Lodgers - Getting it Right

Having decided you want to take in a lodger it's important to do your preparation and make sure you've thought everything through. Whilst you can get rid of a lodger if you find out they (or just having a lodger at all) won't work for you, you can put yourself in a strong position to start with, which should eliminate most of the worry. Follow our step by step guide to getting ready for a lodger and you'll have covered all the important points and be in the best possible shape to make it work.

Checklist

Having decided to take in a lodger you'll need to plan ahead, so here's our step by step guide to help you work your way through the process with minimal fuss and make sure you've got everything covered in advance. Points marked with an asterisk (*) are absolutely essential - you shouldn't ignore any of these. Those with the 'recommended' symbol ® are points we'd strongly advise you to consider.

  1. * Check with your mortgage lender, landlord or local authority (if you're in a local authority owned property) to make sure you can legally take in a lodger. Unless you own your property (and the freehold) it's always best to check that you're OK to get a lodger to save any surprises later on.

    • If you own your property check with your mortgage lender
    • If you rent from a landlord check your tenancy agreement
    • If you're a local authority tenant check with your local authority
  2. * Inform your insurance provider to make sure you're still covered and so you can let your lodger know if they'll need their own insurance. As landlord you're required to have buildings insurance (and you should have this anyway) but you're not obliged to insure your lodger's personal possessions. If you're happy to include them in your contents policy then that's one option, however, there are plenty of room contents insurance policies around these days which your lodger can use to cover his or her belongings so that's probably easiest.

  3. * Inform your local benefits agency if you receive any benefits. It's almost certain your benefits will be affected by taking in a lodger so find out in advance what the result will be.

  4. * Let the council know if you're paying reduced council tax for single occupancy. If you pay reduced council tax then your lodger will affect this and you'll almost certainly be liable for the full amount. You can pass this on to your lodger in the rent of course, or as part of the bills they pay. If your lodger is in full-time education or on a government youth training scheme they may be exempt from council tax liability so double-check with your local authority.

  5. ® Get the room ready. Make sure you have all the furniture you need and everything is ready for a lodger. Remember, if you're going to use the Rent a Room Scheme to earn tax-free income, you must provide a furnished room.

  6. ® Decide in advance what the terms and conditions will be. It may seem unnecessary at first but will avoid most nasty problems before they occur and give you a clear point of reference if you run into any difficulties. This includes you deciding in advance which bills are included in the rent and what else your lodger will pay for.

  7. ® Get a Lodger Agreement in advance so you're both covered. This doesn't need to be a lengthy or complicated document but should set out the basic terms and conditions of the tenancy, including what either of you will need to do to terminate the agreement. You can buy an agreement from Lawpack

  8. ® Check local rents so you're setting a fair rent for what you're offering. There's no point in overpricing your room and struggling to find a lodger. Use SpareRoom to see what other people are asking.

  9. * Get your gas appliances checked by a Gas Safe Registered professional. You can find a gas installer (as they're know) or check whether someone is registered at Gas Safe Register's website

  10. ® Advertise your room. Go to SpareRoom's 'place an ad' page and place your listing. Don't forget to check the 'room wanted' ads and sign up for alerts so you'll be aware of anyone looking for a room in your area.

  11. ® Viewings. It's good practice to take your time with viewings, this gives your potential lodger a chance to ask any questions but also gives you a little more time in their company to see what you think of them. It's important not to just accept the first person that wants and can afford the room. If someone looks round and says 'yes' you can reasonably tell them you've got a few other people coming to see the room and you'll let them know. As you're going to be letting a stranger into your home it's worth taking as much time as you feel you need. Tell them when you'll let them know by and make sure you follow up on this. Why not invite anyone you get on with to the local pub for a quick drink after the viewing. It'll give you chance to get to know them a bit in a more relaxed situation and see if you think you're compatible. This is a particularly useful technique if you're renting out a room and there will be just 2 of you in the property as it becomes even more important to find the right lodger.

  12. ® Credit checks. Once you've found a prospective lodger you may want to use a credit checking facility to make sure they're OK. Not everyone does this with lodgers but there are plenty of services available should you wish to.

  13. ® Signing contracts, deposit and agreeing terms and conditions. Setting out the details of who is responsible for what in advance is highly advisable to avoid any later problems. You should have prepared for this already (see point 7) so all that remains is going over the agreement with your lodger and both signing it. Make a sure you take the first month's rent up front − this is standard procedure so your lodger should be expecting it. It's also standard to take a deposit (usually equivalent to a second month's rent) at the same time to cover you in the event of any unpaid rent or damages at the end of the tenancy. Unless you have good reason the deposit should be fully refunded at the end of the term so you should make sure it's available whenever your lodger wants to move out (so don't spend it thinking you'll replace it at a later date −it's not your money).

  14. ® Getting your lodger to set up a standing order for the rent. This takes the personal element out of collecting the rent and means you can both budget more effectively. It also provides a record of all the money the lodger has paid to you, which will be invaluable in the event of any disputes.

  15. ® Lodger moves in. It's a good idea to be available for your lodger on the day they move in, don't just give them a key and go out. They're bound to have questions on the first day so make it easier for them to move in and feel settled - don't stand around and watch them unpack but make sure they know your door is open if they need you.

  16. * Inform your tax office if you earn over £7,500 per year from your lodger. If you fill out a tax return anyway make sure you include the income.