Thinking of taking in a lodger?

Renting a room in your home out to a lodger is a great way to earn extra income – up to £4,250 a year tax-free – and can also provide you with extra security, since they may be home when you are out. For people who would otherwise live alone, a lodger can be a good companion and can help with the bills too.

This slightly less formal and flexible arrangement is appealing from the lodger’s point of view compared to renting a property outright. It is also cheaper and maybe more suitable to someone who doesn’t want to stay at the property all the time.

Drew Wotherspoon, Marketing Director of Towergate Insurance Direct says:

“10 years ago lodging was seen as something aimed at the young but as attitudes and circumstances have changed, this perception has changed too. Rising house prices, young people graduating with higher debt levels and people tending to wait longer to make big life decisions such as marriage, family and buying a property has all resulted in more people either sharing for longer or taking in lodgers.”

But not everyone is cut out to be a live-in landlord. If you are considering taking in a lodger, you may wish to consider the following from Towergate Insurance.

What’s the difference between landlord and lodger?

  • The main difference between being a landlord and having a lodger is the greater freedom you have to end an agreement. If you have someone in your home and the relationship doesn’t work out, or your personal situation changes the landlord retains more rights to end the tenancy agreement.
  • There are still differences in the type of agreement though. These depend on whether there is shared space within the property or the tenant has private use of at least one room. The exact legal rights of each party depend on these arrangements.
  • One of the first things to check before you take a lodger is whether you’re allowed by the owner or lender.
  • If you are a Leaseholder, you may have conditions to the lease which prevent or dictate the type of renting you can do within the property.
  • If you rent a property privately, you’ll need express permission from the landlord before taking a lodger. But if the tenancy is with your council you may be automatically allowed to rent out a room to a lodger.
  • If you own your property with a mortgage you will need to advise your lender about the change in circumstance.

Council tax

  • Don’t forget that if you lived alone before taking on a lodger you may have been benefiting from a single person discount on your council tax. This will no longer be applicable and you will have to inform your council of the change in occupancy.

Landlord Insurance

  • Most standard home insurance policies will not automatically cover lodgers. This means your contents insurance, or even your buildings insurance could be made invalid from a claim. Although it is not likely to incur an increase in your premium via a specialist insurer it is vital that it is noted on your policy.