When creating a lodger licence agreement for a room in your furnished house, it might be tempting to avoid legal fees and download the first free contract template you find online. However, creating legal documents without prior legal expertise can be risky. Is the template up-to-date? Does it provide sufficient protection to you and your home, or the lodger? Did you inadvertently download a tenancy agreement? In this article, Legislate will provide a more transparent way to create your lodger agreements in England and Wales on no legal budget.
What is a Lodger licence agreement?
A lodger licence agreement is a contract which allows a live-in landlord, also known as a licensor, to rent out a spare room in their main home to a lodger in exchange for a licence fee. A licence fee can be paid daily, weekly or monthly and the lodger licence can be for a fixed term or continue on a rolling basis. As the lodger is sharing facilities and common areas with the licensor in their main home, they are treated as an excluded occupier which means they do not have exclusive possession of their room and they have less rights than a tenant. A lodger licence can be terminated by either the lodger or live-in landlord by giving reasonable notice which is usually proportionate to the licence fee payment frequency.
What else should a live-in landlord know before taking on a lodger?
Before taking on a prospective lodger, live-in landlords should know their responsibilities and understand how a lodger is different from a tenant in order to properly weigh the pros and cons of renting out a furnished room in their principal home to a lodger. Live-in landlords should also be aware of the tax-free benefits of the rent a room scheme and the potential implications on their council tax bills when taking on a lodger.
What are the key terms of the lodger licence agreement?
There are a number key clauses in a lodger licence agreement which need to be included in the rental agreement to provide the resident landlord and lodger with sufficient protection. Below are some key terms you need to include in your lodger agreement template:
- Who is the live-in landlord and lodger?
- Which bedroom in the furnished house will be the lodger's room?
- What is the licence fee amount and payment frequency?
- What is the notice period for transferring the lodger to a new room or terminating the licence?
- Does the licence fee include utilities, broadband and WIFI?
- Which common parts of the property does the lodger have access to? E.g. living room, kitchen
- Confirmation the licensor has the appropriate electrical and gas safety certificates for the electrical and gas appliances
- Is there an inventory and are there House rules?
- Appropriate wording to clarify that the agreement is a lodger licence and not an assured shorthold tenancy