Mutual exchange advice

[jhy]

My DPs parents have a 3 bed flat they want to move closer to us, but want a 3 bed house. It's only them who live in the flat now, am I correct in thinking if they mutually exchanged they would not be allowed to over occupy even though they currently have 3 bedrooms? I thought it would be treated as a new tenancy etc.
There is a language/culture difference between them and they are very hard to get through to and make understand rules!

Depends on the new proposed landlord.

They can refuse consent on the ground that the 3 bed house is more extensive than your parents require because they'd be under occupying by 2 bedrooms (there are reasons for refusal under schedule 3 to the housing act 1985 and comparable ones for a slightly different type of mutual exchange under the localism act 2011).

They'd probably be OK for a 2 bed property but many landlords would refuse a mutual exchange where the incoming tenant would under occupy by 2 bedrooms given it could house a family of 6