21st Oct, 2020

Thinking of renting out a room? Here’s what you need to know about taking on a lodger

Stratford Editorial 9th Sep, 2020

Renting out a spare room can be a great way to earn extra cash – but there are things you’ll need to consider. Lisa Salmon finds out more.

With increasing numbers of people losing their jobs as the pandemic takes its toll on the economy, there’s a growing need for additional income sources. And for some, that source might be as close as their spare room.

You can potentially make thousands of pounds a year – up to £7,500 tax-free in the UK under the Government’s Rent a Room scheme – by taking in a lodger. Take the right precautions and it can be a very easy way to earn money with additional benefits to boot, including potential friendship, help with cleaning, and even a live-in cat or dog-sitter if you go away.

That said, there’s still a few things you’ll need to think about carefully before taking on a lodger.

“You’re going to have someone you don’t know moving into your house,” says Matt Hutchinson, director of the room-renting website www.SpareRoom.co.uk.

“The best way of making sure everything goes smoothly is to remember that it’s not just a financial decision. Finding the right person is essential – that means someone who fits in with your lifestyle and routines.

“So make sure you discuss any potential sticking points up front. That could be the hours you keep, a conversation about cleaning, who’s responsible for what, whether they have a partner who’ll be staying over and if that’s OK with you. It’s always easier to avoid issues and conflict by discussing things before someone moves in, rather than later.”

Thinking about taking on a lodger? Here’s some of the things rental experts suggest you should keep in mind…

1. Rents vary widely

The income from renting a room can vary significantly, depending on the size of the room, facilities and location. “How much you can earn from your room really depends on where you live,” Hutchinson says. SpareRoom reckons the average rent for a room in London, for example, is around £725 a month, while a room in Northern Ireland or the north east of England averages under £400 per month.

2. Check with your mortgage and insurance providers

You need to ask your contents insurance provider if you can take in a lodger without it affecting your cover, warns Hutchinson.

“If your mortgage is leasehold and you don’t own the freehold, it’s also worth asking your mortgage provider if there’s anything in the mortgage terms stopping you from renting out a room,” he says. “If you receive benefits then they’ll almost certainly be affected too, so check in advance.”

3. Consider midweek rental

The obvious downside to renting out a room is that you lose your privacy and space to some extent. One way of finding a middle ground is to consider offering your room on a Monday to Friday basis, where the lodger lives with you during the week but goes home at the weekend. “This can work really well if you live in a big city,” says Hutchinson, “especially now more people have the flexibility to work from home, but may still need to go to an office too.”

4. Draw up an agreement

Sample lodger agreements can be found on the internet and are important to outline all the conditions of the rental, including what the lodger gets for their rent and any bills they’re liable for etc, thus safeguarding both the landlord and the lodger’s interests.

James Wood, senior policy officer at the National Residential Landlords Association (nrla.org.uk), explains: “Landlords should be careful that it’s the right agreement for them. The key thing is, if you live in the property and share living space, such as a kitchen and bathroom, with a lodger, you can set up an agreement to run from week-to-week or month-to-month, so you’re relatively well protected in case there are any issues.

“I wouldn’t recommend anyone give a long-term lodger’s agreement, as it’s not really in the interests of the landlord or the tenant. If you’re taking in a lodger, it’s typically quite a short-term arrangement anyway.”

5. Get references

Citizens Advice warns landlords to be aware of their own safety when meeting potential lodgers, and says it’s wise to ask for references – personal, or from previous landlords, an employer or bank, for example – and check them before signing a lodger agreement.

6. Get a deposit

SpareRoom advises landlords to take the first month’s rent up front, plus a similar amount as a deposit to cover you if there’s any unpaid rent or damages to your property or contents. Details of when the deposit is forfeited can be included in the lodger agreement.

7. Make sure the property’s safe

“The key thing for people renting out a room is getting a gas safety certificate and making sure the room is safe to live in,” stresses Wood. “They have a liability to anyone who’s going to occupy the property, so they have to make sure it’s safe.”

8. It’s not just about the money

“If you like the idea of sharing a house then there are definite advantages to doing it,” says Wood. “Companionship can certainly be a good thing – it’s always nice to have a bit of company. But primarily the advantage is the financial aspect.”

And while Hutchinson agrees the main advantage is the extra income, he adds: “There are plenty of other benefits too, ranging from the more obvious – like having company if you live on your own, to having a pet-sitter (or plant-waterer) while you’re away, or just feeling safer in the property than you would on your own.”

By Lisa Salmon, PA

Photo credit: iStock/PA

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