Need to reduce your housing costs? Thinking of taking a lodger?

Whether you live in an old house or a new one, are a tenant or a homeowner you may well feel that it is becoming more and more of a financial burden.  Rent or mortgage repayments, Council Tax and heating and lighting bills all mount up to form a significant part of what we spend.  In addition if you live in a council property or are a social housing tenant you may have found that any Housing Benefit you receive has been reduced since April 2013 because you are deemed to have more bedrooms than you need.  This is known as the ‘under-occupancy charge’, the ‘social sector size criteria reduction’, the ‘removal of the spare room subsidy’ or perhaps most commonly, the ‘bedroom tax’.


If you have a spare bedroom and your Housing Benefit has been reduced you might think about taking in a lodger.  A lodger is someone who lives with you as part of your household sharing some of your home, such as the bathroom or kitchen. Lodgers often receive extra services such as meals, cleaning or laundry.

However, before taking in a lodger, there are a number of important things that you should think about first. For example, whether you need to get permission from your landlord or mortgage lender (if you are a homeowner)

Most local authority tenants are secure tenants. You are also likely to be a secure tenant if your landlord is a housing association and your tenancy started before 15 January 1989.  Flexible tenancies are offered by some local authorities in England. They are similar to secure tenancies except they last for a fixed period of time.  Secure and flexible tenants have a legal right to take in a lodger and don’t need their landlord’s consent to do this.  You should however, check your tenancy agreement in case you have to tell your landlord about any changes in your household which could include taking in a lodger.

If you are an assured or assured shorthold tenant, you should check your tenancy agreement. It may allow you to have a lodger, allow it on certain conditions, or forbid it completely.  Assured tenants are mainly housing association tenants where the tenancy began on or after 15 January 1989. Assured shorthold tenants normally rent their properties from private landlords.

Suppose you are a working age local authority or social housing tenant and your Housing Benefit has been reduced because you have a spare bedroom and you have decided to take in a lodger.  The first £20 (assuming that you do not provide meals) of what you charge your lodger per week is disregarded when calculating your Housing Benefit.  However, anything over £20 per week is taken into account when your Housing Benefit is calculated.  The good news is that because you are using the spare room you no longer suffer a reduction in Housing Benefit through the Bedroom Tax

If you receive Universal Credit which is being introduced to replace a number of benefits, including Housing Benefit things are different.  Rent from lodgers is not treated as income. This means that whatever amount you charge a lodger, it will not impact on how much UC you receive.  . However a room let to a lodger is not deemed to be used for the purposes of the Bedroom Tax and the housing costs section of the Universal Credit you receive will be reduced regardless of whether you have a lodger.

Private rented sector tenants are not affected by the Bedroom Tax directly although the amount of Local Housing Allowance they receive includes an assessment of the number of bedrooms they are deemed to require.

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