Lodgers & letting a room - how is it done?

PaulAA_2

Hi all,

I would like to let a room out. What are the typical terms, i.e.
1. Should I be supplying a contract to the lodger?
2. What are the typical break clauses and section 20b implications?
3. Tax implications?
4. Is it acceptable to ask for cash payments?
5. What is the typical deposit?
6. Should the room be paid upfront for the month ahead?
7. Before the moving in date in a few weeks time nothing stops the lodger from changing their mind. Should I ask for a part of the deposit, e.g. 1 week, to be paid now?

Thank you.

p00hsticks

you mention tenants, which implies you live elsewhere.

Can you clarify if you mean this, or are actually talking about letting out a room in a house you are living in (i.e. your are talking about taking in a lodger) as the rules and obligations are very different for the two....

PaulAA_2

p00hsticks wrote: »

you mention tenants, which implies you live elsewhere.

Can you clarify if you mean this, or are actually talking about letting out a room in a house you are living in (i.e. your are talking about taking in a lodger) as the rules and obligations are very different for the two....

Correct, lodgers. I will be living in the same property. Corrected the text above not to confuse other readers.

G_M

PaulAA wrote: »

Hi all,

I would like to let a room out. What are the typical terms, i.e.
1. Should I be supplying a contract to the lodger?there will be a contract. It is advisable for that contract to be written (though it can be verbal). I would incorprate 'house rules' either in the contract itself or discussed and supplied via a separate document. That avoids future misunderstandings.
2. What are the typical break clauses and section 20b implications?
I would not recommend a fixed term, therefore Break Clauses would be irrelevant. I would advise a short notice period: 1 week either way. S20b is irrelevant in the case of lodgers.
3. Tax implications? see links below
4. Is it acceptable to ask for cash payments? Yes. Provide receipts.
5. What is the typical deposit? 4 weeks if rent is weekly or a month if rent is monthly
6. Should the room be paid upfront for the month ahead? advisable
7. Before the moving in date in a few weeks time nothing stops the lodger from changing their mind. Should I ask for a part of the deposit, e.g. 1 week, to be paid now?
sensible

Thank you.

LODGERS (Licencees/Excluded Occupiers)
A lodger (broadly) lives in the same property with their resident landlord, and shares facilities. Unlike tenants, lodgers have few rights.

The Housing Act 1988 provides definitions of 'Resident Landlord' and 'same property' (S31 & Schedule 1 (10).

There is advice for landlords considering taking in lodgers here:

LodgerLandlord (21 tips from solicitor Tessa Shepperson + General information site)

Landlordzone (Various articles on taking in lodgers)

Renting out rooms in your home (Government info)

Rent a Room Scheme (Government scheme for tax-free income from lodgers)

HappyMJ

PaulAA wrote: »

Hi all,

I would like to let a room out. What are the typical terms, i.e.
1. Should I be supplying a contract to the lodger?
2. What are the typical break clauses and section 20b implications?
3. Tax implications?
4. Is it acceptable to ask for cash payments?
5. What is the typical deposit?
6. Should the room be paid upfront for the month ahead?
7. Before the moving in date in a few weeks time nothing stops the lodger from changing their mind. Should I ask for a part of the deposit, e.g. 1 week, to be paid now?

Thank you.

My opinion...

Contract not needed. Written house rules would be good to avoid misunderstandings.

Break clauses not needed. Reasonable notice as last reply could be 1 week notice either way.

No tax if under rent a room allowance.

Cash is fine..signed duplicate receipts would be recommended. Rent books are available at stationers for that purpose. Tenants keep the rent book and you fill it in as each payment is received.

Deposit can be anything 4 weeks or a month is fine.

Yes room should be paid for upfront either weekly, fortnightly, 4 weekly or monthly. That's up to you. It could depend on how often lodger is paid. If they're paid weekly you could even choose weekly on or just after their pay day.

£100 deposit would be OK or maybe a weeks rent to take it off the market to be offset against the full deposit received on move in day.

jjlandlord

p00hsticks wrote: »

you mention tenants, which implies you live elsewhere.

It doesn't, actually.

PaulAA_2

Thank you! Where could I find template contracts for lodgers please?

I know it's probably a matter of a personal choice, but I will ask anyway. I have a choice of renting out a room to lodgers and staying in the same flat, or renting out the whole place to tenants and finding a smaller place to rent for myself. I think both options lead to comparable financial benefit - save for the tax treatment.

Which one would you prefer and why?

PaulAA_2

HappyMJ wrote: »

My opinion...

Deposit can be anything 4 weeks or a month is fine.

Should the deposit be protected at all? If not, how would the lodger feel about this?

G_M

There is a HUGE difference between letting your entire property to a tenant, with exclusive occupation, and letting a room to a lodger.

Many extra rights for the tenant. Large tax differences. Many additional responsibilities for the Landlord. Permissions required from insurers, mortgage lender, Freeholder etc.

This is not a decision to take lightly.

The deposit from a lodger does not need to be protected. How the lodger feels is not relevant. Deposit from a tenant MUST be protected.

Have you read the links provided above yet?

http://www.whsmith.co.uk/products/lodger-agreement-form-pack-how-to-create-an-agreement-for-letting-a-room-in-your-own-home-8th-revised-edition/9781907765551

https://www.rocketlawyer.co.uk/documents-and-forms/lodger-agreement.rlm?utm_source=bing&utm_medium=cpc&utm_campaign=GSN%20-%20P2%20-%20Lodger%20Agreement&utm_term=%2Bwhat%20%2Bis%20%2Blodger%20%2Bagreement

http://www.lawpack.co.uk/landlord-and-tenancy/tenancy-agreements/product711.asp

Dird

Your landlord doesn't need a court order to evict you

Thank god they can't become dirty squatters like normal tenants

gazter

PaulAA wrote: »

Hi all,

I would like to let a room out. What are the typical terms, i.e.
1. Should I be supplying a contract to the lodger?
2. What are the typical break clauses and section 20b implications?
3. Tax implications?
4. Is it acceptable to ask for cash payments?
5. What is the typical deposit?
6. Should the room be paid upfront for the month ahead?
7. Before the moving in date in a few weeks time nothing stops the lodger from changing their mind. Should I ask for a part of the deposit, e.g. 1 week, to be paid now?

Thank you.

You dont need a formal written contract, if you do knock one up, be careful you dont give your lodger any rights. There are templates out there. But you can create a simple one, your name, their name, the monthly/weekly amount, how much notice you are willing to give them.

Definitely need some house rules. No smoking, limited overnight stays for guest. Expectation of keeping the house and their room clean and tidy.

Tax implications are the first £4,200 tax free. You dont need to notify hmrc if you are going to be under that threshold.

Cash is fine. But you might want to use a receipt book from staples or somewhere to give them in return.

Typical deposit is equivalent of one month to secure the property and first month rent on moving in.

Tell the potential lodger that the room will be made available to the first suitable person who pays the full deposit.

Get references from their employer, and from their most recent landlord. And dont take people 'down on their luck'.