House Share/ Flat Share (Lodger)
This information is for those people who own or rent a property and wish to invite a lodger into their home. The lodger will have the use of a bedroom in the home for himself, and will have seperate or shared use bathroom, kitchen, living room and other communal areas with the landlord. This information does not cover tenants who share a property together,or where the property owner lets rooms to different people, but does not live there himself.
There are many benefits to letting a spare room to a lodger, not least financial. In the past, taking in lodgers was common place and is now becomming popular once again as many live-landlords,young professionals or families look to make some extra cash from the spare rooms in their houses or flats.
Along with the financial benefit of rent, the other surprise is that the income from renting out a room in your home is usually tax free, thanks to a government incentive to encourage people to take in lodgers.
The rent-a-room scheme allows you to let part of your home and generate a tax-free income of up to £4,250 a year. This equates to a monthly rent of just over £350.
It can be a single room, or a whole floor of your house, as long it’s furnished, and not a separate flat that you rent out (in which case you would pay tax in the normal way). You can also include an amount for laundry and meals.
If the property is in joint names, you can simply split the allowance.
The government doesn’t distinguish between homeowners and renters. As long as your landlord agrees, there’s no reason why tenants shouldn’t benefit by taking in a lodger too.
Tips on Choosing A Lodger
Last year Zurich Financial Services carried out research on lodgers and found that 75 per cent of people do nothing at all to vet their new housemate before ushering them through the front door.
With that in mind, here are some guidelines from MondaytoFriday.com on choosing a lodger:
1. Reference your prospective lodger. This will provide a credit check and affordability report and a previous landlord and employer reference.
3. You can check whether the individual has a criminal record.
4. Set up interviews with prospective tenants – find out about likes and dislikes; how much time they’ll spend in the house; what work they do; how they spend their evenings; and explain house rules.
5. Remember, your property must be safe; care must be taken with regard to fire safety, electrical safety, gas safety (if applicable), furniture and furnishings and the general safety of the building (inside & outside).
6. You should inform your insurance company that you are letting a bedroom and ask them what additional cover you need. Also inform your mortgage company
7. Have a written agreement between you and your lodger. This should include: rent amount and payment details; which rooms/facilities the lodger is entitled to use; services you agree to provide; any share of household bills, how long until the payment amount is reviewed and house rule; notice period. For a House/Flat Share Agreement CLICK HERE
8. Request a minimum deposit of one month’s rent in advance. This can be used against any unpaid rent/bills or in case any damage is made to the property.
9. Around 60% of the usual week-long rental is usually deemed appropriate for weekday only tenants.
10. Keep any valuables such as passports, credit cards and bank statements out of sight. With fraud being an increasing problem, you can never be too careful.
Always remember that either party can terminate the agreement at any time (given the indicated notice period) and that many people let to lodgers very happily!