7 Tips for Taking on a Lodger
BY READERS DIGEST
1st Jan 2015 Property
Taking in a lodger has never been more popular. At the moment with soaring bills, renting our your spare room can be a easy and quick way of earning extra cash. Read our top tips on what you need to think about when letting out a room in your home.
1. What is a lodger?
Simply put: a lodger is anyone who rents a room in your house without exclusive access to the rest of the property. Agreements with lodgers can take many forms, from straightforward agreements to use a bedroom to arrangements including laundry services and meals.
Whatever the arrangement, it is highly recommended to put a lodger agreement in place.
2. Do I have to declare any payments?
The UK government's 'Rent a Room' scheme allows you to receive up to £4,250 a year tax-free for letting out a furnished room in your home. However, if you share a house and both of you rent out a room, or rooms, then the maximum amount drops to £2,125.
Under the scheme a lodger can rent anything from a single room to an entire floor in your family home. However, this will not apply if you separate areas into different flats. Nor does it apply for unfurnished rooms.
If you exceed the maximum amount or rent out an unfurnished room you must declare the payments as income to HM Revenue & Customs and pay tax in the normal way.
3. Can anyone take in a lodger?
Anybody can take in a lodger, even if you are renting your home, and benefit from the 'Rent a Room' scheme.
However, you should check with your mortgage lender or your landlord to make sure this isn't prohibited by your agreement with them. It is also wise to check with your home insurance provider to ensure that there are no issues with your decision to take in a lodger.
4. How do you evict a lodger?
Under UK law, lodgers do not have the same rights as a tenant would have. This means that once you have given reasonable notice that a lodger must leave they have no right to stay in your home.
However, should a lodger refuse to leave you will need a court order if you want to evict them. This emphasises the importance of drawing up a lodger agreement that both parties agree to before the lodger moves in.
5. Do I need a tenancy agreement?
As a lodger is, strictly speaking, not a tenant you do not need to have a tenancy agreement in place, however, writing up a lodger agreement is necessary. This will help to avoid any future problems by clearly setting out both your requirements and boundaries. Additionally, a fairly written agreement, using an approved lodger agreement template, will help facilitate any legal challenges that may occur if the relationship sours.
6. How do you find a lodger?
Given that it can be difficult to evict a lodger, choosing the right person to share your home is vitally important. Good places to find lodgers include:
Universities, who often provide a list of available rooms to their students.
Property advertising websites such as spareroom.co.uk and MondaytoFriday.com, which allow you to place an advert and read profiles of prospective lodgers.
Public listing sites, such as Craigslist.co.uk and Gumtree.com can be invaluable tools in the search for a good match.
7. Do the new tenancy deposit laws apply to taking in lodgers?
Currently the deposit laws only apply for assured shorthold tenancies. However, taking a suitable deposit to protect against property damage and the lodger failing to pay rent is highly recommended. If you plan to take a deposit, it is vital that the terms are stipulated in a lodger agreement and that a property inventory template is filled out.
