You can let out rooms in your home or parts of your property to make money.
Renting out a part of your property makes you a Resident Landlord. Because it is your home, you can give less notice to end a letting because you are more vulnerable in your own home. Also, a tenant does not have the right to challenge the level of agreed rent.
If you own the property, you may need permission to let from your mortgage lender. If your home is leased, you will need to check the lease terms before letting any part of the property.
When you let a room, you must provide access to either shared or separate facilities, like a kitchen, bathroom and toilet. You have responsibilities for repairs and maintenance to the property, for gas/ electrical appliances and furniture/ furnishings safety.
Tenancy or Licence?
Anyone who shares a home with a landlord has very limited rights. If the room is let exclusively and the landlord needs permission to gain access to the room then the let is classed as a tenancy. If there is unrestricted access to the room, for example if you provide cleaning, then the let is deemed a licence to occupy. A let will also be a licence to occupy if a person has to share their room(s) with another person they did not choose.
You should agree at the start how a let will run. There is no minimum length of time to set and a let can be either:
- periodic - run indefinitely from one rent period to the next
- fixed term - last a set number of weeks, months or years
If you do not set a fixed term, it will automatically become a periodic let. Licences can also be periodic or fixed, or open-ended for informal arrangements, such as allowing a friend to stay on an as-and-when basis. But you will not be able to call the arrangement a licence if you do not charge a regular rent.
Written tenancy agreements can help sort out any problems or disputes, but are not compulsory unless the let is for a fixed term of more than three years.
Houses in Multiple Occupation (HMO) and Licencing
If you let part of your own home to persons who are not family members, your property may come under the definition of being a House in Multiple Occupation (HMO). This will place additional responsibilities on you as a landlord. The present legislation allows that you may let rooms to a maximum of two persons in your home (to include children) without your property being classed as a HMO. You may similarly provide accommodation for domestic staff, foster children or carers without your home being classed as a HMO. Please refer to the Regulations and Legislation links page for the specific legal definitions of these classes of persons and the specific circumstances where such exemptions may apply (including the definition of a family (household)).
Please refer to the HMO pages for details of the obligations that may arise from your home being classed as a HMO. These will include an obligation to licence the property with the Council and additional legal duties to ensure for the safety of the residents and maintenance of your property.
Rents and Bills
There are no rules to limit how much rent you can charge. Usually, you would agree rent before letting and set out any increases in the tenancy agreement.
You must provide a rent book for tenants who pay weekly. For others it is not compulsory, but you should use receipts and keep records of payments.
You can accept Housing Benefit for rent. The council usually sends money to the tenant for them to pay rent. However, the council may pay rent directly to you if your tenant is eight weeks or more in rent arrears or has a history of missing rent payments.
You will be charged Income Tax on any rental income that you receive. You may be able to take advantage of the Rent a Room allowance which allows you to earn £4,250 (£2,125 if letting jointly) in rental income tax-free each year.
Ending a let
Depending on whether the let is excluded or non excluded the length of time on any notice to quit (which could be verbal in the case of an excluded tenancy) can be as little as 1 week.
If the tenant refuses to move out, you can apply to a court for a 'possession order'. If the court grants this, the tenant will be forced to leave your property.