Take in a lodger... official MoneySavingExpert.co...

[MSE Lawrence]

This is a special discussion as part of the guide to

Boosting Your Income

The ‘rent a room’ scheme means you can take in a lodger to live in a furnished room in your home, and it has a special exemption meaning you won’t have to pay tax on the first £4,250 you make each year.

This is a huge tax break for most people and really ups the gain. Better still, as a landlord you’ll be expected to ask for a deposit and a month in advance, which means ready cash comes in quickly.

How much? You can take home £4, 250 without paying a penny in tax; if you've a desirable property and don't mind paying income tax on anything above this, you could easily add another £1,000.

Find out more: Read the Govt info on rent a room.

The "Take a Lodger" Great Hunt

I want to tap MoneySavers for their tips on finding the perfect lodger, dealing with deposits and being a good landlord. Where should you advertise? What do you need to provide, eg, duvets, food etc?

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[Murrell]

Please note that most insurance companies won't touch you if you have a lodger and will exclude the lodgers room from the insurance.

Thanks
Sandra

[sec79]

I have rented out my spare room to lodgers, and yes some companies won't isure you, but quite a few will. You charge the lodger a bond to cover any breakages etc. Their stuff is not covered but they can always take out insurance fir their items. You are not covered for accidental damage, that is the only downside.

I let the insurance company know when I have a lodger, the premium does not change.

I'm with Norwich Union, and have been with other insurance firms whilst having a lodger.

[Bogof_Babe]

If someone takes in a student for example, under the rent-a-room scheme, I believe you can only charge up to something like £84 a week without incurring tax liability.

Two questions: (1) Could you have two students, if you had two rooms, for £42 each, or is the scheme restricted to one lodger only? (2) If you feed them, are you allowed to charge extra for that?

I'm not thinking of doing it myself at the moment, but if ever I was left on my own it is something I might consider.

[Browntoa]

as many people as you like up to the tax threshold

[jessicamb]

I think the feeding part might be taxable income on any profits made

[Bogof_Babe]

Originally Posted by jessicamb

I think the feeding part might be taxable income on any profits made

Makes me wonder how on earth they could prove it though :confused: .

[Browntoa]

I wonder if they trawl the electoral roll ?? or council tax returns

I've got one lodger but does not take me near the limit

I'm sure the tax free part excludes bills etc

[Bogof_Babe]

That's a point. If you are living alone you get 25% Council Tax discount, which you would lose on taking a lodger. That would eat well into any profit.

[Browntoa]

I charge that as a seperate amount, but only charge them the 25% each year so i don't lose out, if you had 2 lodgers then split it between them ??

I charge phone calls, gas , electricity as seperate from "rent"

they cook/buy their own food, I have the space so they also have their own lounge/bathroom so they are not in my face all the time

[blowingbubbles]

I'm a lodger, the relationship with my landlord is very much no questions asked, I pay him I stay in the room. I don't say nothing to noone nor does he. According to the council I'm still at my old address (I have contacts ) and thats how it will stay while I'm here.

One piece of advice is make the rent all inclusive as if I was offered a room with all separate bills I would run a mile considering I could find a room tomorrow if I liked. (again more contacts) Just take a deposit before moving in.
From my experience let the lodger buy his/her own food, give them a cupboard, shelve or 2 in the fridge and a shelve in the freezer and lay down the rules straight away to avoid tension at a later date.

Also bar students most lodgers will have troubled lives from my experience but normally nice enough people.

[Pjcity]

Good bit of info regarding lodgers is that they don't have any protection to remain in the property they are regarded as licence holders NOT Tenants.... If you want them to leave you get them out very easily..... DON'T GIVE THEM A TENANCY otherwise they do have greater security of tenure which could take a lot longer to evict them......

For further info see Shelter.com

[Youngy]

Does the rent chargeable up to £4250 have to be inclusive of bills?

ie, can you charge the maximum and then add bills on top? Are most lodger agreements inclusive or exclusive of bills? If exclusive is it fair to split all down the middle? Just looking for views, thanks

[kevintiobraid]

Re the insurance, I had no problem. Rang up Norwich Union and told them I had a lodger. All they wanted to know was whether she had a criminal record, thats all. No extra premium to pay.
I charged monthly rent all inclusive. The easiest way to do it, but potential for abuse (think electric heaters or geeks with tons of electric equipment).

Re the tax free amount you can declare....beware, I've heard that if and when you sell your house, if you have declared lodger income, you may be liable for capital gains tax on the profit you make from the sale, regardless of whether you've gone over the threshold or not.

[Leo267]

When I lodged as a student (some years ago now I admit) most landlords/ladies included breakfast in with the rent. I can't remember the reason I was given at the time... I think it was something to do with laws regarding eviction or tax. Does anyone remember what that was about and if it still applies? My lovely landlady said we (she took in three male students) could eat all the breakfast cereal we wanted... I don't think she could believe it when we ate a giant box of Weetabix between us every day!!!! We had Weetabix for every meal!

[seven-day-weekend]

We've had lodgers on and off throughout 36 years of marriage and now our son has them.

As regards the person who says you can 'only' charge £84 pw, our son's lodgers are charged nowhere near that much and their rent is all inclusive (apart from food and telephone). They are lodgers, not tenants, you can't charge them as much as a tenant.

One pays £15 more than the other as he has a much bigger room and a Freeview box. They share kitchen and bathroom with my son, sometimes the lounge (but that is up to the individual landlord).

We've always found it a good way to make a bit of extra money and have never had any problems with insurance.

We've remained good friends with several of our ex-lodgers and I am even Godmother to the daughter of the two who married each other!

[Pandora123]

Here is info on a bit of a different spin on lodgers... those which stay Monday to Friday only.

Rise of the midweek renters

[Beate]

Originally Posted by Bogof_Babe

That's a point. If you are living alone you get 25% Council Tax discount, which you would lose on taking a lodger. That would eat well into any profit.

Yes but students do not have to pay council tax so if you took a student as a lodger, your share of the council tax would fall to 50%, or am I mistaken?

[Hardup Hester]

I pay full council tax as I live with my hubby, so taking in a lodger doesn't affect my council tax. We've had a few lodgers over the last few years & most have been ok, though we have also had a few nutters, lol.
Our lodger has their own bathroom & bedroom & we all share the kitchen, or they can eat with us, my current lodger is such a fussy eater she now sorts her own food out.
When I'm next looking for a lodger I'm going to try for a Monday to Friday one first, though I'm not sure how much call there is in Reading. I have a wireless router so will offer the room with wireless access.
I would prefer to have my house to myself at the weekends as I find I can't relax with blaring music, screeching phonecalls & having my pc taken over.
I have a set of groundrules for the lodgers, but the current one has trouble remembering them.

[Keldin]

Originally Posted by Pandora123

Here is info on a bit of a different spin on lodgers... those which stay Monday to Friday only.

Rise of the midweek renters

It is fairly common for IT contractors (and I imagine other contractors as well) to take short term contracts away from home and stay over during the week.
I normally look for a cheap but decent B&B that will do a reduced rate for booking 4 nights at a time but a weekday lodging would work as well especially if some of your luggage can be left over the weekend.

K