unfortunately, the financial and social advantages tend to be the first consideration, rather than truly contemplating ‘how’ a group might co-exist successfully under the same roof. The rules of engagement are often therefore worked out as time progresses, rather than at the outset – and this invariably leads to discord, disagreement and devastation when opinions in the group begin to splinter and separate.

Some of the best of friendships have ended abruptly … and sometimes shortly after signing a joint tenancy agreement. When there is no room for manoeuvre or little chance of a compromise being achieved, one of the group may feel leaving is the only course left open to them. This may be an option available (in physical terms), but much like a marriage or civil partnership, separating is not always so easy in the legal and liability arena. While it may seem quite simple to walk through a door, getting out of the joint and several contractual obligation is likely to prove rather more complicated.

The situation where one tenant in a joint tenancy (comprising two or more people) decides to vacate the property early, happens all too often – and causes problems of varying degrees for the remaining tenants, the vacated tenant and the landlord.

The vacated tenant is usually shocked to discover that, despite leaving the property, they actually remain liable for the rent for the remainder of the term of tenancy. When signing the tenancy agreement, they accepted a ‘severally liable’ term whereby each of the joint-tenants are legally bound to pay the rent collectively. In fact, in law, each of the joint-tenants can be held responsible for the entire rent – and it’s up to the tenants themselves to make their own arrangement over how it is collected or apportioned.

This is something very few tenants know enough about or contemplate, when they first decide to share a rented property. Those that may be planning such an arrangement now would be wise to get and consider all the facts, before they sign on the dotted line.

When one of a group of sharers decides to leave before the end of tenancy term has been reached, the likeliest resolve (assumed by the remaining tenants) is to find and then co-opt a replacement sharer into the group. However, the landlord does not have to accept this arrangement, because he has not chosen this particular person as a suitable prospective tenant – and in any event, the existing tenancy with those named on it is still running.

There are also various complications that can arise with the deposit when one of a group of sharers chooses to leave. The vacating tenant will probably want his or her share of the original deposit back, but as the tenancy has not ended, the approved deposit protection scheme administrators are unlikely to authorise any amount of reimbursement. In addition, any incoming replacement tenant (preferred by the remaining tenants) should pay a deposit amount against future damage and/or rent arrears, but it cannot be collected, because the government approved scheme system does not currently provide for this type of arrangement.

There are, in fact, only two alternatives for both landlords and tenants, when a shared tenancy arrangement fails.

Either the existing tenancy can be left to continue to the end of its term, with the remaining tenants making their own arrangement over how the full amount of rent is collected and paid between them; or the tenancy can be brought to a premature end by the tenants submitting (and the landlord accepting) early and voluntary surrender. A new joint tenancy can, of course, then be commenced with the same group of sharers, which would include any replacement tenant. This would be at the landlord’s discretion and after the new applicant had passed all reference checks.

Any problem over the deposit previously outlined will rectify itself under this resolve, because the original deposit would be refunded, while a new deposit from the new group could be taken for the new tenancy.

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