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Renting to Lodgers

from "UK Landlord" magazine, November 2007

Homeowners who rush into renting to lodgers in an effort to offset increased mortgage repayments may regret the decision if they fail to take adequate precautions.

According to a survey of mortgage borrowers conducted by propertyfinder.com, 24.6 per cent of borrowers would consider taking in a lodger to increase their incomes if interest rates continue to rise, while a further 19 per cent would do so if they had the space. This may be attributable to government incentives: Owner occupiers who rent to furnished accommodation to lodgers can receive up to £4250 tax-free, or £21 50 if renting it jointly, under the government's Rent a Room Scheme.

The NLA reacted to the survey with a warning to owner occupiers to take care when taking someone unknown into their home and advised that formal written agreements between the lodger and landlord are "a must" for anyone considering this route. NLA Chairman David Salusbury noted, "The extra income is great, but people should be cautious of relying on it - lodgers are short-term and landlords should be wary of relying on this income. The NLA would recommend getting advice from a reputable landlords association before entering into any arrangement with a lodger.

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