If you’re lucky enough to have your own place, taking in a lodger could be a smart way of boosting your income while also meeting new people.
Read on to learn about some of the key considerations before taking in a lodger and becoming a live-in landlord.
How much can I earn by taking in a lodger?
The amount you can earn by taking in a lodger depends on a number of factors such as:
- The location of the property
- The size of the room
- The standard of the room
- Whether or not the lodger will have their own private bathroom
The above list is certainly not exhaustive. Before taking in a lodger, it’s wise to look online at similar rooms in your area to see how much other live-in landlords are charging. Pricing a little below everyone else can be a smart way of getting more applicants and being able to pick the best one.
What is the Rent a Room scheme?
If you rent out a room in your home, you can earn up to £7,500 a year in tax-free income. This is due to a government incentive called the Rent A Room Scheme, designed to encourage people to take in lodgers.
To be eligible, you must rent out a room or part of your main property. You can rent out a whole floor, if you wish, but it must not be a self-contained flat. The room/s must be furnished in order to qualify.
Can I rent out a room if I don’t meet the Rent a Room criteria?
Yes. You can still rent out a room in your home and take in a lodger even if you don’t meed the Rent a Room criteria. However, you will have to pay tax on the income you earn.
Do I have to be a homeowner to use the Rent a Room scheme?
You don’t have to be a homeowner. If you have your landlord’s permission you can rent out a spare room in your home and earn tax free income.
Unfortunately, I imagine very few landlords would agree to this.
Do I need to fill out a tax return?
If you don’t already fill out a tax return and the income you earn from renting out a room is below £7,500 (around £625 a month) the exemption is automatic and you won’t need to tell HMRC.
However, if the amount you earn is above the threshold, you do need to let the tax office know.
What should I consider if I’m self-employed?
If you’re self-employed and usually fill out a tax return, it’s worth noting that the Rent a Room scheme won’t allow you to claim expenses for wear and tear, insurance etc. So any money you spend on decorating the room or fixing appliances will see you making a loss.
Are there any costs to consider?
Before taking in a lodger, consider how much it will cost you to get the room to an acceptable standard. Do you have all the furniture already? If not, how much will it cost you?
There’s no legal definition of what constitutes a furnished property, but at the least, most tenants would expect a bed, wardrobe and chest of drawers in their room.
If you do want to give your lodger more furniture, perhaps consider advertising the property without it first to see how you get on. You might find a great lodger without having to spend money on desks and chairs etc. Some lodgers may even prefer a bit of extra space in the room so they can add their own items.
Should I interview potential lodgers?
100% yes. Most lodgers will want to visit your home before agreeing to rent your spare room, so you may as well interview them while you have the opportunity.
When arranging the viewing, ask your tenant if they can spare an extra 20 minutes for a chat and a brew. They’ll probably be just as keen to learn more about you as you are to learn more about them.
What do they do for a living?
Ask potential lodgers about their job. It’s wise to find out their working hours and ensure they earn enough to pay the rent.
What do they do for fun?
Finding out about their interests can make it easier to gauge whether you’ll get along. Do you have much in common? You don’t have to share the same interests. Opposites can sometimes attract and make for a fun and fulfilling experience. But if they love partying but you’re an early to bed, early to rise kinda person, you may clash.
How clean and tidy are they?
This is a good time for some self reflection. Be realistic when it comes to how clean and tidy you are. It’s unfair to get a tidy lodger who wants to live in an immaculate home if you’re a bit of a scruff ball yourself.
This is something I’d struggle with. I’m not a tidy person but I also wouldn’t consider my living habits unclean. I’ll leave stuff all over the flat, but I’ll also do an intensive deep clean of the flat once or twice a week. I’d have to improve my tidiness or at least be honest about this before letting someone pay to live with me.
Will they be having overnight guests?
You can also ask if they have a partner who will be staying over.
Chances are you don’t want to wind up with two lodgers when you were only expecting one. By being honest at the start you can make sure you’re on the same page.
I think what I’d do is set an informal limit to the number of nights a friend or partner can stay over.
Alternatively, you could say “I’m happy for your partner to stay over two nights a week as long as you stay at your partner’s for two nights a week too.” When your lodger moves in, you don’t have to be really strict with these rules or keep a track of it in a diary, but it’s good to manage expectations from the outset.
Explain what will be included in the rent
Make it clear which bills (if any) will be included in the rent. Most lodgers prefer bills to be included because it means their outgoings will be the same every month and they won’t be hit by higher living costs in winter. This approach can also prevent the whole: “Well I was on holiday for a week in August so I don’t think I should have to contribute to bills that week” argument.
If you’re including all bills in the rent, it’s not unreasonable to lay out guidelines in the contract to prevent your lodger taking the piss. You can ask that they don’t spend half an hour in the shower every day or constantly leave the heating on when neither of you are home.
This could also be a good time to think about inexpensive but thoughtful little touches you could throw in. For example, you could offer to add your lodger onto your Netflix or Spotify* account at no extra cost to them. This won’t save them tons of money, but it’s a nice gesture and will give them fewer bills to think about overall.
Some live in landlords choose to provide additional services such as meals and laundry, but this isn’t essential and it may even put some lodgers off.
*You don’t need to be related to share a Spotify Family account. You just need to live at the same address.
What are my legal responsibilities when taking in a lodger?
To comply with Gas Safety Regulations, you must get your gas appliances inspected before the lodger moves in. You must get them rechecked once a year after that.
Not having gas appliances checked by someone on the Gas Safe Register is a criminal offence.
Smoke alarms aren’t a legal requirement, but you should have one for safety.
Furnishings must comply with fire safety regulations. This means all furniture must be fire safety compliant and carry proper labels. If you’re using new furnishings this shouldn’t be a problem, but double check anyway.
You must also carry out a Right to Rent check.
How do I carry out a Right to Rent check?
As of February 1st 2016, the law requires everyone renting out property in England to check whether their tenants are legally allowed to live in the UK.
Not only does this apply to landlords renting their properties out to tenants, the same goes for live-in landlords too.
The law applies to all types of agreement, whether they’re written or verbal. Not having a tenancy agreement doesn’t exempt you from having to check.
You can be fined up to £3,000 for renting your property to someone who isn’t allowed to rent in England.
Within 28 days of the start of a new tenancy, you must check:
- Which adults (over 18) will live at your property as their only, or main, home. It doesn’t matter if they’re named in the tenancy agreement or not.
- Original copies of the documents that allow them to live in the UK.
- That the documents are genuine and belong to the tenant. The tenant has to be present for this.
- Make and keep copies of the documents and record the date you made the check.
Should I create a lodger agreement?
When a live-in landlord takes in a lodger, there’s generally fewer legal requirements than when a live-out landlord rents out a whole property.
However, it’s still wise to create a written lodger agreement before renting out a room in your home. This can allow you to set out some ‘house rules’ from the outset and reduce the likelihood of confusion in future.
I’ve read so many posts on forums from disgruntled landlords and lodgers that could have been avoided had a lodger agreement been created at the start.
For example, in one thread on the Money Saving Expert forum, a user complained that his landlord was unhappy about his girlfriend staying over at the weekend and insists that the living room is her own private space, despite not mentioning this initially.
Will taking in a lodger affect my council tax?
If there are already two or more adults living in the property, taking in a lodger won’t change your council tax.
However, if you’re currently living alone, taking in a lodger could see your council tax increase. This is because single occupants often get a council tax discount of 25%. Once there are two or more occupants, this discount is no longer available.
There are some exceptions to keep in mind. You’ll still qualify for your discount if your lodger is:
- In full-time education
- Already paying council tax somewhere else (this can apply to Monday to Friday lodgers) or
- Receiving certain benefits
Before taking in a lodger, contact your local authority to find out whether your council tax will change.
What’s the best way to find a lodger?
Spareroom.co.uk is one of the most popular websites for those looking to get a lodger. You might choose to use other websites instead or advertise on social media. Asking friends to recommend people they know can be a great way of finding a trustworthy lodger. This can be a particularly smart approach if you’re concerned about safety.
When advertising your property, include lots of photos of the room in your ad. Make sure it’s clean, tidy and free of any personal items. Also include photos of any rooms in the property that your lodger will have access to, such as the kitchen, bathroom and living room.
What do I do if I get a lodger and want them to move out?
If you decide you no longer want your lodger to live with you, ending their occupancy depends on the circumstances.
Here’s what Spareroom.co.uk has to say:
“Ending a lodger’s stay depends on their setup. If they live in your house and share a kitchen, bathroom or living room with you or a member of your family, they’re an ‘excluded occupier’. This means you don’t have to go to court to evict them, you just have to give ‘reasonable notice’ to leave. This is usually the length of the rental payment period, so if they pay rent weekly, you’ll need to give them a week to leave. This notice doesn’t have to be in writing.
“However, if your lodger lives in your house but doesn’t share any living space with you or your family, they’re likely to have basic protection and you’ll need to get a court order to evict them. You’ll need to give them a written ‘notice to quit’, and the notice period will tend to be around 4 weeks.”
However, if you and your lodger have been getting along just fine and there have been no serious problems, giving them more notice can be a really nice gesture and can help your lodger find a new place to live.
What do I do if I have issues with a lodger
If you’re experiencing issues with your lodger, try having an informal chat with them about it first. You’d be surprised how many problems can be solved with honesty and compassion.
If that doesn’t work, the step is to write a letter voicing your concerns and asking them to change their behaviour. I know this seems like a big escalation, but if the alternative is arguing back and forth, what choice do you have?
Keep the letter short and factual. Don’t make any threats or say things you may later regret. Keep a copy of what you’ve written.
If your lodger doesn’t take any notice of your letter, it may be time to write a second, more formal letter, warning that if things don’t change, they will need to leave.
On most occasions, the lodger will leave on or before the date stated in the notice you’ve given them. Few people want to live in a hostile environment, after all.
However, if they do refuse to move out you might have to proceed with eviction.
How do I evict my lodger?
A few days before the notice period expires, ask your lodger when they’ll be leaving.
If your lodger won’t leave, you might have to refuse them entry to your home. You may need to change the locks when they’re out and refuse to let them back in. If they insist that they want to enter the property just to collect their things, arrange for someone else to be present.
You must not pack your lodger’s belongings yourself and you must not force them out of the property.
If you find yourself in this situation, it’s wise to get legal advice.
What do I do if my lodger leaves items behind when they move out?
If your lodger leaves items behind after moving out of the property, you cannot dispose of the items or sell them unless you’ve formally asked your former lodger if they can remove them first.
Give them a list of the items and an idea of how long you’re willing to hold onto them before getting rid. 14 days is usually a reasonable amount of time.
Ideally, it’s wise to send this list via post using recorded delivery so you have evidence. However, if you don’t have their new address, text or email will do. Alternatively, you could instruct a tracing company to track them down. Some tracing companies operate on a no trace no fee basis so you won’t be charged if your ex-lodger isn’t found.
If you get no response within the time period stated, you can sell, donate or dispose of the items.
Keep a careful record of the process, from emailing to using a tracing company, just in case the lodger decides to come back and sue you for compensation.