Are you thinking of renting out your property? Do you know whether you should go for a tenancy agreement or a lodger agreement? Though often used interchangeably, there’re some significant legal and insurance distinctions between a tenant and a lodger. Having a clear understanding of these would help you avoid future disagreements.
What makes a lodger different from a tenant?
The biggest difference comes in terms of whether or not you reside in the property where your renter does. If you do, you’ll share the home with a lodger as a resident or live-in landlord. On the other hand, a person, who is paying rent for your property where you don’t reside, will be considered a tenant and you’ll be the live-out landlord.
However, there’s an exception to this. If you share the same house with the occupier but don’t share living space, the person becomes a tenant instead of a lodger. It means the common areas can be shared by the person(s) but they’re having their own room(s) with restricted access for the landlord (you).
Here’re the other differences to help you define whether a lodger or a tenant is renting the property from you.
- Rights: Tenants typically have more rights than lodgers. They’ll receive a tenancy agreement, typically an AST (Assured Shorthold Tenancy), which grants them certain rights including a minimum of six month’s tenancy and a standard notice period before eviction.
On the contrary, lodgers will receive a lodger license that offers them fewer rights than tenants. For instance, if you want to regain the possession of the area rented to a lodger, all you need to give him/her a “reasonable” notice, which is usually 28 days, to leave the property.
- Right to enter the property: If you wish to visit the property rented to a tenant, you’ve to give them a notice unless there’s an emergency.
When it comes to entering a lodger’s room(s), you don’t need to give notice to do so. Additionally, a lodger isn’t allowed to put a lock on his/her room unless you’ve got a duplicate key.
- Legal responsibilities: If you’re renting your property to a tenant, you’ll have a comprehensive list of responsibilities that you must adhere to. These include ensuring the property is safe, every electrical and gas equipment is safe, providing the tenant with a copy of an EPC (Energy Performance Certificate), and so on.
While you still have to ensure the property is safe for lodgers such as having the electrical and gas connections regularly checked, your legal liabilities will be much less stringent.
- Deposits: If you’ve got tenants living on an AST, by law you’re required to protect their deposit under any of the government-approved tenancy deposit schemes.
In the case of lodgers, you don’t essentially need to protect their deposit but you can if you want.
- Insurance: When it comes to tenants, you’ll need to obtain certain landlord insurance while for lodgers, a lodgers insurance is what you’d have to acquire to protect your property.
Apart from these, another major difference between lodgers and tenants lies in the process of eviction. With tenants, the process not only takes longer but you’ll need to start court proceedings if they refuse to leave your property at the notice period’s end. On the contrary, usually, you won’t require a court order to evict the lodgers. However, you should note that even though it’s easier to evict a lodger, you must take appropriate care of his/her belongings if he/she has left them in the room(s).
Whether you plan to have a tenant or a lodger, make sure you’re using the correct agreement to be able to stay transparent on the legal relationship with the occupier. If you’ve got questions about your legal obligations or rights, it’s best to consult a lawyer.