Rules on 'under occupancy' mean that if you are of 'working age' your housing benefit or universal credit housing costs will be reduced if you are deemed to be living in a property larger than your needs.
Considering taking in a lodger?
If you are affected by the under-occupancy charge, you may wish to consider taking in a lodger. Having a lodger could avoid the council deducting the under-occupancy charge. A lodger will be taken into account and will be deemed to be part of your household. For example:
- A couple with a child and a lodger in a three bedroom house would not be considered to be underoccupying and there would be no reduction in Housing Benefit due to under-occupancy. However, very importantly, you are advised to obtain independent advice on how the income from a lodger could affect your other benefits. For example, you might be charged a non-dependant charge from Housing Benefit, and the Department of Works & Pensions may decide the money you get is income and reduce your Job Seekers or other benefits.
If you decide to have a lodger you need to inform us in writing before they move in.
Assured tenants have the right to take in lodgers. However:
- This must not create overcrowding in your property
- You are responsible for notifying all the relevant authorities of these changes (the date you took a lodger, their name and date of birth, and the amount they pay)
- Any income you receive from a lodger may affect your benefits
- Your lodger cannot stay in the property if you leave
- You will be responsible for legally evicting your lodger if you want them to leave
- You are responsible for their behaviour, in the same way as any visitor or family member at your property, and, if they cause anti-social behaviour, your tenancy may be at risk.
What is a lodger / boarder / or sub-tenant?
A lodger is someone who pays you to use a room in your home and share your facilities.
A boarder is a ‘lodger’ who also receives regular meals, in return for payment.
A sub-tenant is a person who rents the whole or part of your property when you are not living there.
Magna does not permit you to move out and let the whole of the property. Your benefits will differ depending on whether you have a lodger or a boarder, so please make sure you use the right term when contacting Agencies.
What will I need to provide for my lodger?
You must provide your lodger with a furnished room, use of other communal areas such as the kitchen and bathroom and a key to the main entrance door (not a bedroom door key). It is up to you to decide whether you wish to provide meals and do their laundry/cleaning.
How much should I charge a lodger?
What you charge your lodger will depend on what facilities you are providing for them. To give yourself an idea, look at websites such as SpareRoom and see what other people in your area charge for similar accommodation, or check the local paper for adverts. To avoid misunderstandings, we suggest you write up a licence beforehand that you both agree on and sign.
Can I ask my lodger to leave if things don’t work out or I need the room back?
Yes. If you wish your lodger to leave, ask them to move out and agree a reasonable amount of time for them to find somewhere to go to. ‘Reasonable Notice’ depends on the circumstances for ending the agreement, but you would both try to agree an end date and keep everything amicable. When your lodger moves out, they are entitled to take all their possessions with them, settle any outstanding monies between you, and return any items to you such as keys. You must notify all the relevant agencies immediately of the changes, this includes Magna.
Will I have to pay income tax on the income I receive from my lodger?
If the income you get from letting a furnished room exceeds a certain amount (currently £4,250 a year/£81.73 per week) you may be liable to pay income tax. You should obtain independent advice about all the tax implications and contact HMRC to see if Child or Working Tax Credits will be affected.
How will having a lodger affect my benefits?
If you take in a lodger you will need to inform your local council immediately. Taking in a lodger is likely to affect the amount of housing and council tax benefits you are entitled to. If you don’t tell them, you may end up having to repay an overpayment or even be prosecuted for fraud.
Your local council can advise you on the effects additional income would make to you before you go ahead with taking a lodger. You must decide how much you will be charging before you contact them. You will also need to declare the income from a lodger to the Job Centre or DWP if you are claiming benefits. Again, these Agencies will be able to advise you further on this matter before you go ahead, but you should check first so you don’t have any unexpected reductions in income.
How will taking in a lodger affect my household utility bills?
An extra person in the household is likely to increase the amount you spend on bills like gas, electricity, water, telephone, broadband and council tax. Agree with your lodger before they move in if the amount they pay you includes these bills or if they will be expected to contribute more. You should agree if they are buying their own food, if they can help themselves to whatever you have in the house or if you are providing meals (ie for a boarder).
Will having a lodger affect my home contents insurance?
Possibly. You must tell your contents insurance provider to make certain your policy is still valid. Ask your lodger to purchase their own contents insurance if they are not covered under your policy.
Should I do a background check on my lodger?
It is a good idea to do checks on your lodger for your own safety and security. You can ask for a reference from their current landlord, or carry out checks to see if they can afford to pay you (evidence of employment/earnings, recent bank statement etc). The extent of the checks you carry out may differ from one person to the next, and it is for you to decide what is appropriate. If you have any doubts about the person, stop negotiations and politely let them know you do not wish to proceed.
Can my lodger continue living at my property if my tenancy ends?
No. A lodger can only live at the property whilst you have the tenancy. If your tenancy ends, it is your responsibility to make sure the lodger leaves with all their belongings and returns keys to you, on or before the end of your tenancy.