Renting a room to a lodger — steps to take before you rent out a room.

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By Matt Hutchinson of SpareRoom.co.uk

Inviting a stranger to live in your home is a big undertaking and shouldn’t be done lightly (even if they are helping you pay your mortgage). However, with a little preparation and some common sense, it can be a great way to make a little extra money. In this article we’ll look at the things you should consider before taking in a lodger to make sure you (and your room) are fully prepared.

About you
The type of person you are and who you’d like to rent a room to should be your starting point.

– Why do I want a lodger? For most people the answer will be ‘money’ and that’s fine – nobody expects you to give up your privacy without a suitable reward. But company may also be an important factor.

– What type of lodger am I looking for? You don’t have to give up your privacy 24/7 to get some benefit from it. You can take in a lodger for a fixed term. Alternatively, if you’d like to keep a little privacy, you can try a Monday to Friday lodger who stays with you during the week and lives elsewhere at weekends. It’s becoming increasingly common as people commute to work and keep a family home elsewhere.

About the room
It’s not only the lodger you have to think about but the room you’re planning to rent out.

– Is my room suitable? It doesn’t really matter whether your room is a single or double (as long as you state in your advert which it is). Make sure you de-clutter so your lodger has space for all their belongings. You’ll need to provide furniture and make sure the room is clean and ready for someone to move into.

– How much can I charge? How much you can realistically charge for your room will depend on your area and the type of property you have. Have a look online to see what other people are charging in your area as this will give you the best guide.

SAVVY TIP: SpareRoom.co.uk provides a free monthly Room Rental Index which lists average prices for a double room (including bills) across the UK by postcode and town.

Practicalities
Once you’ve worked out who you’d like and how much you can charge, it’s time to sort out practicalities.

– Can I take in a lodger? In most cases the answer is yes. If you own your property you should be fine although there are a few things you need to be aware of.

– Many local authority tenants can take in a lodger. Check with your local council to make sure before you go ahead. If you rent privately then check your contract or ask your landlord to see if it’s OK. Many landlords will be fine with this as long as you let them know.

– What will be affected? If you receive a single person’s council tax discount you’ll probably lose this unless you rent your room to a full-time student, although it’s fine to charge an amount in your rent to cover council tax. You should also inform your insurance provider.

– Will I need to use a tenancy deposit scheme? No. At this point the deposit scheme only applies to Assured Shorthold Tenancies and these aren’t used for lodgers. We would still recommend you take a deposit and have some form of written agreement though.

– What about gas checks? You will need to get your gas appliances checked by a Gas Safe registered engineer and have them checked every year.

Will I need to pay tax on my income?
See the article on getting income tax-free from a lodger for details about the Rent a room scheme, which lets you receive up to £4,250 in rental income a year without paying tax. However, most room rentals in the UK are now higher than £4,250 per year – SpareRoom.co.uk are lobbying the government to raise the threshold to a more realistic level.

SAVVY TIP: For more information and to support the campaign (backed by Shelter and the National Landlords’ Association) go to SpareRoom.co.uk

Should I get a contract?
We’d advise anybody taking in a lodger to get a contract as it’ll make things much easier. Get them to set up a standing order as this will de-personalise the payment of rent and avoid any awkward conversations if they’re late paying. Agreements are available inexpensively online.

Related articles:

You can earn up to £4,250 a year by renting your room to a lodger

Can you make money renting out your home or drive

Extending your home without planning permission

SpareRoom.co.uk has also written The Essential Guide to Flatsharing.

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