Guide to live-in landlords

If you rent out a room or part of your home to a tenant or lodger, while also living there yourself, you’re classed as a ‘live-in’ or ‘resident’ landlord. Taking on a lodger, or tenant, can earn you some extra money, but it pays to be aware of the procedures you need to follow, and the rights and responsibilities of both parties. If things go wrong there can not only be the awkwardness of sharing a building, but also possible legal ramifications.

We’ve broken the article down into the following sections so you can quickly find the information you need:

• What is a live-in landlord?
• What are the benefits of renting out a room in your house
• The different types of tenancy with a live-in landlord
• Can a landlord live in a buy-to-let property?
• The first steps to becoming a live-in landlord
• Top tips to renting a room in your house
• What to do when things go wrong

What is a live-in landlord?

A live-in landlord, , also known as a ‘resident landlord’, is when a home-owner rents a room or part of their property in their permanent residence to a third party.

The term is interchangeable with ‘resident landlord’, and could equally apply to a tenant who is subletting a room in their rented home – as long it’s allowed in their tenancy agreement.

You are not a resident landlord if:

• The property is split into purpose-built flats, with the landlord in a separate flat to the tenants
• You are not considered in law to be ‘resident’ at the property

A self-contained annexe attached to your property may be considered as being in the “same building”, but where it is built in the garden, for example, it is likely to be considered as a separate property and should be rented out on an assured tenancy.

 

Can a live-in landlord have two residences?

The law states that you, as the landlord, must be using the property as an only or principal home, at the start and throughout the period of letting.

So yes, in theory, you can have two residences – for example, you may own a main home and rent out a part of it to a lodger, while also owning a holiday home that you visit from time to time.

But you can only have one main residence. This is important, because if you rent out a room in a property that is not your main residence, your tenant should be covered by a regulated or assured tenancy, which gives them greater rights.

 

What are the benefits of renting out a room in your house?

The main reason people choose to rent out a room, or part of their house, is to earn extra money. It could be you use the extra money to help pay the mortgage, to pay off other debts, to add to retirement savings, or just to top up your income.

Then there are the empty nesters, whose grown-up children have moved out and who like the idea of having some extra company – and someone to look after the house, and even pets, while they’re on holiday.

 

Are there any tax benefits to renting out a room?

Yes, the Government’s Rent a Room Scheme lets you earn up to £7,500 per year tax-free from letting out furnished accommodation in your home.

The tax exemption on renting a room in your house kicks in automatically if you earn less than £7,500, but if your income exceeds this you will need to complete a tax return and opt in to the scheme. The scheme does not apply to homes converted into separate flats.

 

Can I rent to more than one lodger?

Yes, if you have more than one spare bedroom, you can rent them out, but bear in mind that if you rent to three or more tenants who are not from the same family you become a house in multiple occupation (HMO), which has stringent licensing rules.

 

What are the different types of tenancy with a live-in landlord?

There are some subtle, but crucial, differences in tenancy types where a landlord shares a building with a tenant.

They are:

Excluded occupier

Excluded occupiers are lodgers, who share a portion of the property with their landlord or a member of the landlord’s family.

This is a typical situation where someone rents a bedroom to a lodger, who shares bathroom and kitchen facilities with the live-in landlord.

Occupier with basic protection

These tenants share the building with their landlord, but have exclusive occupation of their own accommodation and don’t share any areas other than stairs or storage facilities.

They have more rights than excluded occupiers, and landlords must go through a full eviction procedure if they want a tenant removed.

Read our Guide to the different types of tenancy agreements for more information on tenancy types.

Can a landlord live in a buy-to-let property?

No, the terms of a buy-to-let mortgage expressly forbid a landlord living in the property.

Doing so risks invalidating the terms of the mortgage, and committing the criminal offence of fraud.

 

Becoming a live-in landlord: first steps

Let’s assume you’ve decided to take the plunge and rent a room in your home. What legalities do you need to bear in mind, and who do you need to inform?

 

Who do I need to inform about renting a room?

You will need to inform your mortgage lender, if you have one, that you will be renting out a room in, or part of, your home.

If you are a long leaseholder, you should check the terms of the lease to ensure that you can let part of the property and, if necessary, get the freeholder’s agreement first.

Taking in a lodger can also affect any housing benefit you receive, so it’s worth checking with your local authority to see if any of these changes to your circumstances will have an impact on your payments.

If you live alone, you will be receiving a discount on your council tax, so you need to inform your local council that this is no longer the case.

Finally, you must inform your insurance company, and you may need to take out specialist landlord insurance to ensure you are fully covered for all eventualities.

 

Do I need a tenancy agreement?

You do not have to have a tenancy agreement unless the tenancy period is for a minimum of three years, but it is highly advisable that you have a contract for renting a room in your home as it will make it easier to sort out any disagreements which may arise later.

A tenancy agreement should cover:

• The period of the letting
• How much rent the occupier has to pay, and any arrangements for review if necessary
• How much notice each party will give the other to end the letting
• What meals or services will be provided, if any

 

What safety steps should I take when renting out a room?

There are three key areas you need to address when taking in a lodger or a tenant:

Fire safety: all furnishings supplied, including sofas and mattresses, must meet the fire resistance requirements.

There are no specific fire regulations, unless your property is classed as an HMO, but it is recommended that home-owners:

• Make lodgers aware of escape routes
• Smoke alarms must be fitted on every storey used as living accommodation, including bathrooms and toilets, and tested on the first day of a tenancy. Tenants are responsible for testing thereafter.
• Carbon monoxide alarms must be fitted in any room that contains a “fixed combustion appliance” (excluding gas cookers), such as a wood burner.
• Landlords must make sure that smoke and carbon monoxide alarms are repaired or replaced once they have been informed of a fault.
• Provide a fire blanket in the kitchen
• Provide a fire extinguisher

Gas safety: Gas safety regulations apply if you are taking in a lodger, which means you must ensure all gas appliances are maintained in good working order and have an annual gas safety carried by a Gas Safe engineer.

You must keep a record of safety checks and must usually provide the lodger or tenant with a copy within 28 days of the inspection.

Electrical safety: The Electrical Safety Standards in the Private Rented Sector (England) Regulations do not apply if you take in a lodger, which means there is no requirement to have an electrical inspection carried out every five years.

However, you still need to ensure the electrical installation is safe, including any appliances the lodger may use like kettles toasters and washing machines etc. You could be held legally liable in the event of an accident if the installation or device is deemed unsafe.

Read more: Electrical checks for landlords | EICR report guide

Ready to rent: top tips to renting a room in your home

Once you’ve got your home ready to take in a lodger and informed all those who need to know, it’s time to find your tenant, or lodger. Here, we’ll provide some tips to help get you up and running and try to ensure a smooth-running tenancy.

 

Set your rent

Before you try to find a tenant, work out how much you are going to charge, and think about what bills will be included in the rent.

 

Advertise your room

There are many ways to find a lodger, and your approach could depend on if you want to rent to someone you know or if you’re happy sharing your home with a stranger. If it’s the former, you may want to limit your search to work notice boards or putting the word out among friends, although this can be very limiting.

To spread the net wider, there are plenty of websites you can advertise a room on, including SpareRoom, ideal flatmate, or Rooms For Let.

 

Tenant vetting

It’s advisable to carry out some checks before a tenant moves into your property and signs a contract.

Our article, Do you really know who your tenants are? covers this subject in detail but, to summarise, landlords can access a tenant referencing service, which includes details on:

• Verification of income and a six-year credit history
• Details of any County Court Judgments (CCJs) and bankruptcy
• Validation of references from previous properties they have rented
• History of rent or mortgage arrears or repossessions

 

Right to rent immigration check

Private landlords are legally required to check the immigration status of all tenants, including lodgers, before they move in. Acceptable evidence includes a UK passport or right to residence document, or two other documents such as a UK birth certificate and driving licence. Landlords can check on the immigration status by requesting a Home Office right to rent check, or calling the landlord right to rent helpline on 0300 069 9799.

 

Protect your income

If you have used a tenant referencing service, and you have a written rental agreement in place, you can take out rent protection insurance to ensure you don’t lose out if your tenant fails to pay their rent.

Often, it is not the tenant’s fault that they cannot pay – they may have lost their job or been incapacitated through illness – but rent guarantee cover acts as a safety net to make sure you don’t lose out.

 

Write an inventory

If you are providing furnishings in the room or part of the house you are renting out, it pays to make a list of everything supplied and take photographs to note the condition. Any existing damage, like marks on walls or carpets, should also be noted.

The document should be signed by both tenant and landlord to prevent arguments about damage down the line.

 

Draw up an agreement

Although not a legal requirement for a lodger, it’s well worth having a tenancy agreement in place, so that the rights and responsibilities for each of you are clearly set out.

It should set out, at a minimum:

• The amount of rent payable, and when it should be paid
• The length of the agreement
• What the lodger can and can’t do, such as keeping pets, smoking, and use of common areas
• What services you are providing, such as cleaning and meals
• How the agreement can be terminated

Template lodger agreements are freely available by searching on-line.

 

Set the ground rules

Before your lodger moves in, set the ground rules of what you expect from them – it’s your home after all.

If you don’t want them coming in at 3am, playing loud music, smoking indoors etc, make sure you say so – and include them in the agreement.

 

Take a deposit

It makes sense to take a month’s rent as a deposit to cover the cost of any damages, returnable when the lodger leaves if there is no damage.

Unlike with the assured tenancies, there is no requirement to protect the deposit under a tenancy deposit protection scheme, but it’s wise to keep the money in a separate account so you know you can return it when required.

 

Resident landlord: when things go wrong

Hopefully, your life as a live-in landlord will go smoothly, but you need to know what to do if things go wrong.

We’ve looked at some of the most common issues, and how to deal with them.

 

Damage to property

If the lodger damages your property, you can deduct the cost of repairs from the deposit you have taken.

The inventory you have taken when the lodger moved in will help you provide evidence of the original condition of the property and its contents.

Should the cost of the damage exceed the amount of the deposit, and the lodger refuses to pay the difference, landlords can seek to recover costs through the small claims court.

This will only succeed, however, if you can provide evidence from a signed inventory.

 

Lodger causing a nuisance

Sharing your home with a lodger can sometimes give rise to tensions, and it won’t always be because of obvious bad behaviour or damage.

It may simply come down to a clash of lifestyles between night owls and early birds, for example, or how loud they play their music or watch TV.

Hopefully, you will have set down the ground rules at the start of the lodging, but there can still be issues that need to be dealt with. But how?

Sometimes issues can be resolved with a polite conversation or informal letter, but if this doesn’t resolve the problem you should write a formal letter to the lodger informing them that if things do not change they will be asked to leave the property.

This is the first legal stage in evicting the lodger, which is covered below. Do not try to force the lodger out using bullying, intimidating or violent behaviour.

If the lodger’s behaviour crosses over from annoyance to criminality, landlords should inform the police, who will then have documentary evidence of the lodger’s behaviour.

 

Failure to pay rent

Recovering unpaid rent will be much easier if you have a basic tenancy agreement in place, which forms a legally binding contract and sets out how much and when rent should be paid – and the consequences of non payment.

It will also enable you to claim on your rent guarantee insurance should you not be able to extract payment from your lodger.

If your lodger is late with the rent, first speak to them to find out why. If you’re happy with your lodger, you may be able to come up with a solution if, for example, they are temporarily out of work – either paying the arrears in instalments or reducing the rent until they have a new job.

Failing that, you should:

• Write a letter detailing the amount overdue, and when it should be paid by
• If the rent is still unpaid on that date, write a formal letter warning them you will issue a ‘notice to quit’ unless the rent is paid
• If all this still fails, issue a ‘notice to quit’, giving a date by which they must leave the property

Landlords can make a claim to the courts for the unpaid rent, or via their rent guarantee insurance.

 

Evicting a lodger

As we’ve mentioned, there are two types of tenancy under a “resident landlord” arrangement:

• Excluded occupiers, where they share living accommodation with the homeowner, like a kitchen and bathroom
• Occupiers with basic protection, where they live in the landlord’s home but do not share any facilities other than stairs, hallways and storage.

The eviction process is different for each.

To evict an excluded occupier:

For an excluded occupier with no tenancy agreement, the landlord only has to give reasonable notice to end the letting, and they do not have to go to court to evict them.

The notice to quit period is usually the period of the rental payment, either a month or a week.

After this time, the homeowner can change the locks on the property, but must return any belongings left behind.

 

Where you have a signed tenancy agreement for, say, six months, you will only be able to evict the occupier during the tenancy if they have breached a term of the contract.

If they refuse to leave after you have served a notice to quit, you will almost certainly need a court possession order to force them to leave.

At the end of the tenancy period, there is no legal requirement for you to get a possession order so long as notice has been correctly given.

To evict an occupier with basic protection:

This type of tenant has more rights than an excluded occupier, and the landlord must serve them a written ‘notice to quit’.

If the lodger doesn’t leave, the landlord will need to get a court order to evict them.

 

How do I get a court possession order?

If you need a court possession order to evict a lodger, for any of the reasons noted above, landlords should complete the relevant forms, available from the local county court, and provide any supporting evidence.

The court will then serve the summons, with details of the claim, by post to the lodger or tenant,  notifying him or her and you of the date of the hearing.

The lodger will be invited to complete a ‘defence form’, which they should return to the court within 14 days if they dispute the eviction.

Both parties should then attend the court hearing, where the judge will award you possession at the end of the tenancy period as long as you have followed the correct procedures, or if they consider their behaviour to have breached the tenancy agreement.

Sometimes, the court may postpone the start date of the possession for up to six weeks

In some cases, the court can postpone the start date of the possession order for anything up to 6 weeks and, if the lodger has not left by then, you can apply for a warrant of eviction, when bailiffs will evict the lodger.

 

For more information about live-in landlords, the government has issued extensive guidance, and or a wealth of other information about becoming a landlord, visit our landlord hub.