Taking In Lodgers- ‘Rent-A-Room’ Scheme

Ever considered taking in a lodger? A lodger can be a great way of generating income; many thousands of people earn extra income in this way.

To start with, I’m going to list a few of the perks and pitfalls for accommodating lodgers:

The positives of taking in a lodger
  • most obviously, it’s a great way of earning extra cash, which can ultimately help you pay your mortgage and support other financial expenditures you may have
  • The Inland Revenue allow you to earn up to £4250 per year (Just over £350 per month) tax-free through the rent-a-room scheme. To be valid for the scheme (tax-free policy), you need to stick to a few rules, which I’ll cover later.
  • Your lodger has a license to occupy your premises and not a full tenancy – no interest in the property – therefore it’s a much simpler process to remove unsuitable lodgers than it is tenants You have much more control over the situation with a lodger than you do with full tenants. This is because Lodgers occupy your home on licence, and they do not have security of tenure – unlike tenants. Lodgers cannot call the place their own, therefore they have no right to stay on if you give them notice to leave.
  • If you live alone, a lodger’s presence alone can provide you with security
  • Good lodgers can become great friends; they can even become free house sitters, child and pet minders. Let’s face it, living with someone new and random could be fun; you may find yourself with a new drinking partner
The negatives of taking in a lodger
  • you could potentially end up living with a stranger. So it’s important you get someone trust worthy in. It’s always best if you can get a friend in, or a friend-of-a-friend; basically anyone that comes with a good recommendation from someone you can trust.
  • you’ll have to provide a communal area, such as a bathroom and kitchen.
  • you may find it more difficult to gain personal space and “alone time” around the house. So walking around in your undies or cooking naked may no longer be an option. Unless, of course, by some miracle you’re both nudists! In that case, game on.
  • Lodgers and landlords aren’t always going to agree on everything, so the odd debate here and there is more than possible.
  • Your tenant has the right to invite guests over, so you may have to play host for random guests and have unknown faces around your house.
The Rent a Room scheme

The main benefit of getting a lodger is that you can apply for the “rent a room scheme”, which as mentioned, entitles you to a tax free income of up to £4250. The Rent a Room scheme is an optional exemption scheme from renting furnished accommodation in your only or main home.

To avoid creating full tenancies and to qualify for the rent-a-room scheme, you must meet the following requirements:

  • The room you let must be in your main residence, where you live most of the year. If you move out the lodger could become a full tenant by default.
  • The lodger must not have exclusive possession of a self-contained part of your property. Cooking facilities and bathroom etc. need to be shared with you.
  • The room you let must be for the lodger to live in, not to run a business.
  • If you are a tenant yourself you will need permission from your own landlord before you take a lodger. You will need permission in writing.
  • You will need to inform your insurers – they may want to change the cover slightly, and it’s a good idea to ask the lodger to insure their own possessions. It’s unlikely your household insurance will cover the lodger’s possessions.
  • You need to inform your mortgage lender, though it’s unlikely they will have any objections.
The advantages and disadvantages of the scheme

Although the scheme sounds like a decent deal, it might not be for you; it’s simply a matter of working out what is best for you. The principal point to bear in mind is that if you are in the Rent a Room scheme you can’t claim any expenses relating to the letting, for example, wear and tear, insurance, repairs, heating and lighting.

To work out whether you will be better off joining the scheme or declaring all of your letting income and claiming expenses on your tax return you need to compare the following:

  • how much income you are left with after your expenses
  • the amount of your receipts (rent plus any income from laundry services, meals, etc) over £4,250 or £2,125 if letting jointly (2007-2008 tax year)
  • If you opt out of the scheme (or simply do nothing) you will pay income tax on the first amount. If you opt into the scheme you will pay tax on the second amount.
Extra “rent a room scheme” notes
  • You will not need to worry about health and safety, environmental health and gas checks, as you would with a full tenant. However, it never hurts to make take those precautions regardless.
  • As mentioned, you’re taking a huge risk when taking in a stranger as a lodger. We all tend to be too trusting of people we don’t know – letting a complete stranger into your home is a risk.
  • It is most advisable to verify the lodger thoroughly. You should carry out credit searches and referencing on prospective lodgers, just as you would a tenant – unless you know they are genuine or they come recommended from a reliable source.
  • Legally you don’t need a formal agreement, but it is an extremely good idea to have one, as it can prevent a lot of arguments later.
  • Renting out a room may also affect your contents insurance. Most insurers will put up premiums, but it’s still important to inform them if you want to be sure that your belongings are protected. If you don’t tell them, the insurance may not be valid.
  • Taking in a lodger will most likely affect the amount of benefits you get if you’re claiming. For example, if you’re receiving housing benefit and you take in a lodger, the amount you get will almost certainly be reduced as they’ll assume your lodger is paying rent. This will be the case even if your lodger is living rent-free. If you simply don’t tell them, you may end up having to repay an overpayment, or be prosecuted for fraud.

Have you ever been a lodger or taken in a lodger or even simply considered taken in a lodger? Tell me about it…

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157 Comments- join the conversation...

Showing 107 - 157 comments (out of 157)
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Nicholas 19th September, 2012 @ 12:19

@ Anna
Thanks for your quick and exhaustive reply and suggestions!
Yes, my job is carried out ALL online (and I intend to retain all my Italian clients) so it should be fine!

Ciao

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Josie 23rd September, 2012 @ 15:31

Can anyone tell me whether I can take in a lodger in a 2nd residence. I still own a property after moving away for my partners work and still live there 2-3 days per week. Just thought a bit of company would be good!

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Sonia Jamshead 7th February, 2013 @ 11:09

HI

I have a question.I only work 20 hours a week and as my daughter is disabled i am therefore getting a disability allowance and child tax credit.
As my income is very limited and it is hard to meet the ends meet so some one suggested me to rent one of the room of my house for extra income. But if i go for it then will this affect on the child tax credit benefit i am getting. In other words will i get less child tax credit as i will be getting the income from a renting a room...? Because if i get less child tax credits then there is no point in renting a room. So could please any one advise me. Thanks

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joyce 3rd April, 2013 @ 00:05

I am thinking of takeing in a couple as lodgers,i am a pensioner on pension credit (just over £2 a week,lol)live in a two bedroom social houseing flat on my own,The house they live in is being sold and they are desperate for somewhere to live,both work and saving for their own place,I would like to be able to help them,seems a shame when i have a empty room spare but worried how it would affect me,not in it to make money,i am on full houseing council tax benefit,do you know or could advise on how this would affect my money .any help would be appreciated.

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Benji 3rd April, 2013 @ 01:04

Joyce,

Ask your council.

A couple of points;
You might not be allowed to take in lodgers.
You would have to pay more council tax.
It may affect your other benefits.

Your best bet is to ask your council.

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Anna 13th April, 2013 @ 11:52

Hi Joyce

As the couple are working & therefore not exempt from Council Tax, as things currently stand, you would lose Council Tax & any other means tested benefit you are on, in proportion to your rental income from your lodgers.

As far as landlord's permission goes, if you rent from your local council, this should be fine (they normally only object if letting a room meant the accommodation becoming over crowded). However, housing associations sometimes put a clause disallowing room rental in the agreement. However, whoever your landlord is, is worth asking & you will need their written consent in any case.

Ironically, after October, I believe the government intends to allow social house tenants to keep their means tested benefits AND still receive rental income from a room let.

Anna

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Deni 4th January, 2014 @ 12:15

Hi....
Am i a lodger? I live with landlord but do not share kitchen and bathroom only hall entrance. I payed my full rent which should expire on the 29th jan. We were in discussion about me leaving for over a month (it was my decision to leave) but havent really set the date. The landlord asked me 2 days before xmas if im leaving and i said yes. Then she asked me when and i said the 29th as told will make sense...my rent was due on 29th. She told me she has someone to move in on 20th of jan. I told her i will try to find something but i never promised. As im away till 10th of jan i dont think i will find another place in such short period.
I have payed rent and she havent said i overplayed or i should not pay my full rent if im suppose to leave on 20th. She took all the money and week after told me i should leave by 20.
Do i have any rights to stay until my rent money expires?

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Mandy Thomson 4th January, 2014 @ 14:21

Hi Deni,

I believe you are correct, strictly speaking, from what you say about your living arrangement (I'm assuming you live in England and Wales) you would be an occupier with basic protection - if you pay rent monthly, this entitles you to a month's written notice as you've correctly pointed out.
However, the law may well be on your side, but can you actually PROVE this - that is, is there a written rental agreement? If there is, does it stipulate a different notice period? If the agreement is verbal, can you show a regular standing order going through for the rent?
Whether there is definite evidence of the let or not, I would firstly approach your landlord on a friendly informal basis (it could just be an genuine oversight) and point out that you've paid until 29th January, and you need the extra time to find somewhere else to live.
If the landlord isn't very accommodating (that is, offering to pay you back the rent you've paid for 20 - 29th January or putting off the move in date of the new lodger) your only recourse will be the small claims court https://www.gov.uk/make-court-claim-for-money/overview ASSUMING as I said before, that you have definite proof that you had a rental agreement.
Source: I'm an experienced landlord and author of http://www.lodgersite.com

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Deni 4th January, 2014 @ 15:36

Thanks for replying Mandy
Yes i live in England and i do have a written contract and it says that i pay rent 1 month advance on the 29th each month. Also it says that if i want to move out i should give enough notice preferably a month notice.
I pay my rent cash so dont really hv a proof. But i have message where it says i left my rent money on a table and she replied only thank you and nothing else.
My first notice i told her it would be on 5th of dec but she told me to think about it while she went away and i said ok and we haven't talked about it since then really. Briefly i told her to talk to another housemate to clean the house and she never really did. So i kept saying I'll see how it goes in a week or so and if it doesn't improve then i will move out. And then we had a conversation around 24th of dec and she asked me if I'm leaving and i said yes. And you know the rest, i told her on 29th and i knew she already had a friend who would take my room and said that that new girl is flexible.
I hope its not too confusing for you.

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Mandy Thomson 4th January, 2014 @ 16:55

Hi Deni,

I think this might just be some confusion on your landlord's part about when you're moving out - you said:
"My first notice i told her it would be on 5th of dec but she told me to think about it while she went away and i said ok and we haven't talked about it since then really. Briefly i told her to talk to another housemate to clean the house and she never really did. So i kept saying I'll see how it goes in a week or so and if it doesn't improve then i will move out. And then we had a conversation around 24th of dec and she asked me if I'm leaving and i said yes. And you know the rest, i told her on 29th and i knew she already had a friend who would take my room and said that that new girl is flexible. "
Try to have a chat with the landlord and sort it amicably. If she insists the new lodger moves in on 20th, and also WON'T refund your nine days rent money, I'm afraid, as I said before, your only recourse is a letter of action (telling her to pay you by a specified date, usually within a fortnight) before taking her to the small claims court - but try not to let it come to that!

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Deni 4th January, 2014 @ 18:48

Thank you for your help. Happy new year

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Mandy Thomson 4th January, 2014 @ 19:11

Happy new year to you too - let me know how you get on and / or you have any more questions.

Kind regards,
Mandy lodgersite.com

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Gareth Evans 10th February, 2014 @ 20:45

Hi
I have a joint mortgage with my mum (she is the guarantee, so the mortgage is paid through her bank)She has nothing to do with my house and has her own house which she lives in. Me and my mum both work and earn over 16000 a year.

I have a spare room and a friend of mine who currently unemployed and on benefits , wants to rent my spare room. Giving me housing benefits.

Am i still eligible for the scheme?
Is there anything i should know?

Thanks
Gareth

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Mandy Thomson 10th February, 2014 @ 22:36

@Gareth - the rent a room scheme has nothing to do with whether the rent is paid by someone's benefit or not, this is something completely separate. Your own income from other sources (in your case your job and possibly your mother's job) doesn't have any bearing on this either.
Whether you would be eligible depends entirely on how much rent your lodger pays you - if the yearly rent is no more than £4,250 in total, you don't need to declare the income to HMRC. Try this ready reckoner http://www.lodgersite.com/INTRO.html.
Does your mother actually co-own the property with you, or she just your guarantor?
On a separate note, also have a look at this page http://www.lodgersite.com/Letting_to_a_Friend.html before you and your friend make any binding arrangement.
Kind regards,
Mandy

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Sammy 22nd April, 2014 @ 00:15

Slightly different problem here - please help!

I live in a studio flat. It is my main residence. However, I work on location and stay in various hotels or Winnebagos, etc. Mon to Friday and then return to the flat at weekends.

If I was to rent the flat from Mon-Fri, without my being there, would he/she be a tenant or a lodger? (ie. I still share ALL the rooms in the flat and live there but not on the same days of the week). I could, if necessary, pop back sometimes in the week and make a cup of tea in the kitchen if it changes the situation!

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Sammy 22nd April, 2014 @ 00:18

...And I guess the fact it's a studio precludes me from joining the 'rent a room scheme'???

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Mandy Thomson 22nd April, 2014 @ 13:09

Hi Sammy
As it’s still your main home, the person you let to is your lodger - a mere licensee (only having whatever rights and protection you agree to in your own contract between the two of you). A licensee is an excluded occupier (outside of the protection of the Housing Acts 1988, 1996, 2004). At best, they might be able to argue that they were a common law tenant (as they would only live there part time, but a common law tenant wouldn’t normally share living space) – still an excluded occupier and the same as a lodger with one exception – you would need a court order if the tenant refuses to leave, under the Protection from Eviction Act 1977 – this doesn’t apply to an ordinary lodger (licensee). However, if you still have mail going there, and keep most of your possessions there and can produce witnesses to say you live there, it’s unlikely they could prove that. Judy Niner, the founder of mondaytofriday.com actually did what you’re proposing – she became a midweek lodger in London, and during the week while she was away she let out her home in Oxfordshire to her own midweek lodger – perhaps she could share some tips with you - http://www.mondaytofriday.com/contact?
With any kind of lodger, this person is going to be living in your home – in your case, the person will have complete custody of your home when you’re not there – therefore, it’s imperative that you get someone you can trust – make sure you reference them thoroughly first – please see this http://www.lodgersite.com/Can_I_Trust_Them.html for how you can do this quickly, very cheaply and easily. Even if you know the person already, please, please sit down with them first and agree on house rules http://www.lodgersite.com/House_Rules.html and draw up a written agreement. At least with your arrangement, provided your lodger pays the rent, leaves the place as you expect to find it and doesn’t cause problems with your neighbours you should avoid a lot of the issues that lodgers and live in landlords normally clash over.
As for rent a room, HMRC Helpsheet 223 http://www.hmrc.gov.uk/helpsheets/hs223.pdf states: “Rent-a-Room applies only to owner occupiers and tenants who receive rent from letting furnished accommodation in their only or main home” – “furnished accommodation” – it doesn’t specifically state a room. If your rent is under £4,250, and you don’t fill out a tax return for other reasons, there is no action for you to take. Please see here for more advice about how it works http://www.lodgersite.com/INTRO.html.
I hope this helps and good luck with renting your flat.

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Mandy Thomson 22nd April, 2014 @ 14:33

@Sammy - further to this, I meant to say that Rent a Room applies to people who share living accommodation - the definition of that being lounge, kitchen and/or bathroom - bedroom would definitely apply! If you live in the same building, but only share say, a front door, stairs and landing, but have separate bathroom and kitchen, then rent a room doesn't apply.
There are many live in landlords who spend time away from home but are still classed as live in landlords and as sharing living accommodation because it is still their main home. In the common law tenant scenario I describe above, this would normally apply where you have a landlord and tenant living within the same house say, but not sharing actual living accommodation.

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Laura 16th May, 2014 @ 20:35

I'm thinking of taking in lodgers, but have a question regarding income tax. My husband is not working and has no income whilst I am a basic rate tax payer. Would it be allowed for all or most of the income from the renting rooms to be classed as my husband's income and therefore not have to pay tax (if the income is below his personal allowance)? Thanks.

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Mandy Thomson 16th May, 2014 @ 21:20

Hi Laura,

You're allowed to disregard your rent a room income for tax purposes if it's less £4250 per tax year. This is somewhat misleading referred to as the Rent a Room Scheme - provided your income from room renting IS below £4,250, there is nothing for you to do - unless you do a tax return for other reasons, in which case you would simply declare it on your return, but still wouldn't be taxed (it doesn't matter how high your overall income is).
WHERE YOU AND YOUR HUSBAND are concerned, your £4,250 allowance is equally split between you; therefore, you could each disregard £2,125 before you'd need to declare it on a tax return. However, if this income is still less than your personal allowance, you still wouldn't pay tax. Please note that there are some situations where it makes sense to opt out of rent a room. Please see my rent a room tax assessment tool http://www.lodgersite.com/INTRO.html for more information and the rest of the site for other, equally important considerations with renting a room; please feel free to contact me via the site if you have any further questions.
Good luck with renting your room.
Mandy Thomson

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Laura 18th May, 2014 @ 20:02

Hi,

Thanks for your reply Mandy but what I am wondering and can't find info on is whether, if the income from renting rooms is over £4250 could we say that income up to £9,000 (or whatever the personal allowance rate now is) is his income (rather than mine). If it can be classed as his personal allowance we won't have to pay tax, but if it has to be 50/50 then I will have to pay tax on my 50%. So it makes a difference.

Thanks,
Laura

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Mandy Thomson 19th May, 2014 @ 17:58

Hi Laura,

I'm afraid that if you're both living in the property as either joint owners or joint tenants, and the contract is therefore between the two of you (as joint resident landlords) and the lodger, the rental income would be divided 50/50 between you.
However, the government is making it possible to transfer some of an unused personal allowance to your spouse, effective from 2015/16 tax year:
"This measure will allow a spouse or civil partner who is not liable to income tax above the
basic rate to transfer up to £1,050 of their personal allowance to their spouse/civil partner,
provided that the recipient of the transfer is not liable to income tax above the basic rate" See https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293790/TIIN_2518_transferable_tax_allowance_for_married_couples_and_civil_partners.pdf.

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Deirdre 15th August, 2014 @ 09:11

Hi

I am a new landlady and am wondering if anyone can tell me the average amount of hours their lodger spends in the house.

I think my guy is taking the michael, particularly when he has holiday from work and spends most of his time in his room.

I am not shy about speaking up, know it is my home etc., but getting an idea as to how other lodgers behave would either keep my trap shut or allow me to speak with confidence that it is not me just being petty.

Being new to this I have probably cocked up in not sorting this out in the beginning, but we do learn by our mistakes.

Any advice would be gratefully received.

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Mandy Thomson 15th August, 2014 @ 13:15

@Deirdre

Speaking from both a legal standpoint and a reasonable standpoint, the only way you can absolutely limit the amount of time your lodger spends at home or in his room (yes, HIS home as well as yours once he has moved in) is by taking a lodger who will only be there part time; e.g. a midweek lodger, and putting this in the contract (e.g. accommodation from Sunday night to Thursday night inclusive only).

Otherwise, you can only try to ensure, when you carry out your due diligence beforehand, that that person's lifestyle fits in with yours - i.e. you get along, share similar viewpoints and have habits and schedules that fit. You then agree rules, but these must be reasonable - it wouldn't be reasonable, for example, to stipulate that someone stays away while you have visitors see http://www.lodgersite.com/Interview_Questions.html for suggestions.

In your situation, you're clearly not very comfortable with this person in your home, otherwise, unless he was being disruptive in some way or running up big bills - in which case, either negotiate a rent increase (once out of any fixed term in your contract) or ask him to pay the difference - this shouldn't be an issue. Do you not have very much in common, or are you just not ready for a lodger fullstop?

Perhaps he might also feel awkward?

As I see it, you have two choices - either try to get to know him better and melt the ice, perhaps asking him to join your family for dinner etc once or twice a week - see this for more advice about living with and getting along with a lodger http://www.lodgersite.com/Dispute_Resolution.html.

If this doesn't work, or you can't bring yourself to do this, again, assuming you're not within a fixed term contract, just tell him nicely that you're really sorry, but it's not working out, and you need him to move out and serve notice. Give him at least a month's notice, and give him as much co-operation as you can over moving and storing his belongings.

I hope you both manage to resolve this.

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Deborah 18th November, 2014 @ 16:45

Hi

I took in a lodger a couple of months ago and things did not go well! She took out her frustration on my husband & me whenever she had a bad day by seaking us out in the house and starting arguments over nothing. We asked her to move out by the end of the month to which she agreed. Then last week she had a massive outburst and physically threatened us, after which I told her she had to leave by the end of the week as she was making me scared to be in my own house. Luckily she left but is now demanding the rest of the months rent to be returned to her. This eventuality is not covered in our lodger agreement and I cannot find any legal text relating to this. To me the only reason we had to ask her to leave before the end of the month was because of her actions (the threat she made against us) so I feel we shouldn't have to return an income that we already counted on having this month. Of course she believes otherwise. Is there any legal ground that supports either our or her position?

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Mandy Thomson 18th November, 2014 @ 17:29

Hi Deborah,

You're right, you are quite within your legal rights to keep the rent in those circumstances - after all, as you say, your former lodger's behaviour was not only unreasonable, but extreme, actually criminal- see http://www.harassmentlaw.co.uk/law/crimes.htm.

A lodger landlord is only legally obliged to give whatever notice is "reasonable" under the circumstances (under normal circumstances, this would usually be a month, or possibly less if rent is paid more frequently or a shorter notice has been agreed). In very extreme circumstances such as yours, a week is more than reasonable - you were threatened with violence, and didn't feel safe in your own home. See here for more detailed information about lodger notice periods: http://www.lodgersite.com/Serving_Notice_and_Eviction_Notice_Periods.html.

"Notice" doesn't just mean the period given, it also means entitlement to rent for that term. Therefore, if your lodger was supposed to give you a month's notice before moving out, you would be entitled to the rent for that month, even if she chose to move out before. By behaving in such a way as to give you no choice but to force her to move out sooner, she has effectively chosen to move out before the month was up.

It doesn't sound as if your former lodger is capable of being organised enough to successfully take out a claim against you for the rent money, and it costs money (payable upfront) to make a small claim, which she's unlikely to have. I've come across many situations like this, where a lodger, or sometimes even a tenant, has serious issues that makes just conducting their lives difficult, let alone take legal action. However, just in case, is there any evidence either way, such as witnesses or records of rent payments? Without evidence, it's just one party's word against the other's.

This also shows why it is crucial to thoroughly interview, agree rules with, and reference a lodger before you make any agreement for them to move in: http://www.lodgersite.com/Can_I_Trust_Them.html

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Deborah 18th November, 2014 @ 20:43

Hi Mandy

Thank you for your advice. She paid rent in cash so there is no record of that. Our neighbours are witnesses to some of her anti-social behaviour so if it ever came to it they could provide statements. The lodger is currently refusing to return the keys to our house until we return her rent and deposit, so the outstanding 12 days rent will cover the change of locks (and the items she pinched from me, tho luckily none of them are of substantial value), and I can simply return her full deposit in the hope that this will get her out of our lives.

We will definitely do a more thorough background check for our next lodger! This was the first time we ever took in a lodger but I won't let this experience scare me off. My husband has decided to go back to university so we need this small income boost. Fingers crossed things go better with the next one!

Thanks again for all your help, have checked out your link too, very useful site!

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Mandy Thomson 18th November, 2014 @ 21:46

Thanks, Deborah! Please get back to me if you need any advice in future - maybe one of your husband's fellow students might make a good next lodger? But even if it's someone you know a little, still talk to them, agree house rules (even if it's a relative of yours!) and reference them unless you know them well.

Also, if you decide to go the other way and just let to an already established friend, you have to be prepared to treat them more like a member of the family than a lodger, otherwise you risk your friendship - believe me, I've been there and done it!

Good luck with your next lodger and to your husband at uni!

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Mark 22nd November, 2014 @ 08:50

I am working full time and paying for my house with a mortgage. I do not receive any benefits. My daughter (20yrs) recently returned from her 1st year at university to live with me and is now starting her 2nd year at university close to home which means she will be living with me. My question is can I legally charge her £1 a month rent and have the difference reflected in my tax code so I would in effect be getting tax relief on £4238 of my earned income?

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Benji 22nd November, 2014 @ 10:30

@Mark,

Ha, ha!
I like your thinking but unfortunately it doesn't work like that. Your tax code remains unchanged. It just means you don't have to pay 20 pence tax on the months rent you receive.

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karen 5th January, 2015 @ 18:22

i live in a council house, i will soon have a spare room, im not on benifits, will it be ok to let room,

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Mandy Thomson 6th January, 2015 @ 01:05

Hi Karen

Provided you get your landlord's permission in writing, that should be fine. See http://www.lodgersite.com/Who_To_Inform.html "If you rent from a local authority..."

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Lucy 20th January, 2015 @ 23:38

Hi. My husband's granddad has a state pension and a work pension whilst receiving 25% reduction on council tax. He is thinking of the rent a room scheme as he owns a 2 bedroom bungalow. We are aware that he will have to pay full council tax but what we are unsure of is, if the lodger needs to claim housing benefit and asks for £100pw (as housing benefit never pay the full amount), would the ACTUAL rent received from housing benefit be used to calculate or the rent asked for on the housing benefit forms?

Sorry if this sounds confusing, i;ve actually confused myself.
Lucy

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Mandy Thomson 21st January, 2015 @ 07:32

Hi Lucy,

First of all, tax paid against rental income (of any kind) received has no bearing whatsoever on how that rent is funded (that is, whether the tenant or lodger pays out of their own pocket or gets state help).
His tax position will only be affected if the rental income he receives is more than £4,250 a year (though he would need to declare it if does a tax return already). Please see http://www.lodgersite.com/INTRO.html for more information on the rent a room scheme.
As for his benefit position, from what you say, the only benefit he receives is the single occupiers council tax discount. As you say, this is likely to be affected, unless the lodger is a student - most university students, certainly undergraduates, are exempt from council tax, so he would continue to be regarded as the sole single occupier in that situation. However, if the lodger is on benefits, they are NOT exempt from council tax (the state pays it for them) so the landlord would lose his single occupant discount

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steve 26th January, 2015 @ 18:33

Hi, my ex wife is claiming rent benefit as she lives in a flat. I still live in the family home and considering renting out a room in the home. Will the income I get affect the benefit my ex-wife is claiming? we are currently just separated an not divorced and her name is still showing as joint on our mortgage? the person they may rent will have to claim benefit and have it paid into my bank account so I cannot just be paid cash.Will my wifes rent benefit be affected?

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Mandy Thomson 27th January, 2015 @ 07:35

@Steve

Provided you've both informed the DWP and other interested parties, including your mortgage provider, this is perfectly ok - provided your ex wife has moved into the flat where she now lives formerly and can show proof of address (such as utility bills, letters from government departments, bank statements and/or council tax in her name within the last 3 months).

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Akua 27th January, 2015 @ 10:48

I have a spareroom and looking to rent to a friends son who is on benefits so will be paying through housing benefits.

I'm thinking of joining the rent scheme. Other than the HMRC, which other agencies get notified?

If I'm within the the scheme's limited income, will it reflect in my p60 to boost up my annual income?

Thanks

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Mandy Thomson 27th January, 2015 @ 12:47

@Akua

You don't join a scheme - if your income from renting your spare room is £4,250 or under - regardless of your overall income from other sources, you don't need to take any action as far as HMRC is concerned.

The name is misleading and I wish they would change it. They call it a scheme because you can in fact opt out if you choose to, usually because you've incurred expenses through letting your room and want to claim a tax refund. For more information please see http://www.lodgersite.com/INTRO.html

If you DO pay tax on your rental income (because it's over £4,250), you can ask HMRC to tax you through PAYE, in which case it would be on your P60. Otherwise, if you needed to prove your rental income, in the absence of an accountant, you would need to request an SA302 - so even if you were using your rent a room exemption, you would need to do a tax return.

If you claim means tested benefits, including a single person's council tax discount, these will be affected - please see "If you claim any kind of means tested benefit" (last bullet point on page) http://www.lodgersite.com/Who_To_Inform.html

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Sharon Lowry 27th January, 2015 @ 19:49

Living as a lodger I can tell you the lodger gets a shit deal. I have to put up with my landlord filthy habits with no right to complain. The house is in an awful condition, he leaves rotting chicken carcasses in the oven and dog shit on the landing. Now the lock on the front door is broken and despite several break ins on the same street he can't be arsed to fix it he just keep saying 'I'll get somebody', but it's been two weeks now of me living in an unsecured house with no right to do anything about it.

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Mandy Thomson 27th January, 2015 @ 20:14

@Sharon Lowry

That's absolutely appalling, and by far the worst room letting account I've come across!

The standard pat advice seems to be, "well it's only a room, you're only a lodger and if you don't like it you just have to put up or move" - I am so fed up with reading utter nonsense like that - unless you were causing an equal problem for your landlord, and assuming you're paying your rent, you have every right to compensation! Your landlord, whether he likes it or not, is subject to contract law, which is implied, as is your right to quiet enjoyment of the property you're renting. However, you will need to be able to produce plenty of evidence of your let and the landlord's unacceptable behaviour - witnesses, photos (taken with a newspaper to prove the date), diary entries, emails and other documents. If you have this including evidence of your letting agreement, you should be able to take out a claim against your landlord in the small claims court. Please see the comment by Ian Narbeth, solicitor (where he advises another lodger with a problem landlord) here http://www.property118.com/noisy-landlady-night-keeps-teacher-awake/71534/#comments

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Benji 28th January, 2015 @ 20:35

@Mandy,

That's absolutely appalling, and by far the worst room letting account I've come across!

Really? What a sheltered life you lead.

However, you will need to be able to produce plenty of evidence of your let and the landlord's unacceptable behaviour witnesses, photos (taken with a newspaper to prove the date), diary entries, emails and other documents.

Just supposing a lodger does all this and a Judge finds in their favour. How much compensation do you think would be awarded?

Please see the comment by Ian Narbeth, solicitor (where he advises another lodger with a problem landlord) here http://www.property118.com/noisy-landlady-night-keeps-teacher-awake/71534/#comments

I would question the advice of anyone advising a lodger to "check that any deposit has been correctly protected and Prescribed Information given."

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Mandy Thomson 29th January, 2015 @ 11:55

@Benji

"That's absolutely appalling, and by far the worst room letting account I've come across!

Really? What a sheltered life you lead."

Really?? You think this is in any way acceptable or even NORMAL living conditions?? I've seen better run squats! As for my "sheltered life" who are you to pass judgment when you know absolutely nothing about me?

"However, you will need to be able to produce plenty of evidence of your let and the landlord's unacceptable behaviour witnesses, photos (taken with a newspaper to prove the date), diary entries, emails and other documents.

Just supposing a lodger does all this and a Judge finds in their favour. How much compensation do you think would be awarded?"

A refund of rent payments for starters, the amount dependent on how serious the breach of lodger's quiet enjoyment is? But, if the nuisance is serious enough to be putting the lodger in danger, as might be the case here, this is another matter http://www.findlaw.co.uk/law/accidents_and_injuries/accident_claims/500043.html.... However, in practice, the lodger is only going to prosecute their landlord if they're prepared to move out (why wouldn't they be in living conditions like that?) and there's a good chance the landlord can be made to pay back the money...

Aside from the normal duty of care that we are all bound by under the Occupiers Liability Act 1957 to visitors to our homes, although they're not subject to usual landlord's obligations to repair, resident landlords are still subject to SOME of the landlord health and safety legislation that other landlords are bound by, for example, they must get the gas safety check done each year and they must ensure that the furniture in the lodger's room (but not anywhere else in the house or flat) conforms to fire safety standards http://www.lodgersite.com/Health_and_Safety.html

"Please see the comment by Ian Narbeth, solicitor (where he advises another lodger with a problem landlord) here http://www.property118.com/noisy-landlady-night-keeps-teacher-awake/71534/#comments

I would question the advice of anyone advising a lodger to 'check that any deposit has been correctly protected and Prescribed Information given.'"

While Ian Narbeth is incorrect about lodger's deposits, his advice is otherwise still sound as a licensee is as much entitled to a safe environment and quiet enjoyment of their home as much as tenants or indeed just bare licensees (casual visitors) for the reasons I've given above.

In Sharon's case, I would advise her to contact Shelter and environmental health at her local council - they might prosecute the landlord on her behalf, if he doesn't heed their warnings. Her landlord is exactly the kind of slumlord that gives the rest of us good landlords a bad name, and people like that simply fuel Shelter's antipathy toward private landlords.

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Rachel 17th February, 2015 @ 06:59

Hi I rent a room Monday - Friday and have a good relationship with my lodger, he pays £300 pm for a very nice and large loft room with ensuite. I change his bedding and towels once a week for him and am considering putting his rent up as my bills have gone up significantly. I'm a little scared of broaching the subject, any tips please on how to discuss with him. Many thanks

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Mandy Thomson 19th February, 2015 @ 13:47

Hi Rachel

£300pcm for an ensuite loft room, even midweek sounds like an absolute bargain. The first £100 - £200 of that will simply be covering utilities and possibly council tax and other costs. I paid my friend £300pcm for her daughter's bedroom, with most of her stuff still in situ, and wasn't exactly encouraged to regard it is home either.

Legally, you are entitled to raise the rent, provided you're not within a fixed period on your rental agreement. For a guide to rates in your area, download Spareroom's Rental Index: http://london.spareroom.co.uk/rentalindex_download (this covers the whole UK, not just London). As you are probably aware, a midweek let attracts 60 - 70% of the rent of a full time agreement.

Knowing the full amount you can charge will give you the confidence to broach the subject with your lodger - start with the highest figure and be prepared for your lodger to negotiate down. Even if you live in an area that attracts a low rent, £300 for a lovely ensuite loft still sounds like very little to me. In addition, you are providing a very valuable commodity and are therefore as entitled as anyone else to earn money from doing so.

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Stuart 5th March, 2015 @ 20:00

Hi I've recently had a work colleague stay in my spare room and have not charged them any rent just asked them to pay towards food and the typical utility bills electric and water. I've not done it to make or earn money just they were in a high rise which were cold and damp and as I had a spare room I felt it would give me company and a drinking partner and them a better way of living. She was claiming some sort of tax credit which I am not entirely sure what they were as it's none of my business. However in the last recent few months we have become even closer as friends and as a result decided to let the HMRC know that we are now together and to cancel all her single benefit claims. However, they are trying to back date is on this saying we have been together since she moved in which is not the case and I actually have a wrtten contract which has been signed to show that she was just a friend needing somewhere to stay. Can't you help me on this?

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Mandy Thomson 6th March, 2015 @ 09:01

Hi Stuart,

We had one or two cases like yours when I worked at a Job Centre a few years ago - this sort of situation (where you have a dispute about whether two people are in a relationship and living together or not).

Despite what various people might tell you, including, unfortunately, some DWP staff (who aren't always well trained enough to be aware of rules around less than straight forward situations), there are no hard and fast rules around this - for example, there's an urban myth that a partner can only stay a certain number of nights or shouldn't stay at all.

Instead, what happens is the compliance team will investigate, interviewing both parties, and collecting as much evidence as possible - particularly bank statements from you both. They might also approach people such as your neighbours, employers, friends and family. At the end of the day, it should be decided either way on the evidence available.

Your friend should ask for an appeal of the decision - she may need to be very firm and persistent about this. If the appeal is granted, you should be prepared to be as co-operative and truthful with the investigation as you can, as anything withheld is likely to go against you. Please also read this very thoroughly http://www.taxcc.org/TCC_News/05/02/2013/hmrc-say-youre-a-couple-when-youre-not/

I would also seek help from Citizens Advice, especially if you encounter any resistance along the way.

Good luck.

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Diane 14th March, 2015 @ 10:44

Hi can anyone tell me where i can buy a Lodger Agreement ? Ive looked online but you have to have a printer & ive not got one. I would like to be able to get one delivered to my home....Thanks in advance

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Mandy Thomson 16th March, 2015 @ 20:51

@Diane

You can buy hard copy agreements from WHSmith - either their online store or on the high street.

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Yvonne 19th March, 2015 @ 11:34

Hi I own my own home that I live in with my daughter I work 19hours a week and get tax credits.can I rent a room out and if so will it affect my tax credits ? How much rent can I charge a person ?

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Mandy Thomson 24th March, 2015 @ 14:14

@Yvonne

Sorry for the delay in responding to this. Tax credits are regarded as a means tested benefit, which means that if you have a lodger you can keep the first £20 per week rental income without it affecting your benefit, but the remainder is affected - unless you provide meals for the lodger, where you can keep half of the remainder.

For example, say you're paid £90 per week rent, but you always provide a cooked breakfast for your lodger, you would make £55 per week rental income (made up of the first £20 that is disregarded, plus one half of the remaining £70, which is £35).

To determine your rent, please see http://www.lodgersite.com/Rent.html

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