With interest rates and mortgage rates continuing to rise, taking in a lodger can be an attractive option for homeowners looking to make a regular monthly income. However, it is important to approach the situation cautiously.
There are a number of points that you need to be clear on and you will need to check that you are not in breach of any terms and conditions that you have agreed to, for example in respect of your mortgage and home insurance. You will also need to make sure you do not inadvertently create a tenancy, as this will give the tenant certain rights and could mean it is hard to end the agreement.
What is a lodger?
The difference between a lodger and a tenant is an important one. It is possible to create a tenancy even if the agreement you have is only informal, and once you have a tenancy, you could find it difficult to terminate the tenancy and evict the individual, should you want to.
Similarly, calling the agreement a licence or calling the person a lodger is not enough to avoid creating a tenancy.
The main difference between a tenant and lodger is whether the individual has exclusive possession of any part of the property. If they do, then it is generally the case that a tenancy has been created. If the property owner lives at the property and has the right to enter any of the rooms, then it is more likely that a licence and not a tenancy is in place.
If you can go into the lodger’s room to inspect it or to clean and if you could move the lodger to a different room if you wish to, then they will usually be considered to be a lodger and to occupy the property under a licence.
Obtain your lender’s consent if necessary
You should check the terms of your mortgage if you have one to see whether you are permitted to have a lodger. The lender may require you to obtain their permission first.
If the property is leasehold, such as a flat, you will probably also need to obtain the consent of the freeholder.
Check your home insurance
You will also need to advise your insurer that you intend to take in a lodger. This could mean an increase in the premium.
Consider a lodger agreement
You can consider whether you wish to put a lodger agreement in place. This is not essential, but it can be helpful to establish the rules from the start and can also ensure that you have evidence showing the details of the agreement, should a dispute ever arise.
Details that can be included are:
- What parts of the home the lodger can use
- Whether a deposit is payable
- How much rent will be paid, how frequently and when it will fall due
- How bills will be dealt with
- Whether the lodger will be required to pay towards repairs
- How long the agreement is for
- Whether food is included
- Other rules, such as what hours the lodger can keep, whether they can have guests, permission for the owner to enter the lodger’s room to inspect it and liability for lost keys or damage to the room
- How the agreement can be ended, to include a notice period
If you are considering taking on a lodger, you can have the legal agreement professionally drafted. This will give you the best chance of avoiding misunderstandings and disputes.
Contact us
If you would like to speak to one of our expert property lawyers, ring us on 0333 3055 189 or email us at info@lpropertylawyers.co.uk
