Should I let my tenant rent out the spare bedroom to a lodger?

by Readers Question

5 years ago

Should I let my tenant rent out the spare bedroom to a lodger?

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Should I let my tenant rent out the spare bedroom to a lodger?

Should I let my tenant rent out the spare bedroom to a lodgerMy tenants have requested my permission to rent out a spare bedroom to a lodger.

I have three tenants, a husband and wife and the husbands brother renting a 2 bed 2 bath flat from me. However, the brother has moved out.

They are currently on a periodic tenancy and have decided they can’t really afford the rent on there own, hence their request for permission to let the second bedroom to a lodger.

If I say no then they will have no other choice but to give me notice.

Should I allow this?

If so do I need to create a new tenancy or can I just leave them on periodic and do a letter to them explaining that they are responsible for any damages caused by there lodger?

Should I insist upon them using a specific type of lodgers agreement?

Thanks for your advice.

Rob Walsh

Comments

Don Holmes

5 years ago

What is different "one in one out" but I would strongly recommend a new AST as the Law is clear, all persons residing over 18 should be on the tenancy and maybe put a clause in there saying if the lodger/sherea changes you must be informed so you can prepare another one etc?

Lynne Davis

5 years ago

Technically it will be an HMO if the lodger isn't related to the couple - some lenders are OK with this as long as they're all on one tenancy agreement, but others may not be, so make sure it won't be in breach of your mortgage conditions.

I agree that it's a good idea to have them all on the tenancy agreement but for that to happen they all have to be willing to sign up to joint and several liability.

5 years ago

No there is NO requirement or need for a lodger to be put on the AST.
A lodger's agreement is ALL that is required.
Your AST is with the tenants.
You give permission for them to have a lodger/s providing they are aware that if the lodger/s don't pay then that is the tenant's problem not yours.
What the tenant cannot do is state the lodger hasn't paid me so I cannot pay full rent.
Your response will be I will enforce a notice to quit if you do not pay full rent.
A lodger has only security of tenure for 1 month.
1 month's notice will be given by the tenant.
If the lodger refuses to leave the police may be called to remove him.
The property won't be an HMO as there is only 1 additional household.
The tenants are effectively the owner of the property and the lodger the 2nd household.
I always give flexibility for a tenant to have an approved by me; lodger if that helps them stay tenants.
Which is the reason I got 2 bed properties as there is the flexibility for a lodger/s if required.

Rob

5 years ago

Well ive decided to give the couple permission to take someone in and they have now found a lady friend who they will be taking on a month by month basis. Weather or not its correct im kind of thinking turning a blind eye to it in the interest of keeping the tenants in there is the best thing to do. They pay me £1500pm for the property and have been there 3 years and have been as good as gold so i think it will turn out ok. If on the other hand i say no and they vacate i will then have to pay for an agent to get me another tenant and where im from a "tenant finders fee" ie the agent gets the tenant then i take over is a one off fee of £600+vat plus re protection of a deposit. I do think as a married couple renting the "property" from me they are free to do what they wish with the spare bedroom as long as its not illegal, they are still responsable for the property as a whole weather or not they have someone in the spare room or not. Obviously when they do vacate in the future any deductions needed will come from there deposit regardless of who damaged what.

Mark Alexander

5 years ago

Good morning Rob

I don't think the property will be an HMO as Lynne suggests, even if it is in Scotland. However, having never been asked this question I am reluctant to provide definitive advice on whether to re-let the whole property on an AST or whether you can give permission to sublet. The fact that the property is a leasehold concerns me as the lease may prevent your tenant from subletting.

Two people I'm certain will be able to give you a definitive answer on this are Tessa Shepperson from Landlords Law and Sam Cowen from SpareRoom.co.uk so I have emailed them both a link to this thread to request advice. Hopefully they will respond today.

Tessa Shepperson

5 years ago

My view is that allowing tenants to take in a lodger is a sensible solution to the problem of tenants being unable to afford the rent. However you do need to be careful about the HMO situation.

HMOs are a complex area of law - for example this is the definition in the act http://www.legislation.gov.uk/ukpga/2004/34/part/7/crossheading/meaning-of-house-in-multiple-occupation. (People who want some help in this area should click here http://www.schoolforlandlords.co.uk/landing/hmo-norwich/)

I understand taking in one lodger cannot of itself create an HMO situation although I can't at the moment find any authority for this. But I think they should be OK if it is just the one lodger. So long as the other people in the property do not consist of more than one 'household'. If they are a husband and wife that will be one household.

I agree that it is not necessary for a new tenancy to be given, in fact it may be better to allow the tenancy to roll on as a periodic as this will allow both parties to end the tenancy quicker if things do not work out.

Just a letter to the tenants saying that they are entitled to have one lodger but no more should suffice (keep a copy). This should, as one of the other commentators has said, make it clear that they are liable for any damage done by the lodger, and require proper referencing and paperwork.

They can find suitable paperwork here: http://www.yourlawstore.co.uk/catalog/lodger-landlord-products/

Rob

5 years ago

Thanks for the info mark and tessa it seems that my way of thinking was correct for once,thats a first! I agree if it helps my tenants out in regards to affordability then its defenatly a good idea to help them out in any way otherwise it ends up costing me money.

Sam Cowen

5 years ago

Rob, I would tend to agree with Paul. If you're happy for the couple to take in a lodger, you should recommend that they have a written agreement to remove any understandings about when the lodger's rent is due and who it is payable to. You can find a useful lodger agreement document to download at http://www.spareroom.co.uk/content/info-landlords/lodger-agreement/
As an alternative you could decide to rent out your property by the room, putting each tenant on their own AST. This would give you more control over who lives in the property and you don't have to worry about having a separate arrangement between your tenants and a lodger. You can find individual tenants who wish to share a house on SpareRoom, and avoid agents' fees. If you do go down this route, it's best to give the current tenants some say in who they take in as a flatmate, so that they are happy to continue living there with them.

Rob

5 years ago

Im probably thinking about this way too much now but if my tenant sublets the spare room to a lodger then that would basically make him a landlord to the lodger so;

1. Does he have to take a deposit off the lodger to cover damage?
2. Does he have to secure that deposit?
3. Is he liable for tax on the rent he collects from the lodger?

Tessa Shepperson

5 years ago

Quick answers

1. Does he have to take a deposit off the lodger to cover damage? - no, its up to him, you never HAVE to take a deposit

2. Does he have to secure that deposit? - No. It won't be an AST. The regs only apply to ASTs

3. Is he liable for tax on the rent he collects from the lodger? - Probably not as there is the rent a room tax allowance

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