Lodgers in rented properties

If you breach the terms of your insurance policy, this will give your insurers a reason to refuse to pay any claims you may need to make in the future



Allowing a tenant to take in a lodger often seems like the ideal solution, if they have a spare room in the property.

  • It allows them to earn some extra money (tax-free under the rent a room scheme)
  • This makes it easier for them to pay their rent,
  • Which may mean that they can stay in the property longer avoiding voids, and
  • They are able to provide accommodation for someone who might otherwise find it difficult – thus helping the housing crisis

However, sadly there are a number of problems which can arise which means that in many cases you will have to say ‘no’, often in situations where you would prefer to say ‘yes’.  So lets take a look at these and consider when you can and when you can’t safely allow your tenant to take in a lodger.

Mortgage and insurance

You need to be sure that allowing your tenants to have a lodger will not be against the terms of your mortgage (if you have one) or invalidate the terms of your insurance.

  • If you breach the terms of your mortgage, this may allow your mortgage company to call in the loan.
  • If you breach the terms of your insurance policy, this will give your insurers a reason to refuse to pay any claims you may need to make in the future.

So read your policy or speak to your mortgage company and insurers about this.  Be aware that some do not permit subletting to lodgers.

However provided you make full disclosure and they accept this, and provided care is taken in the choice of lodger, then you should be all right.

But don’t take it for granted.  Check first.

If you are otherwise able to permit a lodger but your insurer is being difficult about this, note that Alan Boswell Group can provide a landlords insurance policy where lodgers are permitted.  >> See here for more information (and they will try to beat your current premium too!)

HMO issues

Lodgers count for HMO purposes!  But the rules are different depending on whether you are the property owner renting to lodgers or a tenant renting to lodgers.

  • If you are the property owner, then you can take two lodgers into your own home (or rather any lodgers must not form more than two ‘households’) before your property is classed as an HMO.
  • However, for tenants, there is no special rule.  So
    • If the lodger is a relative, such as a cousin or a grandchild (ie if they are deemed to form part of your tenant’s household) then this will not change the HMO status of the property, but
    • Otherwise, this may turn the property into an HMO or cause it to become a licensable HMO.

The significance of allowing your property to become a licensable HMO is that:

  • You will have to pay the license fee (which could be up to £1,000 or more)
  • There are usually significant improvement works which Councils require landlords to carry out to properties as a condition of granting a license
  • If you do not have a license for a licensable property:
    • You cannot serve a valid section 21 notice
    • You can be prosecuted and fined or the Local Authority can serve a penalty charge notice on you for up to £30,000
    • Your tenants can apply for a Rent Repayment Order at the First Tier Tribunal.

So it is important that you are careful about granting permission and only do this in situations where you will not be at risk.

Let’s take a look at a few examples:

Example 1

Amelia is an elderly spinster who lives in the property alone. She is finding it difficult to manage on her pension and wishes to take in a lodger to make ends meet.

Answer: The HMO regulations provide that two people sharing cannot constitute an HMO.  So from an HMO point of view there is no reason why you should not agree to let Amelia take in a lodger.

Example 2

Belinda is a single parent with one baby daughter.  She asks permission to rent a room to her niece Sally who is going to be a student at the local college.

Answer: As Sally is a blood relative, she will count as part of Belinda’s household and so, again, there is no HMO related reason why you should not agree to her request.

Example 3

Colin and Celia want to rent a room in their house to Sandra, who is the daughter of Celia’s best friend and is looking for cheap accommodation as she has been offered a job in the local area.

Answer: As Sandra is not a relative of either Colin or Celia, then she will count as a separate ‘household’.  This will mean that allowing her to move in will make the property an HMO.  However, as there will only be three occupiers in the property it will not be a licensable HMO.  Unless your Local Authority has an additional licensing scheme – so you will need to check this.  You can do this using our Local Authority Directory.

Example 4

Diane and Doris are two single parents who share a house to save on expenses.  They both have one child each – David and Dennis.  They want to take in a lodger in the spare room as they are finding it hard to manage on their joint income as they both only work part-time.

Answer: The property is already an HMO as Diane and her son David form one household and Doris and her son Dennis form another.  At the moment as there are only four people living there the HMO is not (subject to any Local Authority additional licensing scheme) licensable.  However were they to have another person living at the property – even if it were a relative of Diane or Doris, this would bring the property into scope for an HMO license.  You, the landlord should refuse permission.   Unless you are willing to pay the cost of licensing and of any improvements to the property demanded by the Council as a condition of granting the license.

If Diane and  Doris had been sisters or cousins, and the proposed lodger was another family member, then this would not create an HMO and you would have no reason to refuse.

Example 5

Edgar and Emily have three children.  Edgar works full time and Emily stays at home to look after the children.  However, she is an experienced hairdresser and has just been given an opportunity to work at a local salon.  Edgar and Emily have asked permission to use the spare room for an au pair to look after the children to allow Emily to work full time.

Answer: This will be fine.  Although there will be six people living at the property and the au pair is not a family member, as she is employed to look after the children she counts as part of the same household so an HMO will not be created.

The Landlord Law Lodger Agreement

Click here

Other problems

If taking in a lodger will not create a licensable HMO and there are no issues with your mortgage or insurance, what are the other potential issues that arise?  These are some of the main problems that worry landlords:

  • The tenant may choose a lodger you do not approve of
  • There will be more wear and tear on the property
  • The lodger may acquire a tenancy
  • If the tenants move out leaving the lodger in occupation it may be difficult to get rid of them.

Lets take a look:

Choice of lodger

You can grant permission on condition that you are shown any reference material and must approve the identity of the lodger in advance.  In most cases the tenant will be as anxious as you to avoid anyone of bad character – this person will, after all, be living in their home.

Wear and tear

Arguably the cost of this will be offset by the saving you will make in not having any voids.  However, if this concerns you, you can always agree to the lodger on condition that there is a modest rent increase to take account of this.

Acquiring a tenancy

No lodger can acquire a tenancy from you without your consent.  The fact that a lodger is in occupation will not somehow change the terms of your tenancy agreement with the tenant.  The only type of tenancy the lodger can acquire is with their landlord, your tenant.  This will be avoided if you insist that the lodger is not given exclusive occupation of their room and that the lodger shares living accommodation with your tenant.

It is important that the lodger shares living accommodation with your tenant (for example kitchen, bathroom and living room – corridors, halls and cupboards do not count) as this will mean that under the Protection from Eviction Act 1977 your tenant will not need to get an order for possession to evict (for example if the lodger proves unsatisfactory) – even if the lodger does actually have a tenancy of their room.

Lodger remaining after the tenants move out

This can be a problem.  However, it is less likely to be a problem if your permission is granted on the basis that they will be liable to you for the costs of obtaining vacant possession if this happens.  Make sure your tenant understands this from the start.

You should also make any agreement to a surrender of the tenancy conditional upon your tenants giving you vacant possession – and ensure that this is put in writing.

If the lodger proves difficult when asked to leave, there is guidance on the Lodger Landlord website (days 19 and 20).

The Landlord Law Service

In order to help landlords who are minded to allow their tenants to take in a lodger we have have the following documents:

An agreement form to allow a tenant to grant a lodger license

This form, once signed and dated, will amend the terms of your tenancy agreement and so should be kept with it.

It sets out the various terms under which you are willing to allow your tenant to rent a room to a lodger.  So long as your lodger complies with the various terms and conditions you should not experience any problems.

We recommend that you sit down with your lodger and discuss the agreement in detail to make sure they understand all the clauses and why there are there.

You can generate the form via the button below:

A lodger agreement and notes

This puts a lot of protection in place – for example, it provides for the agreement to end if the lodger fails to pay more than two months rent – allowing the lodger to be evicted easily.

The Lodger Agreement is the same as the one sold via the Your Law Store website but the notes have been re-drafted to be more relevant for lodger landlords who are themselves, tenants.  Which should be helpful for you.

Click here for the lodger agreement.


In short:

  • Always check first with your mortgage company and your insurers
  • Unless the property is already a licensable HMO, be careful not to grant permission in circumstances where a licensable HMO will be created
  • If you are willing to grant permission, always use the Landlord Law lodger form, and discuss the terms of this with your lodger
  • Provide your tenant with a lodger agreement (for example the Landlord Law Lodger agreement) and insist that they use it
  • Finally, if the tenants want to surrender their tenancy – make sure any agreement is conditional upon them giving vacant possession, and ensure this is put in writing.

Further Information

Your Law Store also has a handy ‘New Lodger’ pack with checklists, reference forms and a ‘right to rent check’ form.  Your Lodger can buy this  here (choose the New Lodger pack alone) and get a 20% discount with the coupon code lllodge20.

Note – if the lodger is only going to be living at the property for a few days per week, the  Your Law Store also has a ‘Monday to Friday’ lodger agreement.

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