A homeowner’s guide to taking on a lodger

POSTED: 14th August 2014
IN: Personal Guides

With a rising proportion of UK homeowners renting out rooms in order to supplement their savings or share household costs, Aldermore explores the necessary precautions to ensure taking in a lodger pays off.

undefinedAccording to room rental website, landlords can expect to earn £5,593 per year on average for renting out a room, rising to £7,667 in London. While this additional income can provide a significant boost for households, it’s important to consider the relevant legal implications and potential risks before inviting a tenant into your home.

As a first step, budding landlords should get in touch with their mortgage provider to ensure there are no impediments to taking on a lodger within their current mortgage agreement. Similarly, failing to let insurers know of the change in circumstances could render home contents insurance invalid, so policies must be updated to protect against possible damages, which may cause premiums to rise.

Another financial concern to bear in mind is the impact rental income may have on current tax credits and benefits. The government’s Rent a Room scheme means landlords are entitled to £4,250 tax-free yearly earnings from rent, though homeowners living alone are likely to lose their 25 per cent council tax reduction if another working adult moves into the property.

Once these calculations have been made, if letting out a room emerges as a profitable option, households must ensure their home meets certain health and safety standards before seeking a lodger. Plumbing, electrical and gas systems must all be in good working order, furniture must comply with fire safety regulations and the house must be deemed clean and free from hazards.

When looking for a tenant, would-be landlords should vet candidates thoroughly before entering into an agreement, and it is advisable to ask for credit checks and references. Writing an inventory, with accompanying photographs, and requiring lodgers to sign an official housing contract are also essential precautions.

Once moved in, landlords should encourage lodgers to set up standing orders for monthly rent to minimise the risk of missed payments, as taking legal action to reclaim unpaid rent can be a costly process.

For further advice on avoiding unnecessary expenses around the home, take a look at Aldermore’s money-saving home maintenance calendar.


  • Consider legal implications
  • Check with mortgage provider
  • Update insurance
  • Review impact on benefits/tax credits
  • Ensure health and safety standards are met
  • Obtain candidate references and credit checks
  • Create an inventory
  • Sign a contract
  • Encourage standing order payments

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