Are these clauses in your free licence to occupy template?
“FREE LODGER AGREEMENT [Click Here]!” Free contract templates. The internet is filled to the brim with them, and despite being aware of all their shortcomings, we can’t help sift through several sites in hopes of finding the perfect one. Their appeal is clear: these contract templates are seemingly free, easily available and claim to be valid. Whilst a free template might seem better than not having a written agreement the first place, they might not be appropriate for your room rental or contain illegal clauses which can be dangerous for you and your lodger. From studying the most popular lodger agreement templates available online, here are reasons you should reconsider using that PDF license to occupy template currently sitting in your downloads folder for your prospective lodger.
Health and safety
Even though a licensor may not be under the same duty as a landlord to maintain the property to a certain standard, they still owe the lodger a room and home which is safe and free from any health hazards. A lodger agreement should therefore detail the steps taken by the licensor to ensure that the property is fit for human habitation. This includes ensuring that all electrical appliances provided by the licensor are in safe working order, and that the furniture installed in the property meet the current fire resistance requirements. Moreover, under the Gas Safety (Installation and Use) Regulations 1998, a licensor must arrange for an engineer to carry out a gas safety check every 12 months. None of the lodger agreement templates we studied mentioned these duties, thereby making it difficult for a licensor to know exactly what is legally and contractually expected of them.
Protection from Eviction Act 1977
A lodger agreement is not an assured shorthold tenancy agreement and a lodger is not a tenant. As a result, a lodger has less legal rights than a tenant because a lodger falls under the category of excluded occupier. This means that they have limited rights to remain in a certain property and are excluded from the protection afforded to tenants under the Protection from Eviction Act 1977. A good lodger agreement will identify the licence being in through it as being an excluded licence under section 3A(2) of the 1977 Act. It is very important for the lodger to understand when they read and sign the contract, that they can be made to leave the property without a court order. Lodgers are only entitled to reasonable notice, which can be as short as their rental period. Unfortunately, the most popular lodger agreements available online do not explicitly recognise the status of the license being granted.
Notice Periods
A resident landlord must give the lodger reasonable notice to end the licence agreement which is usually a function of the rent payments. For example, 1 or 2 weeks' notice for lodger agreements which are rolling weekly and 1 or 2 months for monthly licence agreements. The live-in landlord can also give reasonable notice to the lodger to relocate them to a different room in the property as they do not have exclusive possession of the property. The room relocation must be clearly stated in the rental agreement in order to avoid confusion. If the lodger has not vacated their room at the end of the agreement, the live-in landlord can evict the lodger without a possession order because the property is the live-in landlord's main home and the lodger does not have exclusive possession.
Exclusive possession
The courts have explained that the cornerstone of the lease, and thus its defining feature is exclusive possession. This is the right to occupy a particular property (or part of a property) and exclude all others, including the landlord, from it. When renting to a lodger, the licensor necessarily retains control and possession of the whole property including the lodger’s room. This means that the licensor can lawfully enter the lodger’s room at any time without permission, and the lodger does not have the right to exclude them. Many lodger agreement templates on the internet do not address exclusive possession altogether, and those which do address it in a way that resembles a tenancy and not a license to occupy by purporting to give the tenant exclusive possession of the room.
Deposits
Unlike a tenancy deposit, there is no cap on the amount a resident landlord can collect as a deposit or a legal requirement to protect the deposit with a tenancy deposit protection scheme. If a licensor collects a deposit it is therefore important that the lodger licence agreement details the amount and after how many days they will return the deposit.
Council Tax
Council tax is usually the responsibility of the homeowner and should not apply to the lodger if they are staying in the property for a short fixed term. However, if a lodger is staying for a longer period in time, it might affect a resident landlord's council tax status if they were previously claiming a single occupant discount. Live-in landlords can however claim a tax free allowance under the government's rent a room scheme which might mitigate the affect of the discount loss.
Common parts
A lodger will have access to common areas of the property which can include bathrooms, a kitchen, living room and living space. It is important that these parts of the property are identified in the lodger agreement to avoid confusion around shared areas. A licensor might also provide house rules so that the lodger understands what they can or can't do within the property (e.g. play music at unreasonable times) and the process for inviting guests or seeking repairs from the licensor.