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Taking a Lodger

A lodger is someone who is renting a room and sharing facilities with a resident landlord. Inviting someone into your home as a lodger is a big step that needs careful consideration of all the facts. The purpose of this leaflet is to present the positives and negatives to enable you to make an informed decision.

You maybe considering taking in a lodger because of changes in the Housing Benefit rules in April 2013 that mean you are or will be under-occupied. Other people with a spare room may be seeking an additional income or feel the need for some company as they are now living on their own.

 

What are the positives?

  • Having a lodger occupying a spare room may mean that for the purposes of Housing Benefit you are not under-occupied and your housing benefit is not reduced.
  • Providing affordable accommodation for a single person or couple helps with the housing shortage and helps reduce homelessness.
  • There is no affect on non-means tested benefits such as Disability Living Allowance (DLA), Personal Independence Payments PIP), Attendance Allowance (PIP), contribution based Jobseekers Allowance (JSA) or Employment and Support Allowance (ESA) State Retirement Pension (SR).
  • Taking in a lodger can provide an income over and above any welfare benefits being received as well as resolving under occupancy reductions.
  • Having the right lodger for you can reduce loneliness, feelings of isolation and increase a sense of security and safety. Remember you are inviting a stranger into your home and to some extent into your life which can be positive or negative but is a commitment on both sides.
  • Remember you are inviting a stranger into your home and to some extent into your life which can be positive or negative but is a commitment on both sides.

 

What are the negatives?

  • Taking a lodger may affect your insurance policy. Check with your provider and ensure you are covered, you may need to pay an additional premium.
  • As the tenant responsible for the property you are also responsible for any actions or behaviour of anyone in your property. Therefore if your lodger is behaving unreasonably and causing a nuisance with anti-social or illegal behaviour you could place your own tenancy at risk.
  • Your lodger may not have the same respect for your property as yourself and even the little things like leaving the top off the toothpaste can get annoying.
  • Your lodger may fail to pay the rent regularly especially if their circumstances change.
  • Once occupying a room it can be very difficult to get a lodger to leave willingly.

 

How do I evict a lodger?

As a resident landlord you only need to provide your lodger with ‘reasonable notice’ which is normally considered to be the same period as the rental period. Therefore if your lodger pays weekly you only need to give one week notice when asking your lodger to leave.

If your lodger does not leave at the end of the notice period you can go to the County Court to obtain a Possession Order. Having obtained a Possession Order your lodger may still not leave. You will then have to return to court to obtain a bailiffs warrant and implement it. This can be a costly and unpleasant exercise. Your landlord is not responsible for evicting your lodger.

Using force or intimidation to remove a tenant or lodger is a criminal offence.

 

What is the affect on Welfare Benefits?

The rent received from a lodger would affect any means tested benefits such as Income Support (IS), Pension Credit (PC) and Income based Jobseekers Allowance (JSA) or Employment and Support Allowance (ESA).

Where just accommodation is being provided there is a £20.00 per week disregard of any income from a lodger for all means tested benefits. Therefore if the lodger is paying £60.00/week only £40.00 will be deducted from any means tested benefits being received.

If providing board and lodging, which is a room plus a meal e.g. tea & toast for breakfast, there is the £20.00/week disregard and only 50% of the remainder is counted as income. Therefore if the lodger is paying £60 per week only £20.00/week would be counted as income reducing any means tested benefits by only 20.00/week. If you are claiming Housing Benefit you would still receive full entitlement if receiving any amount of any means tested benefits such as IS, JSA, ESA, Pension Credit Guarantee, as these are ‘Pass-porting Benefits’.

If not receiving a ‘pass-porting’ means tested benefit qualifying you to HB in full, housing Benefit and Council Tax Support will be reduced the same as other means tested benefits.

If claiming Universal Credit income from a lodger is disregarded in full but there is no room allocation so the housing element will be reduced by the 14% or 25%.

Single person discount for Council Tax would not apply where there is more than one liable adult in the property reducing any Council Tax Support. There are some people who are disregarded for the purposes of Council Tax e.g. Students contact your Local authority for detailed advice.

Homeowners and tenants who let furnished accommodation and take in a lodger are exempt from paying income tax on rental income of up to £4,250 a year under the ‘Rent a Room Scheme. Because it’s tax free, it also won’t affect the amount that you receive in Child Tax Credit or Working Tax Credit.

 

Step by step guide to renting out a room

  1. Consider all the issues carefully and discuss with family or friends.
  2. Contact your landlord and gain permission in writing – failure to do so may breach your tenancy.
  3. Get your property rent ready making sure your home and the room you want to rent out is safe, fire proof and that you have general safety sorted.
  4. Advertise your room. There are lots of ways you can advertise your spare room. Try putting a notice in your local shop or go online and advertise it for free through one of the many websites available
  5. Find someone that’s right for you. Letting someone live in your home is a big step, so it pays to be prepared. Take your time to talk to the people viewing your property to make sure they are a good fit for your home. It is also good to lay down your simple ground rules early, so you both know what to expect.
  6. Get references. Ask your new lodger if they can provide references from an employer or previous landlord. This can give you extra peace of mind that the agreement you are entering into is likely to be alright.
  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. There are many guides to lodger agreements available through bookshops and stationers.

 

Safety tips

Always have a friend with you to interview new lodgers. Keep valuables locked away out of sight during the interview. Make sure you use the interview as an opportunity to ask about anything that concerns you.

 

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    Christchurch, Dorset, BH23 4GE
  • 0300 777 7837
  • contact@sovereign.org.uk
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