Guide to taking in Lodgers

There has been a lot of interest in my post about Spareroom.co.uk (the site that lets you place a free ad for room rentals), as people look to increase their income to help them through the recession. Basically the UK government allows you to rent a room in your house for up to £4250 per annum tax free (that's £354 per month).

So suppose you've decided to take the plunge and have looked up Spareroom and decided to advertise on there for a lodger. What's next?

First of all check what rooms are renting out for in your area, and what they include in the rent. You won't be able to rent for more than the going rate, no matter how much you'd like to take in the full £354 per month. Most lodgers expect to have electricity, gas and water included in the price of the room.

Secondly, it's your house, so you set the rules. Some people who take in lodgers allow them to use the entire house (living room, kitchen, dining room, garden, overnight guests, the lot). Others only allow the kitchen and bathroom to be "common areas". Others forbid overnight guests. Decide what you want in advance. If you start to stipulate rules after someone has started lodging with you, you'll end up with a lot of angst and hassle.

Also decide in advance which gender you want. There is this myth that women are tidier than men - not true. There are plenty of women who have no sense of domesticity at all! If tidiness of the kitchen and bathroom is really important to you, mention it in the interview, and stipulate it in the rules. If you don't want to socialise with them much, it's worth buying a TV and sticking it in their room - it means they will tend to watch it there, and not bother you. Professionals are more likely to pay the rent on time than people who have casual work.

There is no legal requirement to have a contract if a lodger is renting a room in your house, but it's worth having one anyway. Instead of the usual six-month tenancies that are common when flats and houses are let, do not provide any guaranteed minimum - this is a room in your own house you are renting, and if the tenant turns out to be a nightmare, you will need to get them out quick. The minimum notice period is seven days, but the norm is thirty days on both sides - but again, as this is your home, you can opt for anything that suits you. Do include all the house rules in the lettings contract, as well as the rent amount, how the rent is to be paid and how long till the rent is reviewed. There is no deposit involved because this is a lodging.

Check with your insurer that it is OK to have a lodger and check your insurance contract - sometimes theft cover is restricted if you have a lodger.

Finally, get references, preferably from the person they rented from previously. People are usually reluctant to be frank in written references, so phone up and have a chat to make sure that the person you are taking in is all right.