Thinking of taking in a lodger? Under the government “Rent a Room Scheme”, you could receive up to £7500 tax free rent from a lodger living in your home. However, there are a several important things you need to think about first.
Do you need permission?
Checking immigration status
If you have a mortgage or are a tenant yourself, you need to check whether your own agreement allows you to have a lodger. Even if you can, you should still inform your mortgage provider or landlord.
It will be your responsibility to check that all lodgers aged 18 and over have a right to rent – if you fail to do this you could get an unlimited fine or be sent to prison. You can find the latest regulations at GOV.uk
Is your insurance affected?
Do you need a written agreement?
You should contact your home insurance company to check if your building and contents insurance need changing - your premiums may increase.
Is your house safe? You will need to ensure your furniture complies with fire safety label regulations, any gas appliances are safety checked each year and that the electrical system and appliances are all safe to use. If you’re a tenant your landlord should already be doing this for you.
Could it affect benefit payments? If you get Housing Benefit, the first £20 of weekly income from a lodger is ignored and won't affect your benefit. If meals are included, 50% of anything over the £20 is also ignored. If you’re receiving Universal Credit instead, income from lodgers is ignored unless you live in social housing. If you’re a single person you could however lose your 25% Council Tax discount.
It's best if you and your lodger sign an agreement, so that the rights and responsibilities for each of you are clearly set out – various starter agreements are available online. It's also a good idea to draw up an inventory of the furniture and fittings provided in the lodger's room. This can help prevent disputes about any deposit when the lodger moves out. It can be useful to take photographs to show the condition of the items.
How tenants differ from lodgers Lodgers live in the same property as their landlord and must allow the landlord free access to any part of the property. They will usually be provided with services such as cleaning. They do not have the protection of a tenancy agreement – they only need to be given “reasonable” notice to quit – usually a month if they pay monthly. The maximum number of lodgers per house is limited to 2 – above this the house becomes a House in Multiple Occupation (HMO).
Need advice? You can phone Adviceline on 0800 144 8848 (Mon-Fri 10-5) or, if you’re in Surrey Heath, you can call 01276 417900 and leave a message for a call back, or email client@camberley.cabnet.org.uk. Alternatively, you can find information at citizensadvice.org.uk regarding your local office, where you can also get advice by webchat and email. 36
