Guide to lodger agreements for renting a room in your house

Discover the essentials of lodger agreements & resident landlords to make your first lodging a successful experience!

Ellie

4 minute read
·
5 Apr 2024
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If you decide to rent out a room in your property, it is possible to do so with a lodger agreement. Resident landlords are those who rent out parts of their homes to lodgers. Renting out to lodgers, as opposed to tenants, comes with unique rules and responsibilities. In this blog, we’ll outline:

  • What a lodgers agreement is
  • The different types of lodgers agreements
  • Factors to consider before renting to lodgers
  • How to establish your own lodger agreement

What is a lodger agreement?

A lodger agreement, also called an excluded tenancy agreement, is a legally binding contract between a landlord and a renter (the lodger) who rents a room within the landlord's home. Unlike typical tenancy agreements, which typically involve renting an entire property, a lodger will rent one room of your home and usually share common areas with the landlord or the landlord's family.

A lodgers agreement can be periodic or fixed term:

  • Periodic (running indefinitely through payment periods)
  • Fixed term (with a definitive deadline)

You can only have a lodger living in your main place of residence. If you own a second home, you cannot use a lodger to rent out that property.

Depending on your agreement, you may be able to evict a lodger without a court notice. However, you’ll have to provide “reasonable notice” to do so. This typically means you’ll have to give as much notice as the length of your payment periods. For example, if your lodger pays rent monthly, you must provide one month's notice.

Factors to consider before having lodgers

Renting a room in your property can be an excellent way to generate additional income. But before deciding whether to rent out rooms in your home, some factors are worth considering.

Do I have to pay tax on income earned by a lodger agreement?

Under the UK government’s Rent a Room Scheme, you can earn up to £7,500 tax-free per annum if you rent out a furnished room in your main home. If you share this income with another person, you can each earn up to £3,750 tax-free per annum.

Do I have to get approval to have lodgers?

Those who own their property outright do not need to get approval to have lodgers stay in their homes. If you still have a mortgage, you must get approval from your mortgage provider before renting out rooms. Renting rooms on your property may breach your mortgage agreement, so it’s crucial to inform your provider before doing so.

Can I ask my lodgers to pay a deposit before moving in?

It’s wise to take a deposit before your lodger moves in. One month’s rent is the typical amount expected for a deposit. While it’s not required to register under the deposit protection scheme as a resident landlord, it’s best to keep the lodger’s deposit in a separate account and return it when the lodging ends.

Am I responsible for repairs and maintenance of the lodger’s room?

As lodger agreements don’t fall under the umbrella of tenancies under the 1985 Landlord and Tenant Act, the responsibility for repairs and maintenance isn’t always the landlord’s. The lodger is responsible for repairing any damage they cause, while the landlord should handle repairs and maintenance of the common areas. The landlord is also responsible for ensuring the home is fit for habitation.

Should I inform my home insurance provider of my lodger?

It’s best to inform your insurance provider that you are lodging as you may need to adjust your insurance coverage accordingly. Generally, it’s wise to opt for various landlord insurances to protect yourself from accidental damage and ensure comprehensive coverage.

Will I have to pay a higher council tax if I provide lodging?

If you live alone and receive a single-person discount on your council tax, this will stop as soon as you allow someone else to live on your property. Students are exempt from paying council tax, so you won’t lose your discount while lodging a student. Your council tax will not be affected if you already have 2 or more adults living on the property.

Remember that you may lose any benefits you receive as the income from lodging will be considered when applying for benefits.

Can I get my lodger to contribute to household bills and taxes?

If the lodger lives in your home and shares the common areas with you and your family, you can pass on some of the costs to the lodger. In this case, the responsibility of paying council tax and bills should be agreed upon in the lodger agreement before moving in. Usually, the landlord will pay the bills and the taxes and request a contribution from the lodger.

But if your lodger lives in your home and does not share common areas, then they are a non-excluded occupier. In this case, they’ll pay their own council tax. For non-excluded occupiers, you can install a prepaid meter or record their energy usage and charge them at the end of the billing period.

Will lodger agreements be impacted by the upcoming renters' reform bill?

As lodger agreements are not considered tenancy agreements, they will not be impacted by the renter's reform bill. Lodger agreements will not be impacted by the reforms to section 21 eviction notices either.

How to establish your own lodger agreement

Getting legal assistance while making your own lodger agreement is a good idea, as each landlord-lodger will have differing terms and conditions. To get you started, we’ve created an example of a lodger agreement which covers the necessities required.

Now that you’re familiar with lodger agreements and what it means to be a resident landlord, renting a room on your property has never been easier! If you’d like to rent your property safely and securely to reliable renters, list your rooms with HousingAnywhere.

*This article is for informational purposes and is not a substitute for legal advice. Please consult the appropriate authorities or a lawyer for personalised support.

For feedback on this article or other suggestions, please email content@housinganywhere.com*

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