If you are short of cash to pay your bills – taking in a lodger can be a lifesaver. I know this because this is what I did.
When I first bought my house I was very hard up. It needed a lot of work and I was still just a trainee solicitor and did not earn very much. But the house had two bedrooms so I let them out to students and slept in the sitting room.
It worked very well and I met some lovely people. It was the ideal solution. I carried on taking lodgers until I got married. I could not have managed financially without them.
I was lucky though – I owned the house and so did not have to ask permission of anyone.
The problems for tenants
Many tenants are extremely hard up and would love to take in a lodger – but they can’t because their landlord won’t let them.
Why is this? Because allowing tenants to take in lodgers is prohibited by the landlords
- Mortgage company and
Not the first time that big businesses looking after their own interests have prevented people from doing something that seems sensible and obvious and which would help them.
A sharing economy
A few years ago there was a lot of concern among landlords about a stray paragraph in the budget about encouraging a ‘sharing economy’. The paragraph seemed to contemplate legislation which would stop landlords prohibiting short term subletting by tenants.
I did a post about it here which brought forth a lot of negativity from landlords in the comments.
However I still maintain the view that if done properly, with a responsible tenant, allowing a tenant to take in a lodger can work well.
After all the lodger will be sharing a home with the tenant and so the tenant will have an even greater incentive than the landlord to ensure that this person isn’t a ‘druggie’ or a criminal.
Bearing in mind that the lodger will be able to rummage through all their cupboards and personal possessions when they are not there – the tenant will want the lodger to be someone responsible who they can trust.
Dealing with the problems
Perhaps one of the biggest issues is that of insurance. If allowing a tenant to take in a lodger is going to invalidate a landlord’s insurance policy then naturally they cannot permit it. But will it?
I had a word with the people at Alan Boswell Insurance, who I know, and asked if this was really the case? Was there a policy out there which a landlord could use? After all surely, in theory, everything is insurable. It is just a question of what premium the insurer will charge to cover the perceived risk.
The answer I got back (after a bit of a wait) from Alan Boswell though was, yes, they could provide insurance where the tenant took in a lodger. However they would need to be told about it in advance and the lodger must be given a proper lodger agreement.
The other good news was that it would not cost anything extra – indeed Alan Boswell will aim to beat your current premium anyway under their price beater guarantee.
So if you are minded to allow your tenant to take in a lodger then the insurance issue is not an insoluble problem.
A question of control
The other problem is that most landlords are worried about someone unsuitable being chosen by the tenant.
In point of fact, if a tenant decides to rent a room to a lodger there is nothing practically (short getting an injunction or or eviction – which will take a while) the landlord can do to stop them.
However if the landlord makes it clear that they will agree to this subject to specific terms and conditions – then this should offer them some protection.
To help with this I have drafted up a ‘permission to tenant to take a lodger’ form for landlords to use in this situation.
The permission for lodger form
This form, when signed by both parties, will have the effect of amending the tenancy agreement to allow the tenant to rent a room to a lodger provided the terms set out in the document are adhered to. These include requiring the tenant to
- Do proper referencing and credit checks
- Provide all referencing material to the landlord
- Do a right to rent check
- Notify the landlord before accepting anyone as lodger and not to let to anyone who is not approved by the landlord
- Require the tenant to get the lodger to sign a formal lodger agreement (which is provided to the tenant) and
- Provide a copy of this to the landlord
It’s quite a long agreement and includes various other clauses to protect landlords. The form comes with a lodger agreement which can be given to the tenant to use.
This form was originally drafted up for my Landlord Law members but I have now made it available for sale on my Your Law Store website. You can also get a ‘bundle deal’ if you get it with the new lodger pack which has reference letters and checklists.
Many tenants may prefer to rent out rooms via Airbnb to holiday makers and this is a very popular way to make a bit of cash. However from a landlords point of view it may be better to allow a proper lodger. There is more scope for these to be properly checkout out in advance, as opposed to an Airbnb booking.
From the tenants point of view – if you don’t want a lodger in your house all the time – why not look for a Monday to Friday arrangement? Then you will get your privacy back at the weekend. We have a Monday to Friday lodger agreement on Your Law Store
The Housing Crisis
This series is about the housing crisis and so far as that is concerned, encouraging people whose homes are too large for them to take in lodgers is the ideal solution.
In fact if a significant element of the demand for accommodation could be satisfied by allowing people to have lodgers this could reduce the need for expensive new housing.
If i were in government and in charge of dealing with the housing crisis, I would be looking to encourage lodgers as much as possible.
And if the mortgage companies are the main ones causing difficulties then pressure should be brought to bear on them to relax their rules.
It would also be good if the ‘rent a room’ allowance could be regularly reviewed to ensure that its value keeps up with inflation.
If you own your home and want to rent to a lodger – whether or not on a Monday to Friday basis, you will find forms you can use here.
Lodger landlords will find a lot of general help and guidance on renting to lodgers on my Lodger Landlord website here.
If you are either a landlord or a tenant wanting to allow a lodger but being frustrated by bureaucracy, write to your MP and ask them what they are doing about it and refer them to this blog post.
If you ARE an MP or (better still) a minister – what are you doing to encourage this low cost way to help the housing crisis that is causing so much misery in our society?