This "Rent a Room" Agreement is especially for use where the landlord is also resident in the home in which rooms are being let to lodger(s). Appropriate for use in conjunction with the HM Revenue tax Rent a Room scheme. Drafted for use in England and Wales.
Renting out a room in your own home is a good way to earn extra money. HM Revenue & Customs supports such arrangements by allowing a certain amount of rental income (£7,500 per year) to be tax free. This is known as the Rent a Room scheme (see below). Room Rental Agreements are popular with students and young people leaving home for the first time because it can be more affordable to rent a single room than a whole property.
Rent a Room Scheme
The Rent a Room scheme applies only to owner-occupiers and tenants who receive rent from letting furnished accommodation in their only or family home. Your only or family home is the one where you/your family live for most of the time. A lodger is someone who pays to live in your home, sometimes with meals provided, and who shares the family rooms. A lodger can occupy a single room or an entire floor of your home. However, the scheme does not apply if your home is converted into separate flats that you rent out, nor does the scheme apply if you let unfurnished accommodation in your home.
Right to Rent
From 1 February 2016 all residential landlords/agents in England need to check that someone has the right to live in the UK before letting a property to them. This includes landlords who take in lodgers or sub-let property. Failure to carry out proper checks can result in criminal sanctions from an unlimited fine to five years' imprisonment or both. It applies to new tenancy agreements entered into on or after 1 February 2016. For further information see the official code of practice.
Why have a written Lodger Agreement?
It is important to have a Rent a Room Agreement (often referred to as a House Share Agreement or Lodger Agreement) when letting out a room in your own domestic property setting out the basic terms and conditions of the tenancy, including what either of you will need to do to terminate the lease. Having a written agreement lets the parties know where they stand in relation to their obligations such as rent, the deposit, method of payment, payment dates etc and can help prevent disputes if anything goes wrong. There are no statutory rules governing rental tenancy agreements so the landlord has much more control over the let.
It is recommended that the Rent a Room Agreement is prepared in duplicate and both copies should be signed by all parties, with both the landlord and tenant retaining a copy. An inventory should also be prepared of the furnishings or equipment included in the room.
Licence to occupy
In a rent-a-room agreement only part of the landlord's home is let to the renter. The lodger has occupation of his designated room and shares the use and facilities of the house or flat (such as the bathroom, kitchen and sitting room) with the landlord. Such an agreement is called a licence to occupy. The lodger does not have security of tenure, meaning that the lodger cannot stay on in the property if the landlord gives him notice to leave. This is unlike a tenancy agreement or an assured shorthold tenancy (AST). With an assured shorthold tenancy, the entire property is let to the tenant(s) by a non-resident landlord. There are strict procedures regarding notices which must be given with ASTs to allow the landlord to repossess the property. For the agreement to be a rent a room agreement and not an assured shorthold tenancy agreement and to qualify for the Rent a Room scheme the following must apply:
- the room being let must be part of a house or apartment which the landlord occupies as his only or principal home;
- the lodger must be allowed to share with the landlord and other occupier(s) of the property the use and facilities of the common parts such as the bathroom, toilet, kitchen, sitting room etc. The lodger must not have exclusive possession of a self-contained part of the house or apartment;
- the lodger must use the property for residential purposes only and can't run a business from the property.>
Houses in Multiple Occupation (HMO)
Unless you want the property to become an HMO, you should not take in more than two lodgers. If more than two unrelated lodgers live with a landlord then the landlord may have to apply for a licence. HMO stands for House in Multiple Occupation and generally refers to one of the following:
- a house split into bedsits;
- a house or flat share where each tenant has their own tenancy agreement;
- students living in shared accommodation.
There are strict regulations governing HMOs so to avoid this you should stick to a maximum of two occupiers.
Rent a Room Tenancy Agreement Checklist
Before you take in a lodger, you need to check with your mortgage lender, landlord (if you yourself are a tenant) or local authority (if you're in a local authority owned property) to make sure you can legally do so. Unless you own your property outright it's always best to check that this is allowed.
You should inform your insurance provider to make sure your housing insurance still covers you and so you can let your lodger know if they'll need their own insurance. You're not obliged to insure your lodger's personal possessions. You can find flat/house share contents insurance providers on the internet which your lodger can use to cover his belongings.
If you're paying reduced council tax for single occupancy you will need to let the council know. If you pay reduced council tax then your lodger will affect this and you'll almost certainly be liable for the full amount. You can get this back from your lodger as part of the bills they pay. If your lodger is in full-time education or on a government youth training scheme they may be exempt from council tax liability so check with your local authority.
Get your lodger to set up a standing order for the rent. This takes the personal element out of collecting the rent and provides a record of all the money the lodger has paid to you, which will be invaluable in the event of any disputes.
As a resident landlord, you have a duty of care to your lodger and you must keep your property safe and free from health hazards. You must make sure that all gas and electrical equipment in your property has been safely installed and is maintained. You must ensure that all gas appliances, flues and installation pipe work in the property are checked by a Gas Safe Registered engineer on an annual basis. You must also follow fire safety regulations - for example, by checking that your lodger has access to escape routes at all times and ensuring that all furniture and furnishings comply with the relevant fire safety rules.
This agreement is suitable for use in England, Wales and Scotland and includes clauses covering:
- The amount of rent and deposit payable and the term of the tenancy
- Right of tenant to use common facilities
- Landlord's obligation to insure the property and keep wind and water-tight
- Right of landlord to charge interest on late rent payments
- Tenant's obligation to pay share of bills and council tax
- Tenant's obligation to keep the room and shared areas in good order and repair
- Use of the property for residential purposes only
- Not to cause nuisance or annoyance to others
- Not to keep pets without written permission.