Choosing Lodgers Advice

DoctorDooLittle

I own a four bedroom house and I'm planning to take in lodgers.

I've had a look online and there doesn't seem to be any problems thrown up so far.

I was planning to let out (is that the right word?) a room each to two single lodgers.
I know that if I go over two lodgers, that would make my house an HMO - which I obviously want to avoid.

However, I have now been approached by a single parent. She has two children (aged 2 and 4). She is currently renting privately (as a tenant) but wishes to move. She has had difficulty finding a letting (ie without a resident landlord) who will accept LHA. I know this woman and would trust her, but she doesn't have any family who would act as guarantor.

I wasn't planning on asking for a guarantor for the two single lodgers.
I was also planning to find single lodgers who were working, not on LHA.

But now I'm reconsidering and thinking the single mum may be a better bet due to:
1. Less likely to be going out drinking, drugs etc.
2. More likely to be in the house, so keeping an eye on it etc.
3. More likely to be stable, less transient etc.
4. The house is in quite a suburban area - not good for bars and cafes etc.

Looking online, it seems she would get the two bedroom LHA rate. This comes out at less than the going rate for two single lodgers. However, I'm thinking the single lodgers may result in more voids, if they move out etc.

I've spoken to a few people and got mixed advice. Some say go for the single workers, they'll be out more, create less energy bills, be more helpful (eg with lifting furniture, DIY etc) and possibly more fun.

Others people tell me about problem lodgers they've heard about, alcoholics, coming back late, drugs in the room etc etc - all seem to be single. So they advise go for the single mum as she will be less risky. I know the answer depends on what kind of single lodgers I would get. But I'm guessing no one intends to get a dodgy lodger, do they?

I've looked online and most of the would be lodgers are the single worker type.
So maybe the single mum is a rare opportunity for a more stable lodger?

My last question is: If I took in two single lodgers and my nephew came as third lodger - would that create an HMO? Or would he be discounted as he is a relative?

metamatic

Never mind the drink, drugs and coming home late.

Have you considered the general mayhem a 2 year old and a 4 year old will create?

HappyMJ

Single lodgers stay in their room and generally are quiet.

2 and 4 year old's do not. You will never be able to relax in your home ever again.

She will also have hassle with the council who will accuse her of being in a relationship with you no matter what you say to the contrary. Her benefits will stop whilst they investigate your sleeping arrangements and they will be quite intrusive.

You don't get guarantors for lodgers. If they don't pay the rent....they go. Immediately. Simple as that. You will therefore never have arrears. If they want to stay and they show reasonable cause you could give them a few days to pay before kicking them out on the street....but would you really do that to a 2 and 4 year old.

For a lodging arrangement to be genuine for HB you must kick them out when they don't pay the rent. You say you know this person. Is this person a friend? Would you really kick them out if they didn't pay knowing they would literally be on the streets?

As long as you're resident all the time you're generally not creating a HMO.

Person_one

Unless you know and love these kids like they're your own family, this idea is madness!

Your house will be their family home, and when you can't stand the noise, mess, smell of fish fingers and lack of privacy anymore how easy are you going to find it to turf a single mother and two tiny children out with nowhere to go?

Madness I tell you. In fact, is this even real?

ali-t

You could still have the drink, drugs, noise hassle with a parent with the added difficulty of feeling obliged to babysit when she goes out/finds a new partner etc.

i would avoid renting to a family as i would start to feel like the intruder in my own home.

booksurr

let out is most certainly the right phrase. Thank you for using that rather than the horrid phrase "rent out".

HMO
OK have more than 2 separate households as lodgers and you are correct in identifying that would create an HMO. Whether that has any relevance to you as the LL is simply a question of whether your council has imposed licensing in your area.

Obviously a parent plus their kids = one household

a nephew is a "relative" as defined in law therefore they would form part of your own household in HMO terms - see Housing Act 2004 section 258 para 4 clause b)


not sure why you are so concerned about forming an HMO? Any responsible adult living with 2 strangers as lodgers would ensure that their house meets the Housing Health and Safety Rating System requirements anyway without that being "forced" on them by dint of running an HMO.

Yes a "legal" HMO may have extra implications for licensing, insurance and mortgage but you price accordingly if that is the case.

Council Tax
By having a lodger you automatically create an HMO for Council Tax purposes (remember HMO has many definitions depending on which law you refer to) so you, and you alone, are liable for the council tax.

capital Gains Tax
By having at least 2 lodgers HMRC regards you as running a lodging business and therefore you become liable for Capital Gains Tax when/if you ever sell the house. You will then need to do an apportionment calculation to define the % of the property you let and then claim letting relief against that %. In reality it is unlikely you will incur much or any actual tax payable, but you will need to remember this when you sell up.
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64702

lodger types
As you have found this is highly emotive topic with no one able to give you a true steer since stereotypes are just that - words which won't apply in many cases. I could just as emotively say.....

- single mother: more likely to be home during the day so much higher utility bills (daytime heating, TV, lights etc) and to do much more laundry. Less likely to be stable as she has already split once. More likely to get cabin fever as she is tied to a suburban property with nothing to do on its doorstep, so no relief from her kids :rotfl:

- single people: do not under any circumstances expect them to "help" with DIY and lifting. They are your customers and are paying to live there. It is not their property, they do not have any responsiblity for property related tasks. They are not members of your family who will do your work for free. Yes of course they may help you of their own accord, but your expectation of that help upfront is not the right attitude as a start point for the household relationship. :rotfl:

as a working person I would be affronted if you asked me for a guarantor to be your lodger as I have so few rights and can be evicted very easily. If you take one month's deposit then you do not need a guarantor since they will never be in rent arrears will they, as you'd have evicted by then wouldn't you?

you will always get mixed advice on this topic since, as you realise, its success depends entirely on the actual people you get not what stereotype they fit into

FYI I have run a 3 household HMO for decades and have seen all stereotypes in that time. Some are still friends, others are long gone.

NYM

I think she would have a very difficult time proving that you are not cohabiting.

If the situation really is as you describe, what would you do if she wanted to have a new partner move in with her?

I recall seeing a programme recently where a guy allowed a single Mum and a couple of children to move in and within a week or two, her boyfriend moved in with the result the man was excluded from his own home. They changed the locks and he had to take them to Court to evict them as they claimed they were tenants not lodgers.

Don't do it!

DoctorDooLittle

Thanks. Some good advice there.

Regarding lodgers helping with furniture etc, I think some people I spoke to were thinking back to their younger house sharing days - perhaps with a bit too much nostalgia..?!

I agree, taking in lodgers is different to being in a house share (e.g. as students).

Most people seem to be advocating the single lodgers option and that was my original plan. I had previously considered letting out my whole house to tenants and moving closer to my new job. That was when I was originally approached by the single mum. I was surprised when she told me she would still consider my place as a lodger, rather than tenant. But then, I am away a lot.

I'm still considering my options and the single mum hasn't any immediate need to move out from her private rental property, so no need to rush into any decision.

I guess it will come down to demand, but if I can keep two single lodgers that should give me about £600 per month, whereas the two bed LHA is about £400 per month.

Am I correct in assuming she would get the same two bedroom LHA rate as a lodger, as opposed to a tenant? Doesn't a lodger pay more, as bills are included?

I can see why it's hard for people on LHA to find rental places. But I agree it's best to treat this as a business decision and not get distracted by sympathy.

DoctorDooLittle

NYM wrote: »

They changed the locks and he had to take them to Court to evict them as they claimed they were tenants not lodgers.

Don't do it!

Could any lodger do this?

HappyMJ

DoctorDooLittle wrote: »

Thanks. Some good advice there.

Regarding lodgers helping with furniture etc, I think some people I spoke to were thinking back to their younger house sharing days - perhaps with a bit too much nostalgia..?!

I agree, taking in lodgers is different to being in a house share (e.g. as students).

Most people seem to be advocating the single lodgers option and that was my original plan. I had previously considered letting out my whole house to tenants and moving closer to my new job. That was when I was originally approached by the single mum. I was surprised when she told me she would still consider my place as a lodger, rather than tenant. But then, I am away a lot.

I'm still considering my options and the single mum hasn't any immediate need to move out from her private rental property, so no need to rush into any decision.

I guess it will come down to demand, but if I can keep two single lodgers that should give me about £600 per month, whereas the two bed LHA is about £400 per month.

Am I correct in assuming she would get the same two bedroom LHA rate as a lodger, as opposed to a tenant? Doesn't a lodger pay more, as bills are included?

I can see why it's hard for people on LHA to find rental places. But I agree it's best to treat this as a business decision and not get distracted by sympathy.

You can charge more than the LHA rate. You could charge £400 rent and £200 (or so) towards bills. You still have to declare £600 as income but she'll get all her rent paid for and use £200 of her other benefits to pay for their share of the bills which most people in a 2 bedroom property would have done anyway.

£200 might be more than 3/4th's of the bills so I'd just charge 3/4th of what you estimate your bills will be....and they will be much higher with 3 more people in the house.

DoctorDooLittle

NYM wrote: »

If the situation really is as you describe,

!

I haven't taken any lodgers in yet. It's still only an idea.