Renting Spare room to unemployed friend

Grot

I've just managed to get a mortgage on a two bed flat and my friend is asking if he can move in to the spare room. He's currently living with his aunt who is threatening to evict him and he'll soon be homeless.


He is currently claiming unemployment benefits since he was laid off and the only way he could afford to move in is if he starts collecting housing benefits too.

So, lots of questions:


Can I let the room to him?
Will he be able to collect housing benefits if he moves in?
Are there any steps I can take to legally protect myself if something should go wrong?
And finally, I don't have a lot of experience with this sort of thing, is it a good idea?

whitewing

I personally wouldn't because if his aunt can't put up with him, maybe he isn't appreciating the opportunity and that could cause you trouble. (Of course, he may be fine, but proceed with caution).

Errata

Two questions: Do you need the money? Are you considering doing it for emotional reasons?

Mojisola

I would want to know exactly why his aunt is moving him on before offering him a room.

Look up the Rent-a-room scheme. He would be a lodger and so have very few rights but it's not easy to throw a friend out if things don't work out.

http://england.shelter.org.uk/get_advice/sharing_and_subletting/lodgers

HappyMJ

If he's a friend then let him stay for a few weeks for free and if it goes on longer then ask for a weekly payment to cover your expenses. He can claim housing benefit for the rental portion of the payment. The rate will be based on the LHA rates for your area for a room in a shared house.

Housing benefits will not cover the gas/electric/phone/broadband/water or council tax. He'll have to pay his fair share of those to you himself. If you don't charge for them separately (in advance) then council will make a deduction for those expenses from his payment.

You could say £50 a week for the room and £25 a week for his share of the bills. You figure out the amounts based on your bills.

He would be a lodger and if he doesn't pay you must be prepared to make him move on.

RAS

He can collect housing benefit

You can accept a lodger and use the rent a room scheme. You can also kick him out at little or no notice providing you do not give him a contract.

You would need to check the maximum local housing allowance for a shared house.

Can he afford a deposit?

However, if he is on JSA, he will struggle to afford the cost of utilities on top of any rent.

You will lose your single person's discount and may have to apply o the basis of his low income. Messy.

And it really is not a good idea to mix personal and business relationships. If he struggles to live with auntie, he is likely to struggle to live with you or anyone else.

Mojisola

If you lived alone, you'd get a discount on your council tax.

If he moved in, you'd have to pay the full amount so add that amount into the financial pot.

BigAunty

The local council website will indicate the maximum Local Housing Allowance rate (HB calculation for private sector tenancies) for shared accommodation. If you ask for rent above this, he may struggle to pay you the top up between the LHA and the rent out of his JSA.

The Landlordzone website has excellent information for landlords offering accommodation to lodgers, including agreements, how to prepare (checking house insurance covers lodgers, gas safety certificate), how to set house rules, plus tax info. There is a Rent a Room scheme which means around £4450 (or similar sum) is tax free.

Remember that if there are tenancy issues, then your relationship suffers as you are mixing business with friendship. We see posts on this forum from friends and family that fall out over things like missing/late rental payments, lifestyle incompatibility and so forth.

Grot

Wooo, didn't expect so many replies so quickly!

Him and his aunt don't really get along, hence why he's having to leave. I did live with him when I was a student so I know what hes like.

He can afford a deposit, I could charge him a couple months rent in advance, but would I need any paperwork for that?

Also how would the council know if he's paying for bills or not? I was just planning on splitting the bills (ie, I pay and he pays me half).

I did realize that the council tax would go up, but I was planning on renting the room anyway so its not a big deal, I just wasnt planning to rent to someone on benefits.

BigAunty

RAS wrote: »

You can also kick him out at little or no notice providing you do not give him a contract.

.

Perhaps its better to have a lodgers agreement with a short notice period in it? That way, there can be no disputes about rent level, payment dates and similar.

Mojisola

There's a sample lodger's agreement on the Shelter website.