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Help Pay the Mortgage With a Lodger

Should you let out a room in your house.

With interest rates rising all the time, even though the Bank of England reduced rates, more homeowners are finding it difficult to make ends meet. Recent research suggests that a third of mortgage owners are struggling to keep up with their repayments and one in eight are considering taking in a lodger to help with costs.

But is taking in a lodger a clever move or is it the beginnings of a disaster?

1.  Will my Lender allow me to Help Pay the Mortgage with a Lodger?

Most Lenders will not give you any problems agreeing to you letting out a room. But ask them first and carry out proper checks.

2. How do I find a lodger?

Students are usually a good choice, and you can usually advertise in the students' union of your local college or university. If you work for a large firm, have a word with the HR department as they may know of someone. Try putting a card in the window of your local corner shop. You can advertise in your local paper and ask your friends in they know anyone. It is probably a bad idea to rent to friends in case something goes wrong. Spare a Room is a good site for seeing what other people charge and to place an ad.

3. What checks should I do on the the lodger?

Your lodger will have access to your home and all your personal belongings so be very careful who you choose. You must be certain that that it is someone who you can trust, and who you will get on with. You will be sharing a kitchen and bathroom with them! You must get references - the main types of references are employer's, bank, previous landlords' and character references - and do a credit check using a credit reference agency. You can get their  here with their permission.

4. What regulations should I follow?

You don't have to comply with all the legal repairing obligations applicable to rented properties, but your furniture should comply with the furniture regulations. Gas appliances should be checked annually by a Corgi registered gas installer. Speak to your local Trading Standards Office (furniture) or local Health & Safety Executive office (gas regulations).

5. What agreement should I put in writing?

When you have found a lodger, you must lay down the rent and any 'house rules'. It's not however absolutely necessary to give a written agreement, but it's generally a good idea. Tenancy agreements for assured shorthold tenancies won't be appropriate. You should also get the rent paid by Standing Order so that you don't have the embarresment of having to ask every week/month.

6. What happens when I don't want them any more?

If your lodger's isn't to your liking or you just don't want one anymore, you don't need to get a formal court order as they're sharing your home.  You do need to give them written notice though. 28 days is the normal notice period, unless they have behaved very badly in which case a shorter period may be more convenient. 

7. What tax do I have to Pay?

The government has a great 'rent a room' scheme which means that the first £4,250 of rent will be tax free.  You must disclose this income on your tax return. If you're on benefit, you'll also need to speak to your benefit office, as it will affect your entitlement. If you have three or more lodgers, you'll will be seen as running a House in Multiple Occupation. In this case you may have to obtain a license from your local authority.

So, is it a good idea to help pay the Mortgage with a lodger? Only you can decide if you want a stranger in your home. If that is not a problem with you than it probably is.


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