Taking on a lodger - how to calculate how much to charge?

paulthe6th

Hiya everyone,

when deciding how much to charge a lodger, is it as simple as looking at what else is available locally and then pricing my provision in accordance with that?

Or is there a bit more of a formula to it? Also is it worth getting a proper lodger agreement drawn up by a solicitor? Or would an internet template suitably checked & tweaked be enough?

What's the standard bond/deposit to take? Does this need to be sorted with the deposit agency who go between tennants and landlords in a dispute?

Thanks in advance, Paul

BigAunty

Market price is your main driver, based on local rates for lodgings.

There is no need to lodge the deposit in a deposit protection scheme and it won't be accepted anyway - it's for tenants with live-out landlords only.

The landlordzone website has good advice on how to screen lodgers, a template for a lodgers agreement, info on the Rent a Room scheme whereby the rent is tax free under a certain sum per year, etc.

BitterAndTwisted

You should base your weekly rent on what the average local rates are, taking note of whether they include utility bills or not. I favour not as an incentive not to put the central-heating on the sub-tropical setting 27/4.

It's not strictly necessary to draw up a formal LODGERS AGREEMENT (most definitely not anything which refers to a tenant because they won't be) as this could just set down some basic ground-rules about sharing house-work, overnight guests, that sort of thing so you both know where you stand from the very beginning.

I'd be looking at a month's rent as deposit as well as a month's rent in advance and at least a week's notice on either side.

HappyMJ

For a lodger I wouldn't ask for a months deposit and months rent in advance. Just 2 weeks deposit and 2 weeks rent will do. The less rent you ask for the quicker you can (morally) get them out. Although, you can ask them to leave at any time but if they have paid a month's rent up front and you find after a week you dont want them then you need to figure out a refund. If you just asked for 2 weeks you can just say it isn't working out can say to the lodger "Sorry this aint working can you find somewhere else to live at the end of two weeks. I'll give you a week's notice to find somewhere else." Then when they are leaving give them the 2 weeks deposit back (if no damage caused to the room.)

You need to figure out a rate that is competitive. Look at the papers and charge an extra £10 a week over winter (or whenever heating is required) to cover the increased usage of gas for heating the extra room. I use the LHA rates for the local area to set a minimum lodger rate plus a small amount for the kitty (small expenses like toilet paper) such as £10 a week.

tbs624

Have a look at Tessa Shepperson's book Quick Guide to Taking in a Lodger and her Lodger LL website http://www.lodgerlandlord.co.uk/ - guidance also on finding/vetting potential lodgers

Having a written agreement from the start means that it easier to avoid misundertandings, especially on things such as having friends/partners to stay over

Generally if you were asking for a month's advance rent, and lodger was to be paying you monthly then you should be thinking in terms of a similar length of notice, other than in exceptional circumstances

Lawpack lodger agreement endorsed by the Nat LL Assoc/approved by LL&T solicitors available here

As BigAunty says, tenancy deposit regs applicable to ASTs rather than lodger arrangements but give a proper receipt and make sure its clear what may be deducted
( remember lodger can make a small claims court application if they disagree with any proposed deductions)

BitterAndTwisted

You need to ensure that the deposit will be enough to cover the utility bills which will come in after the lodger has left as these are normally paid quarterly in arrears, plus any compensation for damage to anything they may have caused. Be wary of landlines: you have absolutely no idea of the cost of calls that can be run up and the bill only arrives after they have gone. Bitter experience speaking here.......

ali-t

I had lodgers over a period of 6 years and had 4 over that time. The last one moved out around 9 months ago and I charged £350pcm including council tax, bills, toilet roll, cleaning products etc.

None of my lodgers ever used my landline as they all preferred to use their mobiles and they had their own living room and bedroom in the property. I did set me phone for no calls to mobiles, premium numbers or abroad to protect myself though but none of them ever wanted access to the landline.

I charged at the higher end of properties in my area because I didn't want young students (did have some medics in training though) and only took people who were employed as I wanted people who would not be in the house running up electric and gas all day!

I used a lodger agreement and tweaked it to suit my own needs and never had any problems with enforcing the conditions. The last lodger I had (medical student) put me off lodgers for life but they are a great way to help out with living expenses.

The only advice I would give you is to go with gut instinct when interviewing and choosing lodgers. My lodger from hell mentioned problems with her current landlady when she viewed the property who had switched off the heating as she felt she used too much electricity! How I wished I had taken heed of the signs when a couple of months later she was sitting in her room with the central heating blasting along with a fan heater on the go and the window open grrrrr.