Should you allow your tenant to rent a room to a lodger?

Life is tough for many tenants nowadays. Rents are going up and salaries are not. It makes it very difficult to pay for everything – including the rent.

Which is why we read increasingly about tenants being evicted for rent arrears when they just can’t make ends meet.

If the rented property has a room which your tenants are not using – there is one possible solution. Renting it out to a lodger. However many landlords are hostile to this.

• They are concerned about the lodger being someone unsuitable who might cause problems
• They are worried about the right to rent rules
• They are worried about the extra wear and tear on the property
• They are worried about the lodger acquiring a tenancy
• They are worried about the implications under the HMO rules
• They are worried about insurance
• They are worried about the lodger being left in the property after the tenants vacate.

I’m going to take a look at all these issues below, but in most cases it goes back to your choice of tenant.

The importance of a good tenant

If you have a good tenant, they will be as keen as you are to have someone suitable in the property – which is after all their home. They will also respect any rules or conditions you impose.

If you have a bad tenant then there is not much you can do to stop them subletting the property other than through the ‘blunt instrument’ of eviction proceedings.

If you have taken care with your tenant and have chosen someone who is responsible then allowing them to grant a lodger license for their spare room should not, in most cases, be a problem.

Unsuitable lodgers

This can be resolved by granting permission on the basis that the prospective lodger is checked and referenced and that you be given sight of the reference material. You can also stipulate that the lodger must be someone you have approved.

Right to rent rules

As your tenant will be the lodger’s landlord, it will be up to the tenant to carry out the right to rent check. However, you need to warn them that they need to do this.

A suitable form to help them, our ‘right to rent checklist and record’ for lodger landlords can be purchased from my Your Law Store website.

Wear and Tear

This will probably be offset by the fact that your tenant will remain in the property for longer, and the prospect of having to evict for rent arrears will be avoided.

However, you can always grant permission on the basis that there is a small rent increase to take account of this. Don’t make this too much though as you risk your tenant refusing to sign and taking in a lodger anyway.

The lodger acquiring a tenancy

There is no way that the lodger can acquire a tenancy with you without your consent while your tenant is in occupation.

The lodger may in some circumstances obtain a tenancy from your tenant if they are given exclusive occupation of their room. However provided they share living accommodation with your tenant, this will not grant them security of tenure as they will be an ‘excluded occupier’ under the Protection from Eviction Act 1977.

Your permission to your tenant should, therefore, be conditional upon the tenant sharing living accommodation with the lodger, to ensure that they have the excluded occupier status.

HMO Implications

If the lodger is replacing one of joint tenants who wishes to move out, this should not affect the HMO situation as you will just be replacing one occupier with another.

If the tenant is a single person and is the only person living in the property – then there is no risk of creating an HMO.

Otherwise, an HMO may be created and you need to consider this before allowing it.  The rule which allows you to take two lodgers without creating an HMO only applies to owner-occupiers.

However, an HMO situation is not inevitable.  For example, if the lodger is a relative then they will be counted as part of the tenants ‘household’.  Or the property may already be an HMO.  This is the situation where more than two people who are not family are sharing the property.

Or the property may already be an HMO.  This is the situation where more than two people who are not family are sharing the property.  In this case, the situation will not change by allowing a lodger.  However, if the HMO is a licensable HMO you need to make sure that you obtain a license as there are severe penalties for non-compliance.

If you are not sure what the HMO situation is, it is best to take advice before agreeing to a lodger.

Insurance

Many insurance policies will be invalidated if you allow a tenant to take in a lodger.  However not all.

Some insurers will permit this – for example Alan Boswell, provide you notify them in advance, follow their guidance and ensure the lodger is given a proper agreement.  You can contact them here.

Lodger remaining after the tenants move out

This can be a problem. However, it is less likely to be a problem if your permission is granted on the basis that your tenant will be liable to you for the costs of obtaining vacant possession if this happens. Make sure your tenant understands this from the start.

If the lodger proves difficult when asked to leave, there is guidance on my Lodger Landlord website (days 19 and 20).

The Landlord Law Service

In order to help my Landlord Law members whose tenants wish to rent a room to a lodger, I have now developed a new ‘permission for a lodger’ form which you can use if you decide to grant permission.

This sets out various terms and conditions for the tenant to comply with, which include all the points made above, and various others to protect your position as a landlord.

I have also provided a Lodger Form which you can require your lodger to use.

If you use these documents, this will minimise your risk.

Why landlords should allow tenants to grant lodger licenses

One reason why I have drafted up these form is that I think landlords should unless there is a legal reason (such as under the HMO rules) allow tenants to do this.

• It will benefit you as it will make it easier for your tenant to pay the rent
• If you do not agree, there is nothing to stop your tenant doing this anyway – all you can do, ultimately, to stop them is to evict them. Which you probably won’t want to do as it will inevitably result in lost rent and eviction costs
• If you agree then you will have some control over the process and can ensure that the lodger chosen is someone suitable

There is also the fact that we currently have a housing crisis, particularly in London and other large cities, and allowing tenants to take in lodger will go some way to help this.