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The current squeeze on household finances means that some people are exploring how renting out a room in their house could help ease the strain. From a tax perspective, it looks like a positive action. Under the Rent a Room scheme, homeowners could receive £7,500 in tax-free rent from a lodger. That’s up to £625 per month. It might mean the difference between cutting costs elsewhere and retaining your lifestyle and, in some cases, your home.
To qualify as part of the Rent a Room scheme, the room to be rented out must be in your main home – and be furnished. All furniture must comply with fire safety regulations and gas appliances must be checked annually by a Gas Safe-registered engineer.
2. Verify that you can invite a lodger into your home
Contact your mortgage company (if you have one) as they will need to confirm that your mortgage agreement allows you to have a lodger. Your home insurance provider also needs to be informed and your policy updated. Be aware that your premiums might increase. You also need to inform your local council and, if you live alone at the moment, you will lose the 25% single-person discount on council tax (unless the new lodger is a full-time student).
3. Complete some checks
If you are welcoming someone you don’t know into your home, you might want to carry out a credit check, take up references and apply for a DBS (Disclosure and Barring Service) check. You also need to check that your lodger (if over 18 years) has a right to rent. If you don’t check, you could be fined or face a prison sentence. Find out more at: www.gov.uk
4. Sign an agreement
A lodger is not a tenant. As such, they have no protection from a tenancy agreement. However, it does makes sense if you and your lodger sign an agreement, setting out the rights and responsibilities for each of you. It’s also a good idea to draw up an inventory of the furniture and fittings provided in the lodger’s room and take photos to show their condition, as this might help prevent disputes when the lodger moves out.
5. Understand the impact on your own benefit payments
The first £20 of weekly income from a lodger is ignored if you currently get housing benefit and it won’t affect your benefit. If you choose to include meals as part of your lodging arrangement, 50% of anything over the £20 is also ignored. If you’re receiving Universal Credit, income from lodgers is ignored unless you live in social housing.
For more information about taking in a lodger, visit the Citizens Advice website:
https://www.citizensadvice.org.uk/
Phone our general Advice Line on 0800 144 8848 (Mon-Fri 10-5). Alternatively, find more information at citizensadvice.org.uk. If you’re in Surrey Heath: call 01276 417900 and leave a message for a call back or email client@camberley.cabnet.org.uk.