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Download Your Lodger Agreement Template

A template lodger agreement for use where you wish to rent out a room of your house.

Lodgers and Housing Benefit

Taking in a lodger is a good way of utilizing any spare rooms one may have for an additional monthly or weekly income. However, a potential landlord does have to consider how sharing living space with a stranger can affect their lifestyle, costs as well as any benefits they might be claiming.

Use a proper Lodger Agreement.  You can buy one cheaply here.

Housing Benefit reduction for having too many ‘spare’ bedrooms

Housing Benefit restrictions may apply when a rented house is considered too big for the tenant, renting from any social housing landlord. Having one or more extra bedrooms even after all the members (couples and single members) of a family have a bedroom of their own is counted as having a house too big for a working age person. The Housing Benefit is reduced at a rate of 14% for one spare bedroom and 25% for two or more. However, this rule does not apply on people over working age.

How does taking in a lodger affect Housing Benefit

Charging up to £20 per week from a lodger does not have any affects on the Housing Benefit claimed by the landlord. Anything over the first £20 is considered when calculation the Housing Benefit the landlord is entitled to.

An additional 50% of the rent charged above the first £20 will be ignored from the landlord’s Housing Benefit if meals are included in the rent paid by the lodger. So, offering meals along with living space is a good way of minimizing the loss on one’s Housing Benefit.

Do the Housing Benefit restrictions apply after taking in a lodger

The extra bedroom is no longer considered a ‘spare’ once a person takes in a lodger as it now has an occupant. So, the House benefit entitled to the landlord is no longer reduced as they are not considered to have a house too big for them anymore. However, the rent collected from the lodger is considered in the House Benefit calculations as mentioned above.

Renting out to a family member

The rules for Housing Benefit reductions are different when one has a relative lodging in their house in exchange for a certain amount of rent. Like when sharing living space with a stranger, the extra bedroom is no longer considered a ‘spare’ when there is a family member living as a lodger. However, the landlord might still be losing a certain percentage of their Housing Benefit by the application of ‘non-dependant deduction’ as the lodger is considered a non dependant in such cases. The exact amount deduced from the House benefit depends on a number of factors including the monthly or weekly income of the lodging relative. It is recommended for the potential landlord to consult a benefits adviser to evaluate how having a relative as a lodger might affect their Housing Benefit.

Use a proper Lodger Agreement.  You can buy one cheaply here.

 


Download Your Lodger Agreement Template

A template lodger agreement for use where you wish to rent out a room of your house.