Lodger Agreement: Taking in a Lodger

Taking in a lodger has never been more popular. With soaring bills more and more homeowners are finding it difficult to make ends meet thus taking in a lodger has become a very popular way to earn extra money.

Renting out your spare room can be an easy and quick way of earning extra cash and helping with costs. However, when letting out a room in your home it is paramount that you have a lodger agreement in place.

Who is a lodger? 

A lodger is anyone who pays to use a room in your house without having exclusive access to any other part of the property. Agreements with lodgers can take on many forms.

Whatever agreement you have reached with the lodger it is highly recommended to have a lodger agreement in place, The Legal Stop provides a FREE Lodger Agreement Template.

Can anyone take in a lodger?

Generally anyone can take in a lodger, whether you are renting your property from a landlord or you own your own house you can take in a lodger. However, your mortgage lender or the property landlord may prohibit the practice depending on your agreement with them.

If you own your property you should always check with your mortgage lender and home insurance provider whether you are allowed to rent a room. Likewise, if you rent your property from a landlord you should check with the property landlord to ensure that they are on board with your decision to take in a lodger.

Are there any legal requirements for taking in a lodger?

Although you don’t have to comply with all the legal repairing obligations applicable to rented properties, furniture should comply with the furniture regulations, and any gas appliances should be checked annually by a Corgi registered gas installer.

Do I need to make a tenancy agreement?

A lodger is not a tenant so taking in a lodger does not create an assured tenancy therefore, an Assured Shorthold Tenancy Agreement – Rent a House or Flat is not appropriate.

Theoretically it is not necessary to have a written agreement to rent out a room but it is highly recommended that you have a lodger agreement in place in order to regulate the relationship between yourself and the lodger and set out the rights and obligations of both parties. This will help to avoid any future problems.

The Legal Stop provides a FREE Lodger Agreement Template, this template is for use in those cases where the room is part of a house or flat which the owner occupies as his/her only or principal home.

Do the new tenancy deposit laws apply to taking in lodgers?

Current laws only apply for assured shorthold tenancies; therefore the law regarding tenancy deposit protection schemes does not apply to lodger agreements.

However, taking a 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, our Lodger Agreement Template contains a clause dealing with deposit.

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.

What amount to reasonable notice is decided by the parties before the lodger moves in, therefore having a well written lodger agreement is essential to avoid any dispute. Our Lodger Agreement Template contains a clause dealing with notice and early termination.

However, should a lodger refuse to leave after notice has been given then you will need a court order if you want to evict them.

Do I have to declare any 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, but you have to disclose this income on your tax return.

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 rules 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.