Lessons Learned Having a Lodger

When I was looking for my first house, I already knew that I wanted to rent out at least one room. It affected how I looked at properties, sizing up the suitability of the area, local amenities and rooms to other young professionals less frugal awesome than myself.

In the end, it happened much faster than planned. A friend of mine living in a house share that was going its separate ways was looking for somewhere to live. Another young professional, he also wanted to buy a place in the next year so wanted a flexible tenancy without a fixed term, and that didn’t cost the earth. So he reached out to me. We had a chat, he came over to look at the place and ended up moving in only three weeks after completing the house sale! Just shy of six months on, I though I would share some of my experiences as a first time live-in landlord.

 

Communicate

 

This is key. You want to sit down and talk about the arrangement with any potential lodger. Things to discuss include rent, what is and isn’t included (i.e. bills, council tax, furniture), use of shared areas in the property, and expectations on both sides in terms of maintenance, cleaning, and so forth.

 

If you don’t know the person, and to be honest even if you do, you should consider getting references. Knowing someone personally or professionally isn’t the same as what they’re like as a tenant or to live with. Ever been to a colleague’s place and been surprised to see a respectable person lives in a pigsty? I sure have.

 

Get it in writing

 

All the above should be documented on a tenancy agreement that both parties agree to and sign. List all of the responsibilities of both parties, any deposit amounts, tenancy length or agreed notice periods. You can get free templates for this online to guide you, and it is still worth doing this if your lodger is going to be someone you know personally. Friendships have ended in bitter court battles over less, and I’d hazard a guess the friendship isn’t worth losing your home over.

 

You may choose to include a trial period of several weeks or months to see whether both parties are happy with the set up, and after that have either a fixed term or rolling tenancy. Setting a notice period of at least a month also gives you time to advertise and look for a new lodger if they decide to move out, and also gives them some assurance that you aren’t going to toss them out on the street if you have a disagreement.

 

You need to remember to look after the pennies!

The money

 

Now, the all important moolah! In setting rent levels, start by looking at your mortgage, bills and any associated taxes you currently pay. Then estimate how much those bills are likely to go up with another person in the property. Think of energy consumption, water use, and for those in the UK you will no longer be eligible for single occupancy discount on council tax if you currently live alone. Work out how much of this you can reasonably expect to be covered by a lodger (unfortunately they may not be happy covering it ALL), and look at local listings for similar properties on sites like spareroom.com to see what the going rates are.

 

Bear in mind that higher rents may mean that a tenant is more likely to look for somewhere cheaper if hard times hit, leaving you without a tenant. Of course you need to get a fair price, but if your tenant is also getting a good deal they’ll be more likely to stay and continue paying.

 

Some people charge for bills separately to the rent, others bundle them all in together. For ease, I charge one amount for all rent and bills, but there is an argument for charging separately to encourage appropriate use of utilities. Each to their own.

 

When it comes to collecting the money, I would advise anyone looking to get a lodger to ask they set up an automated payment for rent. There’s no reason nowadays to have to rely on them remembering to make payments each month, and I wouldn’t take anyone on unless they agreed to automated payments. It’s much safer and more reliable, so is a no brainer!

 

Look after your lodger, and yourself

 

It’s important to make sure you have adequate cover home insurance when having a lodger. Your insurance provider needs to know about any lodgers, as if anything were to happen to your home and your living situation doesn’t match what’s written on your policy, your policy may be invalid.

 

Similarly, you need to ensure the property is kept in a reasonable state of upkeep and manage any issues in a timely fashion. For example, while away over the New Year I received a text from my lodger who had come back to the house to find no hot water or heating. The boiler had packed in while we were both away, and while my lodger was back home I was out of the country for a further five days. I had a discussion with them and offered to get an engineer out asap, but they were happy to wait until I came back (it has a fire and electric shower, so it wasn’t completely cold). I had an engineer arrive an hour after I got back, and with the diagnosis terminal for the boiler arranged to have it replaced at the soonest possibility.

 

If it was just me in the house, I probably would have taken more time and hung on, and maybe gotten a slightly better deal. But by looking after and keeping my lodger happy, the rent they pay regularly more than makes up for the small savings I maybe could have made by looking around longer for new boilers.

 

The verdict, and lessons

 

The last six months of owning a house and having a lodger have been an overall positive experience. It’s provided a regular stream of income, meant there’s someone I get along with at home, and taught me some lessons about being a live-in landlord. So what lessons have I learned?

 

  • As a side income, it can pay well from the very start. I will however charge more to any future lodger, to more accurately reflect rents in the local area
  • It can work having a friend as a lodger. Not always, but at least so far so good.
  • It’s always worth having easy access savings for emergencies, like a new boiler.
  • Discuss at the outset what responsibilities each person has. For example, is the lodger required to help cleaning the bathroom/kitchen?

 

So, that’s me! I’d love to hear from anyone else with experience of taking in lodgers, or is thinking of doing so. Horror stories welcome.

 

TFE

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