Taking in a Lodger -to do list
Deciding to take in a lodger does not just require having a spare furnished room ready to be rented out; it involves a number of legal things too sadly.
Ask your mortgage lender as some mortgage agreements stat that yuo need to ask permission first and normally they do not unreasonably withoud such permission.
If you are a tenant and wanting to take in a lodger you should check with the landlord first. Even if the agreement says you cannot, contact the Landlord and explain your situation as they may prefer you to take in a lodger than leave. Please remember that if you breach your tenancy agreement you could end up being evicted.
For local authority tenants
Local authority tenants should check with the local authority they are renting the property from to find out about their rights to have a lodger.
It is also recommended for a prospective landlord to consult their insurance company to find out whether their contents insurance can cover the lodger’s belongings or do the latter have to have their own insurance.
Deciding the rent
It is recommended for the landlord to check with local rent rates to avoid overpricing their room. A room offered at a reasonable rent will attract more people, increasing the odds of finding the right lodger.
Making sure the living space to be rented out is suitable.
As a potential landlord, one should make sure that the living space offered for rent is in a proper condition for healthy human habitation.
- Cleaning the room so it is free of any health hazards
- Furnishing the room with usable essential furniture (e.g. a bed, a few chairs, a writing desk, etc.)
- Fixing or replacing any broken or damaged tools and furniture
- All furniture and home décor provided by the landlord must be compliant with standard fire safety regulations
- Any gas appliance provided by the landlord must be compliant with gas safety regulations and must be checked once in a year by a certified engineer
- The landlord must ensure that all electrical and electronic appliances provided to the lodger are safe to use
The Landlord may also choose to install new curtains, cupboards and shelves so the room is more liveable and hospitable.
Sort out a lodger agreement
Unlike when taking in a tenant, the landlord may choose not to have a written agreement when taking in a lodger. However, it is recommended to have a legal contract signed by the landlord and the lodger as it can prevent any future dispute.
Apart from the rent, deposit and the dates of occupancy and end of term, a lodger agreement often includes any tax to be paid by the lodger along with their rights and responsibilities toward the rented living space. The landlord may choose to make an inventory of the furniture and appliances provided to the lodger along with the room to keep a record of the items for future reference.
Finding a lodger
The common ways to find a lodger include putting up cards and advertisements on local notice boards, checking the ‘accommodation wanted’ section in local newspapers and advertising the room in a printed publication or online. Read our Guide to finding a lodger HERE
Consider the impact on tax credits and benefits
Those claiming any benefits should contact the benefit agency before deciding to rent out a part of their property as having a lodger will probably affect the benefits claimed by them. The additional income might also affect one’s tax credits.
For those claiming Housing Benefit, £20 of the additional earning from a lodger is ignored in the weekly Housing Benefit the landlord is entitled to. For example, if a person earns £40 a week from their lodger, only £20 of the total income will be considered when calculating their Housing Benefit.
Taking in a lodger does not affect the Universal Credit claimed by the landlord as the rent collected from the lodger is not considered an income. However, in case of tenants renting out a spare room in their rented accommodation, the size criteria rule applies for the living space rented by the lodger.
Tax credits and other benefits
Renting out a spare room in the house can affect the landlord’s council tax and income tax (if applicable). For example, when a person living alone takes in a lodger, they will no longer be eligible for the single person discount (25%) on their council tax.
The government has the ‘Rent a Room’ scheme that allows a resident landlord to earn £4,250 a year without affecting their income tax. It is recommended for a landlord to speak to an advisor to understand how having a lodger might affect their tax payments.