Renting a spare room

freeman3030

Hi,

I'd like to rent out one of my spare rooms to generate some extra income. My partner and I live in a 3 bed property and have our own en-suite so I feel it wouldn't be too intrusive to have a lodger. We would like to rent both rooms, but want to try living with one other to start with, just in case we don't like it. I'd like some pointers on things to look out for/consider. I've got a list going of things that need sorting but would appreciate any advice on any of the below:
1) Inform mortgage provider
2) Inform home insurance provider
3) HMRC/tax on income generated
4) Write up a tenancy agreement (can anyone suggest the best way of going about this? Can it be done online or do I need to go to a solicitor?)
5) Do I keep hold of the deposit or do I have to put it into a deposit scheme? Would a months rent be acceptable?
6) Where would be best to advertise? I've mainly been searching on SpareRoom.com at listings to find out prices etc.
7) Do I write house rules into the tenancy agreement or are they discussed in person? I don't know if I'd be going too far to say that I don't want parties.
8) Would one double wall cupboard be acceptable for them to store their food? (I'm happy to share my plates/cups/knives/forks/utensils. I've got an empty fridge freezer in a lean to on the side of the kitchen for their re-refrigerated/frozen food.
9) When you ask for a reference, what would you typically ask? If they have no previous reference do you ask for an employers reference? (I apologise that may seem a simple question, but I don't know what the etiquette is).

I'm quite nervous about it all as I don't want to make a mistake, I guess its a case of "Fail to prepare, prepare to fail!"

foxy-stoat

By the sounds of it you shouldn't get a lodger let alone 2 of them.

MovingForwards

There are plenty of guides and templates online, download a lodgers agreement and have a read through it. It does cover what your lodger can / cannot do, what's provided for their use, what they share, rules etc.

You do not give them a tenancy agreement, it's a lodgers agreement.

You can 'earn' so much from renting a spare room before paying tax on it. HMRC have a rent-a-room scheme.

[Deleted User]

SpareRoom is the best place to advertise.   Depending on your area you may be competing with flatshares/houseshares where the properties aren't so nice but they'd have a lot more freedom and more social opportunities/fun.  Depending on how finely that's balanced, you might need to price yourself cheaper than those places.  You should set an amount that's inclusive of all bills.

You might want to say "No use of the kitchen after 11pm", because you may otherwise discover your lodger has the habit of starting cooking very late, and will beaver away preparing elaborate meals until late into the night! 

I've had a few lodgers who've turned out to be functional heavy drinkers. I'm talking people who'd knock back at least 5 bottles of wine over the course of a week, while holding down jobs.   I found that a bit uncomfortable to be around, so I prefer to pick people who say they are very much into sports, exercise, and the outdoor life!

Oh, and of course you can say you don't want parties!  In fact a lot of live-in-landlords don't allow their lodgers to ever even have partners/guests over, and it's partners that are more likely to be an issue.  Nothing worse than finding yourself crowded out of your own lounge, or hearing them hard at it.  

I had a lodger who only told me after moving in that his girlfriend lived just down the street, and also that they were both "polyamorous"!  (He was one of the heavy drinkers...)  I also had a lodger coming back and into the lounge with his Tinder date, who he'd just met and who was  drunk and bolshy.   I felt really uncomfortable with that!

So nowadays I don't put anything in the advert or the lodger's agreement that prohibits guests -  because it would put too many people off and I don't actually want anyone to be unhappy here.  But I just look for someone for whom it's not likely to be an issue.   For example international students who have just arrived in the UK for the first time.   Or someone who mentions during the viewing that they're in a long-distance relationship.

My ideal prospective lodger would says  "I do have a partner, but they spend six months of the year in Outer Mongolia, the other six months in a submarine deep under the Arctic Circle.   They have two days off in the middle - is it okay if they stay over for those days?"  

And in that situation, I'd say yes, that sounds quite alright!

Although people that sit in the kitchen or lounge having loud Skype conversations for hours every night is another problem!

I think over time I've realized that the best solution is not to give the lodger access to the lounge, if your layout allows it.   Otherwise it's just too much.    But it's better for them too, because you don't feel like you have to become friends, and you're less disturbed if they regularly have a partner round as they're not in the communal space. 

Whether on balance I'd recommend having a lodger, if you don't have to?  Well, that's another matter.  Sometimes yes, sometimes very much no!   The worst thing is that feeling like someone else's boss makes you less comfortable in your own home.   But then, dealing with their behaviour if you don't challenge or constrain it is just as troubling.   It's not going to be an ideal set-up for you, and even less so for them!

greatcrested

freeman3030 said:

Hi,
1) Inform mortgage provider  probably not required and could open can of worms
2) Inform home insurance provider ask, but may not require any amendment
3) HMRC/tax on income generated see link below
4) Write up a tenancy agreement (can anyone suggest the best way of going about this? Can it be done online or do I need to go to a solicitor?) No. and again NO! Do not use the word 'tenancy' or 'tenant' ANYWHERE.
5) Do I keep hold of the deposit or do I have to put it into a deposit scheme? Would a months rent be acceptable? No need for deposit scheme for a lodger. Make clear the notice period either way - I recommend 1 week in case thngs don't work out. Take rent in advance.
6) Where would be best to advertise? I've mainly been searching on SpareRoom.com at listings to find out prices etc. Local offices
7) Do I write house rules into the tenancy lodger agreement or are they discussed in person? I don't know if I'd be going too far to say that I don't want parties. written is always better. in the contract or a separate document, provided they are clear and understood
8) Would one double wall cupboard be acceptable for them to store their food? (I'm happy to share my plates/cups/knives/forks/utensils. I've got an empty fridge freezer in a lean to on the side of the kitchen for their re-refrigerated/frozen food. Negotiate. Some lodgers rarely cook, some are Cordon Blue chefs!
9) When you ask for a reference, what would you typically ask? If they have no previous reference do you ask for an employers reference? (I apologise that may seem a simple question, but I don't know what the etiquette is). Employers ref, credit check, previosu landlord etc

A lodger (broadly) lives in the same property with a resident landlord & shares facilities. Unlike tenants, lodgers have few rights.
The Housing Act 1988 provides definitions of 'Resident Landlord' & 'same property' (S31 & Schedule 1 (10).

Key advice is to ensure clear 'house rules' or guidelines are agreed from the start to avoid problems. This could be within the contract, in a separate document, or even verbally (though this can lead to future misunderstandings!). Include matters like:
* what parts of the property are open to the lodger eg entire house or bedroom, bathroom, kitchen only?
* cleaning. What is the lodger expected to do?
* guests. Are they permitted? Is there a deadline? Over-night? If over-night, how often (eg 5 nights a week leads landlord to feel he has 2 lodgers, not 1!)
* consumables. eg shared use of kitchen basics (salt, pepper etc), bathroom & cleaning products? Included in rent or shared purchasing?
* smoking
* noise ( eg music after X O'clock)
* any other restrictions
Make clear in the contract what notice period is required. Recommended is a short notice period eg 1 week either way. Sharing a home with someone where it has not worked out can be onerous or even unpleasant.
Some landlords don't bother with a written contract, especially when the lodger is a friend or colleague, but this is short-sighted. As long as things go well this is fine, but if ever there are issues, be that over rent or lifestyle, then a clear mutually agreed contract can make resolution far easier.
Always take a deposit. Make clear in the contract that this can used against rent arrears, rent in lieu of notice, or damage and cleaning. Even if renting to friends.
See also:

LodgerLandlord (21 tips from solicitor Tessa Shepperson + General information site)
Landlordzone (Q & A on taking in lodgers)
Renting out rooms in your home (Government info)
Rent a Room Scheme (HMRC guide for tax-free income from lodgers)
Landlord Lodger Guide (legal and practical advice)

oldbikebloke

Q3. read up on Rent a Room scheme and decide if you want to apply that scheme or the "normal method"
read: https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4000

Note carefully.... since your longer term objective is 2 or more lodgers bear in mind you will thereby expose your property to Capital gains tax when you sell since it will no longer be 100% exempt. (Bear in mind it is headcount, not households so girlfriend moves in means you 2 lodgers in one room, so if you let the second room you will have 3 or more lodgers...)
https://www.gov.uk/hmrc-internal-manuals/capital-gains-manual/cg64702

In HMRC terms they regard anyone having 2 or more lodgers as having changed from "a bit of top up income" to a "deliberate decision to make money via running a lodging business".
How you work out what % of the property is therefore no longer exempt requires a separate question and answer 

Qs 5 - 9 
read: https://www.gov.uk/government/publications/letting-rooms-in-your-home-a-guide-for-resident-landlords/letting-rooms-in-your-home-a-guide-for-resident-landlords

FreeBear

Poster_586329 said: You might want to say "No use of the kitchen after 11pm", because you may otherwise discover your lodger has the habit of starting cooking very late, and will beaver away preparing elaborate meals until late into the night! 

I had a pair that would regularly cook at 2 or 3 in the morning and leave a mountain of dirty dishes to wash at a later date. It didn't take long to tell them to leave (there were a number of other reasons on top). It is now written in to the house rules, "No cooking after 10PM and washing up to be completed promptly after eating". House rules form part of the contract (or Licence Agreement).

[Deleted User]

If you have gas appliances in your home you will need a gas safety certificate.  You will also need to carry out Right to Rent checks on your lodgers, not tenants.

zagubov

You've seen some good lists of issues needing rules in the replies above, particularly greatcrested's..
Make sure yours is the only bedroom with a lock and the lodger's only has a bolt.
If you're anywhere touristy, make it clear there's no sub-letting (can my sister stay when I'm away etc.) - as these  people aren't vetted.
And I'd second the point made above that the rules especially apply if you're renting to a friend.

MaxJones

Its clear that generation rent need to re-name themselves more appropriately ; as 
" Generation Free-Rent. " 
which will very quickly obliterate accommodation and cause Tenants the most harm. 
I've said it before and I'll repeat it. 
The policies that tenant support groups pursue only ' potentially ' seek to assist 5 % of Rogue tenants and are actually detrimental to the vast majority of lawful tenants, ( including the 84% who are satisfied with renting. ) 
Seems to me that if Tenants only knew, they'd actually be campaigning AGAINST, these so-called tenant support groups. !

oldbikebloke

MaxJones said:

Its clear that generation rent need to re-name themselves more appropriately ; as 
" Generation Free-Rent. " 
which will very quickly obliterate accommodation and cause Tenants the most harm. 
I've said it before and I'll repeat it. 
The policies that tenant support groups pursue only ' potentially ' seek to assist 5 % of Rogue tenants and are actually detrimental to the vast majority of lawful tenants, ( including the 84% who are satisfied with renting. ) 
Seems to me that if Tenants only knew, they'd actually be campaigning AGAINST, these so-called tenant support groups. !

congratulations as a newbie for mastering how to dig up an OLD POST so you can make an UTTERLY IRRELEVANT statement on a thread about LODGERS NOT TENANTS