I am taking in a lodger, how do I make sure I do it legally?
With careful due diligence, you should be able to have a lodger without much of a fuss. As with any changes to your household, it’s important to check the do’s and don’ts in order to have a smooth and successful transition.
A tenant has more rights than a lodger. A lodger will likely have to fill out an agreement after they and the landlord agree on a particular arrangement, whereas a tenant will have signed a tenancy agreement.
Taking in a lodger:
Almost anyone can take in a lodger, but it is highly recommended to get approval from your mortgage lender and property landlord. This will save any surprises later on, as your mortgage lender or landlord may prohibit the practice depending on your agreement with them.
If you are a tenant who wants to take in a lodger, check your tenancy agreement to see if you need to obtain permission from your landlord.
If you’re a local authority tenant check with your local authority.
If you own your property, check with your mortgage lender and home insurance provider.
Before a lodger can move in, it must be established that they have the right to live and rent in the UK. As a landlord, you’re breaking the law by not doing this.
Do I have to pay council tax for a lodger?
If you live alone, you get a 25 percent single person discount on your council tax. If you take in a lodger, you need to bear in mind that you will lose this. There may be some exceptions, for example, if the lodger is a full-time student.
This website provides more helpful information regarding council tax.
Evicting a lodger:
If you have given the lodger reasonable notice to leave your home, then they must do so. By UK law, lodgers do not have the same rights as tenants and therefore once they are asked to leave, they have no rights to stay in your home.
This is when the written agreement comes in handy, as you will have hopefully mutually agreed upon what amount of time equates to reasonable notice.
If you have given the lodger reasonable notice to leave your home and they refuse to go, you will need to obtain a court order to evict them.
Declaring payments:
The UK government has a ‘Rent a Room’ scheme which provides that the first £4,250 will be tax-free for letting out furnished room in your home. You have to disclose this income on your tax return. The maximum amount drops to £2,125 if you share a house and both of you wish to rent out the room(s).
If you exceed the maximum amount, you must declare the payments as income to HM Revenue & Customs and pay tax in the normal way. The same goes if you rent out an unfurnished room to a lodger.
Legal Matters:
In order to set out the rights and responsibilities of all parties involved, it’s a good idea to draw up a contract. This written agreement can ensure that both the landlord and the lodger are happy with the arrangements. It should include matters such as:
What is amount of time is suitable for a notice of leave?
the amount of rent payable
the level of deposit (if any) required
the landlord’s responsibilities
what the lodger can and cannot do at the property
concluding the agreement
Downloadable agreements:
This downloadable lodger agreement is an easy template for you and the lodger to agree upon precise terms and avoid any hassle in the future.
