Getting your home ready for a Lodger

 So you’ve decided to take in a Lodger – how exciting!

Just to recap, so we’re clear, a Lodger is a person who rents a room in your house (whether you live there or not). Traditionally, this type of arrangement was quite informal and may have been referred to as renting room in a boarding house. Typically, if someone has a spare room in their house they may decide to rent it out in order to earn some pennies.

Lodging is a great idea, in this age of a cost of living crisis, it provides a cheaper way of living to people seeking a room to rent, and helps the home owner with paying the bills. For many years we had a lodger living with us which was a massive help financially, and even helped us pivot from a career in teaching into a life of property!

Getting your home ready to receive a lodger is relatively easy- you’ll usually need to provide a furnished room, and decide on boundaries and house rules. E.g. bathroom access, storage, parking etc. The room will need to be of a good standard: warm, curtains, fair decorative order, and from experience, provide as much storage as possible (thing space under the bed, a good chest of draws, wardrobe etc). You may also want to consider putting a desk and chair in, although this may be something the Lodger brings with them.  You’ll also need to supply/share pots and pans, plates cutlery etc. and make sure there is access to a fridge, freezer and cooking equipment.

Prior to taking a lodger, these are the things I suggest you think about:

-        What is a fair market value for the room? A double is worth more than a single, an en-suite more than a shared bathroom. Remember that usually utility costs, council tax, internet costs etc. are included in the rent.

-        Will you require a deposit*?

-        Will you be ok with the lodger bring a pet? Smoking?

-        Do you have a preference on the sex of other housemates?

-        Are you open to members of the LGBTQ+ community living with you?

-        What are your thoughts on lodgers having guests to visit/stay over?

-        How do you feel about your lodger working from home? How will this affect utility costs and internet speeds?

-        Is there enough parking?

-        Is there accessible public transport?

-        What period of notice to leave will you require/ give?

I know, this may seem like a long list, but it’s important that you think these things through, you are inviting someone else into your home and it is really important that you both feel comfortable and have clear boundaries and expectations.

A lodger’s contract is a must – a written record of your agreed house rules, rent charges, notice periods etc. helps make sure everyone is on the same page with the same expectations and understandings. It protects both you and your lodger, it’s important. There are examples online, I used this one from Spareroom.com and edited to suite my context.

How much should I charge?

To get an idea of how much your spare room is worth, take a look at what else is out there on the market- I’ve found Spareroom.com to be the most useful, but depending on your area, you may also be able to get an idea by looking on Zoopla and Rightmove. Just make sure that the adverts you are researching are targeted for your target market e.g. working professionals rather than students (unless you’re aiming at the student market).

You’ll need to decide whether you require a deposit – personally I think this is a great option as it protects you against any damage to the room (if your lodger damages the room you can deduct the repair costs from their deposit).

A deposit also gives you cash up front from which you can use to further furnish the room e.g. if the lodger has requested a desk, you can use money from the deposit to pay for it. *Unlike when you rent out a property using an Assured Short-hold Tenancy Contract (these are standard when renting out a property) when taking a lodger, you do not need to hold their deposit in a protected scheme, meaning that you can use it as you wish, so long as you abide by the contract and return the deposit in full (less damage expenses) at the end of the lodger agreement (when they move out).

Finding a lodger

There are many places you can find a lodger, you can ask around at your workplace, you can put an add in the local newspaper, you can advertise on somewhere like Zoopla (but this is an expensive option). You can probably guess what I’m about to say, I found all my lodgers via spareroom.com – I like how the website operates, I like the advice articles and the fact that I can message potential lodgers rather than waiting for people to contact me.

In terms of screening potential housemates, I ask for 2 references and a copy of 3 months of recent bank statements – the account details can be blacked out, but I need to see records of regular bills being paid- it shows me they can manage their money and honour their financial commitments. I will also interview the candidate initially via Zoom, and then if things progress, they’ll be an in-person meeting too, usually when they come to view the room. When a person enquires about the room, I share these requirements with them, it helps screen out time-wasters and people who are not suitable (e.g. a family looking to rent a single room… it happens a lot).

Tax implications

In the UK, the government run a rent-a-room scheme – you can earn up to £7500 per year from renting out of your room without having to declare it to the government (HMRC). This total applies to the entire household rather than the individual or room, so if you rent multiple rooms, once your total earnings go above £7500 you’ll have to declare it on a Self-Assessment form each financial year (if this worries you, please don’t – read this article instead).   

I’ve really enjoyed sharing my home with other housemates, I’ve made new friends, had new experiences and learnt so much about business. It’s been a huge help financially, and if you’re open to the opportunity, I’d highly recommend giving it a go!

Useful links

https://www.gov.uk/rent-room-in-your-home

https://www.spareroom.co.uk