Lodger agreements tend to be more relaxed agreements. Often appealing to people who want to rent somewhere on an as-and-when basis. Read on for the topic to be broken down.
What is a lodger agreement?
A lodger agreement is a contract signed by both a landlord and a lodger for use when the landlord and lodger are both living in the same property and sharing living space. The difference between a tenant and a lodger is a lodger lives on a property that the landlord lives in too. A tenant will just live in a property owned by the landlord.
This agreement can only be signed upon if the landlord uses the property as their main place of residence. For example, if the landlord owned a second home and lived there sometimes, they couldn’t use a lodger agreement to collect rental income from that property and would have to use other agreements like an assured tenancy.
When should I use a lodger agreement?
Lodging agreements should be used if you are a landlord living with a tenant and they are sharing the furnished living space of a property such as a kitchen, bathroom or living area.
What’s included in a lodger agreement?
As with other types of tenancy agreements, there are basic details that must be included within the contract. Due to the nature of the agreement being very informal, there are no clear rules for what should be included within a rental agreement between a lodger.
Yet, there are some terms you can agree on in case there was any kind of disagreement with a lodger and you needed to refer to a document. These can be taken as inspiration from other forms of rental agreements and can include:
- How much the rent is that needs to be paid
- The frequency in which a lodger is expected to pay rent i.e. every month or week
- If the agreement includes other bills like Wi-Fi for example
- If there are any break clauses in the contract for the renegotiation of rent
- Who is responsible for the sharing of living space
- Who is responsible for appliances in the property
- If the landlord has the right to evict you and under what circumstances
- The type of tenancy (excluded licence/ excluded tenancy/ non-excluded tenancy)
Should an inventory be included in a lodger agreement?
An inventory can be taken which includes the state of the property prior to the tenant moving in. This includes the condition of the furniture, the number of appliances and furniture there to begin with as well as if there are any damages.
This is great because a lodger can then pay a deposit before they move into the homeowner’s room which can be refunded to the lodger once they can prove that all equipment is as they left it within reason. It is important the details of this are agreed open before a lodger moves in.
Do you have to protect a lodger’s deposit?
Unlike other tenancy agreements, the landlord doesn’t have to protect the deposit given by a lodger. This means they won’t have to keep it with a registered body like the Tenancy Deposit Scheme and can keep the deposit however they choose. This can be in the bank account of the landlord or even in cash.
However, it is still important landlords keep the deposit as securely as they can as failure to return the deposit with evidence a tenant deserves it back can result in unwanted court action. A tenant is well within their right to refer to their lodger agreement and provide evidence to a court that they are entitled to their deposit.
Should services be given to a lodger?
Whether services should be paid for by the landlord or the lodger is completely up to personal preference. Some lodgers may find it easier to pay their own bills. Other landlords would rather lump the costs of the rooms into one payment and charge a premium for the rooms by providing all the services a tenant needs.
Check the terms of your tenancy agreement if you’re not sure and be sure to factor in every cost a tenant is likely to pay clearly in the agreement before any contracts are handed over.
How to make a Lodger agreement
The process involves making sure your home can house another person, finding a lodger and setting up some form of agreement.
You won’t need any special type of mortgage as a landlord with a lodger. You can pay off a standard residential mortgage and have a lodger in the same house completely legally and can even claim up to £7,500 of this rental income tax-free under the rent-a-room scheme.
However, some lenders may have terms and conditions that are against having a lodger within your own property. As well as this, leaseholders looking to have lodgers in their premises need to gain permission from the freeholder of their property before they are legally able to have a lodger in their space as well.
Is a lodger agreement mandatory?
No, a lodging agreement isn’t mandatory. In fact, it is common for a landlord who is a close friend or a family member to only have a verbal agreement in place and forgo the need to write it down in an agreement.
It is up to you as a landlord if you want to take this level of risk and trust your tenants to pay the rent on time or if you want some level of legal security by including the terms in a written agreement.
This is what makes a lodging agreement appealing to a lot of people because there isn’t the need to be as formal as other types of agreements like an AST.
What is the length of the lodger agreement?
There is no minimum or maximum length of a lodging agreement if doing a fixed-term agreement so they can be as long term as you’d like.
Having said this, because of the lack of security in an agreement and the landlord being able to legally evict a tenant at any time without the need for section 8 or section 21, most lodging agreements are rolling or periodic tenancies anyway.
This means a lodger doesn’t pay rent for a fixed term and they pay rent every week or month until the tenancy comes to an end at the decision of either a landlord or the lodger for whatever reason.
What is the amount of rent payable by the lodger?
The amount of rent payable by a lodger depends on the agreement set out in their lodging agreement. If a lodger signs for a fixed term, there is nothing a landlord can do within this term to increase rent so the rental income will stay at this price.
Nonetheless, if a tenant is on a rolling tenancy agreement, rents can be increased by any amount and at any time by the landlord given the lodger agreement.
This is because lodgers aren’t protected by section 13, where landlords must increase rents by a certain amount and at certain times throughout the tenancy to protect the security of tenants.
Lodger agreement template
If you are interested in taking in a lodger, there are some templates provided by the government as a guideline here. A lot of these templates relate to the Rent a Room Scheme which is a scheme that helps landlords legally have lodgers in their property without paying tax up to a certain amount.
It may also be worth familiarising yourself with the documents needed to rent a flat as well as looking at other tenancy agreement templates to see if you’re missing something.
How many lodgers can live with the owner?
There is a limit to the number of people that can lodge in a property. Any more lodgers than three, given those lodgers, aren’t members of the same family, will classify the property as an HMO. This requires special licensing and safety requirements in order to be let out legally.
If all members of a household are related but they also aren’t members of the same household e.g. cousins instead of parents and children, this also doesn’t qualify.
Can you end a lodger agreement?
A landlord, at any time for any reason, can end a lodging agreement, as long as it is at the end of a lodging agreement or within a break clause. This may result in an eviction if the landlord doesn’t wish the occupier to remain on the property.
Alternatively, the landlord could ask the lodger to sign a new agreement for whatever reason. As long as both outcomes are with the consent of the lodger, there is no legal issue here.
All in all, because of the informality of lodging agreements, it is still important you check the terms and conditions of the individual contract between a landlord and a tenant as there may be conditions that override any of the things stated.
Is there a notice period for early termination?
Typically, a landlord will give a lodger 4 weeks’ notice to leave the property under contract if they are paying rent monthly or weekly regardless of what type of lodger they are.
However, notices don’t have to be that long if the lodger is in an excluded tenancy agreement. This means they live in a home with exclusive access to their room and they also share the living space within the property. In this case, a lodger can be given just one length of the rental payment period. So for example, if a lodger was paying rent weekly, they could also be evicted within a week too.
For excluded licence lodgers, the notice period has to be ‘within reason’ and non-excluded tenants have the longest notice period of at least 4 weeks notice. The notice to quit could be longer depending on the lodger agreement.
However, notices can only be issued at the end of a fixed-term agreement or a break in a contract. Moreover, in a periodic lodger agreement, a notice can be issued at any time.
Can you evict a lodger immediately?
Excluded licence lodgers can be evicted at any notice within reason. So typically evicting a tenant immediately wouldn’t be classed as such.
In other agreements, a landlord cannot evict a lodger immediately, even if they’re not paying rent. The minimum amount of time a landlord can ever evict a lodger is within a week if they are paying rent every week. This is within an excluded tenancy.
Do lodgers have protection from eviction?
The only protection a lodger has from eviction is if they were signed into a fixed-term lodging agreement. If a landlord wants to evict a tenant in a period of their contract that they are ‘locked in’ for, the lodger could take the landlord to court and argue against it.
This fixed-term could be anywhere from 6 months to a year in some cases so it’s important a property owner reads the agreement laid out in the lodging contract in detail before signing anything. Sometimes, verbally negotiating with a lodger alongside their agreement is the quickest way to evict a tenant ethically and whilst still providing a lodger with some security.
What rights do lodgers have?
Because a lodging agreement doesn’t fall under the same security of tenure that other types of agreements fall under, there is some obscurity around what rights a lodger does have.
How to check the type of agreement you have with your landlord
If you are living with the property owner and sharing some part of a property, chances are you are in a lodging agreement. This is the easiest way to identify what type of tenancy agreement you are under.
Other types of tenancies like assured tenancies or regulated tenancies (started before 1988) need to comply with certain terms and conditions that prevent landlords from living with their tenants.
What restrictions are placed on the lodger?
Below are some of the restrictions placed on lodgers as opposed to those you are renting in an assured tenancy:
- A lodger can be evicted on short notice without a homeowner needing to go to court
- Lodging agreements don’t apply to Sections 8, 21 or 11 so landlords aren’t entitled to give the same notice for evictions and they don’t have the obligation to conduct repairs
- The agreement only remains valid if the homeowner continues to live in the property. If they move out you may have to move with them or sign an assured tenancy
- A lodger isn’t allowed to put a lock on that door to the parts of the property they are renting and even if they do, there is no regulation to say the homeowner cannot enter this space if they want to
Despite these regulations, it is still important lodgers are given a safe place to live despite lodging agreements not being protected by The Landlord and Tenant Act of 1985 or 1954.
These agreements refer to the agreement of paying a decided amount of rent for a certain amount of time where the landlord cannot evict you and a lodger cannot leave
Periodic agreements refer to agreements that have no end date. A lodger continues to pay rent weekly, monthly or quarterly. Depending on the terms.
Excluded tenancies are where the lodger shares common living areas with the property owner and the owner also isn’t allowed to enter the lodger’s room.
In these types of agreements, a lodger doesn’t have access to the shared areas of a property despite a landlord being able to enter your room if needed. These types of agreements are covered by basic protection which you can find more information on here.
Non-excluded tenancies are where the lodger lives with the homeowner but they do not share living space, they each live in self-contained flats or buildings.
What happens if your landlord wants you to leave?
When a landlord issues an eviction notice, this can be scary for a lodger because the same protection from assured tenancies doesn’t apply. In the case that a landlord wants you to leave, unless they are in breach of a fixed term of your contract that prevents you from leaving, they are in their right to do so.
What does a lodger need to do if he/she wants to leave?
If a lodger wants to leave while they’re in a fixed term of their contract they are obliged to stay until their agreement ends or there is a break clause in the agreement. They will then hand in a notice to quit.
If the lodger is in a periodic lodging agreement, they can leave at any time within a notice period agreed in their lodging terms. This is usually 4 weeks.
When looking at the topic of lodger agreements, a landlord cannot just evict a tenant however they please. There are still basic rules a homeowner has to follow when taking on a lodger. Having said this, lodging agreements are certainly less regulated and there is a degree of risk associated with the lack of security a lodging agreement provides.
So, for both homeowners and lodgers, consider whether a lodging agreement is right for you based on your own situation.