Lodger agreement: licence to rent a room
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About this lodger agreement template
Renting out a spare room can be an attractive way of earning extra cash to help pay bills while having company.
This lodgers agreement gives permission to one or more people to occupy a room in your home under the terms you want.
It is far simpler to use than an assured shorthold tenancy agreement for a single room, but should only be used where the landlord will live in the same property as the lodger.
There is no requirement to have a formal written legal lodger agreement, but having one clarifies what the prospective lodger can expect and provides a reference point should any dispute occur in the future.
Whether you’re renting a room to a friend for a month or two, or wanting a long term lodger, there are practical and legal advantages of having the rental terms in writing.
The law relating to this document
If you are taking a lodger in as a flat or house mate, this is the document you should use.
Your property can be located anywhere in the United Kingdom.
In legal terminology, this document is 'a licence to occupy', giving permission to live in a property without that person becoming a tenant.
A tenancy agreement is often not appropriate for two reasons.
Firstly, the landlord living in the same property as the 'tenant' is one of the circumstances under the Housing Acts that automatically invalidates use of an AST.
Secondly, tenancies give the tenant greater rights to residence, and more rights generally, than in lodging arrangements.
Licensees do not have the same rights as tenants, notably in respect to ending the arrangement. For example, you won't need a court order to evict a lodger who refuses to leave.
Note: if you claim tax free rent allowance under the Rent-a-Room scheme the property must be your principal private residence. We suggest you seek tax advice if the rent you receive is above the threshold. You can still use a lodger agreement if the property is not your principle residence but you must live there for a significant amount of time.
The applicable law to this document is basic contract law, so it can be used in Scotland, England and Wales. It also complies with the Tenant Fees Act 2019.
Other names you might see for a lodger agreement include: residential licence to occupy, rent-a-room agreement and lodger licence.
When to use this lodger agreement
This document is commonly used in the following circumstances:
a property owner renting out a spare bedroom in their main home
a student owner landlord renting spare rooms in a property to other students
It is suitable for any type of property: flats or houses, and can be used to let more than one room in the same property. You can reuse it for subsequent lodgers.
You can also use this lodgers agreement to sub-let a room if you rent under a tenancy agreement (subject to being allowed to sub-let) and subject to someone on the original agreement still living at the address.
That makes the document suitable, if, for example, you are renting with friends under an AST but decide to go travelling for a couple of months and want to rent out your room while you are away.
The agreement is not suitable if:
The lodger will run a business from the property
The prospective lodger will occupy the whole property and the landlord lives elsewhere (use one of our ASTs)
Helpful and practical pointers for lodger agreements
Taking a deposit
Taking a deposit (a bond) can be done (and is covered in this lodger agreement template) but we advise that if you can avoid doing so, you should. A court may see a deposit as pointing toward this arrangement being a tenancy.
The law relating to tenancy deposit schemes applies only to assured shorthold tenancies. So if you do take a deposit, you don't need to use these schemes. However, it is a good idea to keep the money in a separate account to that which you use for your other household finances.
When a deposit is taken, it is often as a safeguard against the lodger failing to pay rent. So keep the amount proportional to the rent period. If the rent is paid weekly, take one week's rent; if paid monthly, take one month's rent.
The licence fee can be set at any amount and can be payable however often is convenient to you both. Room rents tend to be comparable to market rents for similar properties as your own, pro-rated to reflect that the lodger is renting a room and sharing common spaces.
It is usual to take rent in advance, and for the lodger to pay the first month's rent (or the first week's rent) when they sign the agreement.
The licence does not usually include other costs of living in the property, such as a share of gas, electricity and water rates bills. A separate contribution to these should be agreed.
Council tax is an exception. Commonly, the property owner pays the council tax since he or she is responsible for it, and the licence fee is adjusted to reflect the lodger's share.
Right of access
Work in to your agreement the right for you to enter the lodger's room at any time. Although this needs to be done discretely, if you retain access, you avoid giving the lodger exclusive possession of the property and that identify your arrangement as a licence.
An inventory might not seem necessary if the lodger is renting a room. But consider that they will also use common areas such as the kitchen, living room and bathroom. By including at least a partial inventory, the lodger becomes responsible for the care of items listed on it and liable for their damage, wherever in the property they are located.
Ending the agreement
Living with a lodger can be less pleasant once you’ve given him or her notice. Consider a short term. The expectation of a short arrangement will make giving notice easier (e.g. you can mention that you don’t plan to renew, rather than that you want your lodger to leave).
We recommend granting a licence on a short-term basis (less than 12 months) and renewing it when it expires.
Early termination is implied by law if there is unreasonable behaviour by either party. What is unreasonable is subjective, which is why it is easier to rely on giving a usual notice period unless the behaviour is without doubt very serious. The lodger's obligations continue until the termination date.
If you take a prior residential address (even if it is their parent's or another family member's principal home) before the lodger moves in you may find it easier to resolve disputes over unpaid rent or damaged items on an inventory.
This document was written by a solicitor for Net Lawman. It complies with current English law.
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