Find out if you can rent out your spare room
** Information from DWP Factsheet
From April 2013 there will be new rules in Housing Benefit for working-age people living in social housing. Housing Benefit will no longer pay for bedrooms that they decide you do not need.
For some people, offering out a spare room to a lodger may be a sensible option. This would mean that Housing Benefit would no longer consider the room to be spare.
In addition to this, the first £20 of weekly income from a lodger is ignored and won’t affect your benefits. If you receive more than £20 a week in rent, the extra cash is likely to affect your benefits - although overall you should still be better off.
Your local authority or an advice organisation will be able to advise you on the effects additional income will have on your benefit.
Homeowners and tenants who let furnished accommodation and take in a lodger are exempt from paying tax on rental income of up to £4,250 a year – and because it’s tax free, it also won’t affect the amount that you receive in Child Tax Credit or Working Tax Credit either.
Step by step guide to renting out a room
Step One – Get your house rent ready
Make sure your home and the room you want to rent out is safe, fire proof and that you have general safety sorted.
If you are planning to rent out a room, let your landlord know as you may need to get permission first. Councils and housing associations usually allow tenants to take in a lodger, but you have to check and get permission.
Also speak to where you claim benefits to check if the extra cash affects your entitlement.
A general guide to letting a room is available here. Further information on the Rent a Room scheme and taking in a lodger is available here. It may also be worth speaking to your local Citizens Advice Bureau.
Step Two – Advertise
There are lots of ways you can advertise your spare room. Try putting a notice in your local shop or go online and advertise it for free through one of the many websites available.
Step Three – Find someone that’s right for you
Letting someone live in your home is a big step, so it pays to be prepared. Take your time to talk to the people viewing your property to make sure they are a good fit for your home. It is also good to lay down your simple ground rules early, so you both know what to expect.
Step Four – Get references
Ask your new lodger if they can provide references from an employer or previous landlord. This can give you extra peace of mind that the agreement you are entering into is likely to be alright.
Step Five – Get it in writing
Have a written agreement between you and your lodger. This should include: rent amount and payment details; which rooms/facilities the lodger is entitled to use; services you agree to
provide; any share of household bills, how long until the payment amount is reviewed and house rule; notice period. T here are many guides to lodger agreements available through bookshops and stationers.
Always have a friend accompany you to interview new lodgers
Keep valuables locked away during the interview
Make sure you use the interview as an opportunity to ask about anything that concerns you
Additional Information from Havebury Housing Partnership
If the lodger is a family member then they will NOT be able to claim Housing Benefit for their part of the rent as this could be seen as taking advantage of the benefit rules. They will be treated as non-dependants for benefits purposes and may result in a deduction in your own Housing Benefit payments.
Universal Credit (UC), is to be introduced for new claims for most basic benefits for working age people from October 2013. Existing claimants of JSA/ESA/IS/WTC/CTC will gradually be migrated over to this new benefit and there are significant differences in the way income from lodgers will be treated.
All of the income from lodgers will be disregarded for UC purposes but you will be charged for spare rooms that the lodgers occupy as if they are unoccupied, (the rent-a-room limit for tax purposes will still apply). You should consider these expected changes to the treatment of lodgers when considering the implications to your current benefits and situation. Havebury is keen to maintain records of all occupants in their properties and request that basic information on new occupants and changes are relayed to us.
If you have any queries on this sheet or would like to notify changes in occupants please contact Havebury on 0300 3300 900.
If you would like to print off this guide, click here to download the information sheet.