when does a friend become a lodger?!

Tr1pp

Hello guys, have a question to ask but I know it may sound dodgey when i ask it (please dont take it this way its a genuine query, not trying to do anything dodgey)

ok so at the end of this academic year I will be in my final year at uni. the campus I study at will be nearer to where i live BUT much further away for friends on my course. now this is where it may seem dodgey...

I owe a friend (and his gf) a big favour, my thinking was to let them stay in the spare room of our new house for the final year of UNI as my/my OH's house (mortgage is in OH's name not mine) is right near the new campus. the thing is we were gunna charge them just for the electricity, Broadband, phone etc... and not charge them for the rent.

legally how does this pan out, as they wont technically be paying lodgers with a contract and so on, or are they, simply by paying towards the utilities?

again sorry if this sounds iffy, its not like im trying to dodge any taxes or so on, just paying back a favour as it would cost them a lot of money to rent a place on there own near sidcup. we poor students gotta help each other out ya know

whitewing

It doesn't sound dodgy, it sounds kindhearted but also a potential nightmare. (We had my MIL staying with us for 6 months and it was a job and a half trying to get her to leave as she didn't feel ready to be 'pushed' out and DH wouldn't discuss it with her). It would have to be the most massive favour on earth for me to consider having anyone live with us. I guess you're a lot younger than me. What I would have tolerated in my early twenties, I couldn't now!

tbs624

Can you clarify - you & your OH will be living in the property too? If yes, then before you decide how you want to charge for them being there google the Rent a Room Allowance and then have a look at the Lodger Landlord web site.

Do consider using a formal Lodger Agreement, and thinking about House Rules *in advance* - it saves you so much potential hassle further down the line.

You would need to let your insurance company know , and check whether your mortgagor is OK with you having lodgers.

You would also need to have an annual gas safety check and certification and make sure that furnishings comply with fire safety.

Tr1pp

Yes me and my OH will also live at this property.

hmm i assume its not as simple as simply letting people live with you. If we did do the lodger thing then no doubt we will enevitabley have to pay the tax man for any earnings from this arrangement or is there a certain amount you can get before paying tax (or do they add the lodger payments to the amount my gf earns and tax accordingly?)

I suppose this is something i will have to google, if it starts getting too complex i will have to call it off (not that ive already offered)

tbs624

under the RaR allowance you are entitled to £4,250 a year tax-free (or £2,125 if letting jointly) If your OH is the owner of the property/paying the mortgage then she claims the whole allowance.

BitterAndTwisted

The money side of things doesn't need to be complicated at all, it's the other things which need to be agreed which could make things troublesome. Two couples sharing the same property where the balance of power is unequal can throw up all kinds of resentment on both sides. You and your OH need to have a really hard think about how you live and how you'd like the other people to fit in with your lifestyles and about how communal things get paid for, just like a normal house-shares.

Incyder

Be prepared for them not to be friends after a few months.
You may all see a different side to eachother.
However much you decide to charge them, insist it is paid weekly,in cash, in advance each week.
DO NOT allow them to get behind or make excuses.
Being owed money you never get is one of the worst scenario's so don't let it happen.
Have somekind of cleaning rota system so you all do a bit.
Let them have some kitchen cupboards for their stuff, don't share.
Have separate fridge shelves for yours and their stuff.
No smoking in the house for anyone is a good rule for health and not burning holes in carpets.
I could go on and on but don't want to put you off giving it a go, it may be great

princeofpounds

they wont technically be paying lodgers with a contract

They will be lodgers.

Lodgers aren't much of a problem legally speaking. As long as you are under the rent a room limit you don't need to worry about tax. They don't get particularly special rights like tenant - all you owe them is reasonable notice to leave, and if they have done something wrong (like serious damage or an terrible argument) then that can be pretty much right away as it's largely for you as a homeowner to decide what is reasonable and what isn't.

i assume its not as simple as simply letting people live with you

It almost is. The point people are making is that the less formal an arrangement you have the more scope for misunderstandings. So it's worth being quite clear on the rights and obligations you agree amongst yourselves.

Accountant_Kerry

You can receive from the the £4,250 a year without any bother with the tax man. So there's no issue there if they will just be contributing to the household bills. to scho other posters i would make sure you agree house rules in advance and you may need a regular house meeting to clear the air of any issues, I shared for 8 years and every 3 months or so we would have a meeting to air any issues before they became massive things, it worked really well.

getmore4less

Since this is to help them through final year I think it might be a good idea to set a provisional end date to set expectations early.

Also consider holidays set expectations if you want the place to yourselves.

Note on RaR all payments even for bills and food count towards the £4250.

Tr1pp

thanks guys this has all been very helpful