Letting out a room in your home all comes down to finding the right lodger. There are several steps that you need to follow to make sure you are complying with the law. This article will guide you through the process from preparing your home to finding potential lodgers.
Get the necessary consents
Before looking for a lodger, you need to know that you can lawfully let out your spare bedroom. For instance, if you are renting the property that you’re living in then you will have a superior lease, and need to get permission from the superior landlord or risk breaching your own tenancy agreement. Alternatively, you could be a leaseholder under a shared ownership scheme, in which case you need to get permission from the housing association or private developer who owns the other shares in the property to take in a lodger. Even if you are the sole owner of the home, there are other parties who you may need to get consent from such as mortgagors, lenders and the insurers who provide you with home insurance. You should also check with any adult who has been living in the property with you as partner or spouse because they may have acquired a legal interest in the property. If you receive any benefits, check with your local benefits agency what the implications are if you take in a lodge. If you will be having more than 2 unrelated lodgers living with you in the property then your home may become a House in multiple occupation (HMO). HMOs impose constrains on the size of the room as well as other obligations. You can learn more about what these obligations mean. Finally, you should check if you need to pay tax on rental income from lodgers and whether taking on a lodger will affect your council tax. Schemes like the government's rent a room scheme allows you to earn tax-free income up to a threshold of £7,500 per year from letting out furnished accommodation in your home.
Prepare the property
The property must be up to a certain standard before you can welcome a lodger. It must be fit for human habitation, which means that it must be safe and free from any health hazards. All the furniture, furnishings and upholstery that you provide must meet the current fire resistance requirements. Note that furniture manufactured after March 1989 will comply with these regulations and most will even have a label to prove. All electrical, gas appliances and fire alarms installed in the property must be in safe working order. You can also prepare house rules to share with the prospective lodger which will detail what they can or can't do in your home and if there are any conditions attached to the use of shared areas such as the kitchen or living room. If you are letting out a furnished room you may wish to purchase a home contents insurance policy.
Find the right lodger
The nature of the room and the location of the property will determine the type of lodger who will suit you. Some lodgers are looking to live in the property as their main home, while others only want to reside there for a few days a week depending on their work schedule. Some lodgers want services such as breakfast and cleaning to be provided, while others prefer to be left alone altogether. Many lodgers are specific in what amenities or facilities they are looking for, so it will be helpful for you to be clear about what you have to offer and what your expectations are. You can place an advert for your room directly on a marketplace like rightmove, spareroom, easyroommate or gumtree.
Right to rent
Once you have found a suitable lodger, it is a legal requirement to check the immigration status of a prospective lodger to see whether they have the right to rent property in England. If they fail this test, the policy is for you to deny them lodgings,
Create a lodger agreement
Unlike a tenancy agreement, a lodger agreement grants a license to occupy rather than lease. This means that the lodger will not be granted exclusive possession of the room, which will remain in your control and possession. To create a simple but legally valid lodger agreement, many landlords use end-to-end solutions like Legislate for creating and managing their lodger agreements and related documents on no legal budget. This reduces the time and number of errors in the contract creation process whilst guaranteeing that the templates are always up-to-date.
Manage the licence
As a landlord you will generally be responsible for repairs unless the damages have been caused by the lodger themselves. You will also be responsible for the maintenance of common areas, such as stairways and hallways. If your property is an HMO, you will have additional duties. You will need to ensure the property is kept to the appropriate standards discussed above e.g. by arranging a gas safety check every year.
End of the licence
Depending on the terms of the lodger agreement, you will need to give a notice to terminate in order to end the license. If your contract is silent on the notice period, then you must give the lodger reasonable notice. Notice is usually reasonable if it is at least as long as the rental period, but the lodger agreement may specify a different length. Before the lodger has left the property, go through a final inspection with them to make sure that the property is in the same condition as when the let began, minus general wear and tear. Cleaning fees are banned but the deposit may be used to cover the cleaning costs if the property is not to the agreed standard on post-tenancy inspection.
Finding the right lodger requires a lot of effort, and while it may be tempting to save time at the contracting stage, your agreement must be complete and up-to-date and that you have satisfied your legal obligations. A failure to do so will compromise your rights and protection as a licensor.